the california budget outlook · i. california's revenues i...
TRANSCRIPT
:!..anuary 4, 1994
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The California Budget Outlook II ::::~~
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Presented To The California Agricultural
Leadership Program
By Elizabeth G. Hill
Legislative Analyst
LEGISLATIVE ANALYST'S OFFICE
Of
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I. California's Revenues I ~HMf:Mnfn@[email protected]#JMn.umHnIHMmfUtHMH¥MMmMU~j[f~
~anuary 4, 1995 LEGISLATIVE ANALYST'S OFFICE
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02
State Revenues Have Been Flat in Recent Years
(In Billions) Iill1!l Special Funds
• General Fund
State Revenues
January 4, 1995 LEGISLATIVE ANALYST'S
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• OFFICE
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LAO 50 years if strrJia
January 4, 1995
Almost Two-Thirds of All State Revenues Come From Income and Sales Taxes
Slate Rel1enues 1994-95 Personallnoome
Taxes
Sales and Use Taxes
Bank and Corporation Taxes
AU Oth ..
Tot~
LEGISLATIVE
$18.4
Total State Revenues S54 Billion
Molor Vehicle-Related Taxes $7.3
1.6
0.5
2.7
$12.1
•
ANALYST'S OFFICE
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04
Corporation Taxes Have Been
LAO 50 !JUlTs of serrJiu
Especially Sluggish ¥WMg@M~1UrtnWMl.%MnltgMf.11M£fgt'lMf:litJ:NWfl~Mmttt1mHt1M.tW~MifMff.UMWMf.~MMtlgtW%tl%iJt~g1I%gl¥gl
Growth in General Fund Revenue Sources 1989-90-1994-95
Personal Income Tax
Sales and Use Tax
Bank and Corporation Tax
All Other Tax Sources
Total Revenues
W~
-I 0 Annual Percent : hange 3 4 III
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~anuary 4, 1995 LEGISLATIVE ANALYST'S OFFICE
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05
LAO 50 ytaTs t>{ suviu
~anuary 4, 1995
Taxable Corporate Profits Have Been at Historic Lows
Taxable Corporate Profits As a Percent Of PeFSOIUlI/llcome
10
9
• 7
LEGISLATIVE ANALYST'S
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,.
OFFICE
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Taxable Sales Have Generally Been Declining as a
LAO W.Wl 50 yuzrs of strtJice
Share of the Economy
Taxable Sales As a Percent oj Personal Income
54
52
50
48
46
44
42
78 80 82 84 86 88 90 92 94
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January 4, 1995 - LEGISLATIVE ANALYST'S OFFICE
6 07
~anuary 4, 1995
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Outlook for California's Revenues
MEtH Moderate Growth
• Revenues will reflect continued economic recovery
• Rapid increases are unlikely, but so is a sharp slowing
tHat Key Factors Affecting Growth
• Continued growth in nontaxable services
• Phase-out of temporary high-income tax brackets
• Corporate use of net operating loss carryforward deductions
LEGISLATIVE ANALYST'S OFFICE
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LAO 50 !fUlTs 0/ strrJiu
M
l~~ II. California's Expenditures Itlf
and Budget Condition III %&@H@~gMMW%%ilim.t@d@H@Mt¥}M&%t~HMNWf:1tM@mIl1.@t@mt1H%f:@{mr:iMiliMHMl%Nt%i¥H~'i
January 4, 1995 LEGISLATIVE ANALYST'S OFFICE
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January 4, 1995
Education Receives the Largest Shar~ .of State Spending
" .. ".:;: .. ::.::~:~:«::(>: :.;::~:;::: ::;:-}::i:".:;:;;:·;~~: ;': ~:.::.:::;:::;::
State Sp~nding By Major Program 1994-95
LEGISLATIVE
Higher Education
Total Spending i $54.7 Billion I
ANALYST'S OFFICE
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Total State Spending Flat Since 1991-92
(In BiUions)
Ili!ill Special Funds & '<
• General Fund ;j
State Spending
84-85 86-87 88-89 90-91
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92-93 94-95 I ilia
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January 4 1995 - , LEGISLATIVE ANALYST'S OFFICE
10
11
Spending Growth Varies
LAO 50 years ofserrJia
Considerably by Program Area nnijnftrtMMHmHIHMM1tillImMlflt%[email protected]~]MMx@mmMHHmmJMfWtmrtlUWfH{t~WfiH
State Spending Growth, By Program 1983-84-1994-95
K-12 Education
Higher Education
Health
Welfare
Corrections
Transportation
Shared Revenues
All Other
January 4, 1995 LEGISLATIVE
3
Total Spending
6 9 Annual Growth Rate
ANALYST'S
11
12 15%
OFFICE
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~anuary 4, 1994
Annual Cost Per Participant Varies . Widely Among Major Programs-1993-94
Corrections-lnmates and wards Prison Youlh Authority
Education-studentsa
K-12 UC CSU Community Colleges
Health and Welfare-beneflclarles Medi·Cal AFDC SSIISSP
0.1 0.01
5.2 0.2 0.2 0.9
5.4 2.6 1.0
$20,900 32,000
$2,534 11,816 6,014 1,054
$1,500 1,100 2,100
a Ooes not include federal funds or lottery funds.
LEGISLATIVE ANALYST'S
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$20,900 32,000
$4,217 11,816 6,014 2,811
$2,300 2,200 5,300
OFFICE
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. . : .
General Fund Condition
~nuary 4, 1994
Past Operating Shortfalls Have Resulted in Budget Deficits
(In Billions)
.':'." .
"""" Operating .- Surplus/Deficit
Year-end Budget - Surplus/Deficit
LEGISLATIVE ANALYST'S OFFICE
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Strategies to Address Recent Budget Gaps
Strategies to Address Budget Gaps Have Varied
Gap (In Billions)
$1
1
91-92
• Reduced Reserve and Other Actions
IiiI Cost Deferrals/Revenue Accelerations
~ Cost Shifts to Local and Federal Levels \\
• Revenue Enhancements .. , ; o Program Reductions ~
mm" .W;:;":;';:X$%':'::;:X~~HM";;;;:m.",t. *$,~Wk;¢hYfo;:.;;-;mqhi.iJf·m;m;:i~
92-93 93-94 94-95
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January 4, 1994 - LEGISLATIVE ANALYST'S OFFICE
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'!.anuary 4, 1994
State Plans Balanced Budget In 1995-96
Two-Year General Fund Budget Plan
(Dollars in Millions)
Carryover deficit from prior year
Revenues and transfers Expenditures
Operating surplus
Year-end deficit or reserve
Federal immigrant funding assumed
1994-95 1995-96
-$1,971 -$1 ,019
41,892 40,940
$952
-$1,019
45,442 44,394
$1,048
$29
($763) ($2,824)
LEGISLATIVE ANALYST'S OFFICE
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January 4, 1994
Near-Term Outlook for California's Budget
@e; Some Positive News
• Recent favorable economic trends
• Recent improvement in revenues
• Slower growth in some caseloads
• 1993-94 carryover deficit revised downward
@e;: Budget Risks and Pressures
• Ongoing economic uncertainties
• Federal funds for immigration costs
• Court cases
• Continued service demands
- Continued population growth, despite weak economy
- Corrections' budgets to double in next four years
- Health and welfare caseloads growing faster than ten years ago
- K-14 education enrollments growing faster than revenues
LEGISLATIVE ANALYST'S OFFICE
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III. Long-Term Challenges I [email protected]¥f.·@MMf.MMMHJ:tMMniWf*4Jf.*Hf:f#f.}@f.~l¥~H¥MH}tM&i#X;;Wf.~?f.@?#®hd%f.@~}t*tH@Jt
~nuary 4, 1994 LEGISLATIVE ANALYST'S OFFICE
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January 4, 1994
California Has Nearly 7,000 Local Entities-1991-92
Counties C~ies
Special districts Redevelopment agencies K-12 school districts Community college districts
Total
. " .. " .. " .
58 466
4,857 381
1,067 71
6,900
~ Special districts account for the overwhelming number of local entities.
~ The number of cities, special districts, and redevelopment agencies is growning over time.
LEGISLATIVE ANALYST'S OFFICE
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State's Involvement in Most Program Areas is Extensive-1993-94
'.: ..
;.:-;-: ... -' Program Policy Control Operation Funding
;;:_m:.:::r::s:::::·]9~: ; :;EPjJ ,,2 :m:m:: . w.t=.$.%l-.... ::;..,.::r~"*
AFDC Fede .. USlate Counties () )l'i, «;:
SS/ISSP FederaUSlate Federal f) General AssIstance Slate Counties • Mental Health Counties Counties • tit ':p.;
Medi-Cal FederaUSlate SlatelCounties () · ~ .. ~ ., Indigent Health Core State/Counties Counties '~w.'
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Public Health State Counties ~ W.-x:«
Courts State Counties t! ., M?
CustodylSupervision State/Counties Countie&lState «» , ': " .'-
ProsecutionlOefense State Counties • Public Safety State CountieS/Cities • Transportation Statellocai Siatellocal ~ I 0 Federal J[jj State • Local.
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OFFICE January 4, 1994 LEG I S L A T I V E A N A L Y ST' S ----------------------------------------------------------19
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January 4, 1994
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Local Governments Raise More Revenue Than the State-1990-91
Counties .:'
Total Revenue • ~ $105 Billion •
~
~ The figure shows state and local own-source revenue, which includes tax and fee revenues but excludes funds received from another government entity. Local revenues include income of publicly owned utilities and other local government enterprises.
~ More than half of the state's revenues were aIlocated to local schools and other local agencies.
LEGISLATIVE ANALYST'S OFFICE
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~anuary 4, 1994
Taxes Remain Below Pre-Proposition 13 Levels As a Share of Revenues
. : : . :. : : : : .
Composition of Own-Sourt:f!
100%
80
60
40
20
• MIscellaneous m Taxes m D Charges/Feel l
78 83 88 92
State & Local
LEGISLATIVE ANALYST'S
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OFFICE
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The Problems in California's State-Local Relationship
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January 4, 1994
Jumbled assignment of responsibilities.
Counterproductive fiscal incentives.
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11 ~ Lack of accountability for program outcomes. II %:i
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Unproductive competition for resources.
Erosion of local control.
LEGISLATIVE ANALYST'S OFFICE
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Reform Principles _ 50 y!:n~9ert1iu M!l~tl]tlU1tUnultf]n:w:rt~~tmflmHrtffHtHWH~fm1r.ililmR~f~1.JlliU~UnmIHtltHm1I~tM1mrmtW#~,utttft.t~lEtj;UitH
'!.anuary 4, 1994
Maximize separation of state and local government duties.
Match redistributive programs with redistributive revenue sources.
Recognize program linkages to promote coordination of service delivery.
Rely on financial incentives to promote prevention and coordination.
LEGISLATIVE ANALYST'S OFFICE
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