SearchToday, May 29, 2024, Assembly Speaker Robert Rivas and Senate Pro Tem Mike McGuire announced a joint legislative budget plan and will begin holding budget committee hearings this week. The Legislature has been working diligently to craft a balanced and responsible budget plan, incorporating public and stakeholder input, and addressing the Governor’s May Revision. If approved, this plan would shape the upcoming budget bill, which must be passed by June 15, 2024. Overall, the budget plan emphasizes balanced fiscal management, protecting essential services, and making strategic investments in education, health, environment, and infrastructure.
Key highlights of the plan include:
Overall Budget
Balanced Budget: Addresses projected shortfalls of $45 billion in 2024-25 and $30 billion in 2025-26 as well as maintains significant reserves of $23 billion in 2024-25 and $13 billion in 2025-26.
- In 2024-25, a $3.6 billion Regular Reserve and $23 billion in total reserves – similar to the May Revision proposal.
- In 2025-26, a $1.3 billion Regular Reserve and over $13 billion in total reserves – around $2 billion higher than the May Revision.
Budget Balancing Actions: Totaling $46.9 billion in 2024-25 and $29.3 billion in 2025-26, which include program reductions and revenue increases. Breakdown below is in billions.
| 2024-25 | 2025-26 | |
| Reductions | $16.6 | $11.6 |
| Revenues | $10.6 | $7.8 |
| Delayed | $5.6 | $0.6 |
| Fund Shift | $7.2 | $1.8 |
| Deferral | $1.6 | $0.5 |
| Reserves | $5.3 | $7.4 |
| Total | $46.9 | $29.8 |
Reserves Usage: The Legislature’s Budget Plan relies less on reserves compared to the Governor’s proposal over the next two years:
- Rainy Day Fund: Both plans use $12.2 billion over the two fiscal years.
- Safety Net Reserve: The Legislature’s plan uses $450 million, which is $450 million less than the Governor’s May Revision.
- Proposition 98 Rainy Day Fund: The legislature’s plan uses about $1 billion less than the May Revision.
| 2024-25 | 2025-26 | |||
| Leg | Gov | Leg | Gov | |
| Regular Reserve | $3.6 | $3.4 | $1.3 | $0.7 |
| Safety Net Reserve | $0.5 | $0.0 | $0.5 | $0.0 |
| Prop 98 Rainy Day Fund | $1.1 | $0.0 | $1.1 | $0.0 |
| Rainy Day Fund | $17.9 | $19.4 | $10.5 | $10.5 |
| Total | $23.0 | $22.9 | $13.3 | $11.2 |
Budget Reforms: Enhances the Rainy Day Fund and introduces a new “Projected Surplus Temporary Holding Account” to manage surpluses more effectively. Under this reform, a portion of any projected surplus will be deposited into Projected Surplus Temporary Holding Account where they will be held until a future year once it is clear whether the projected surplus of revenues materialized.
Education
Programmatic Funding: About the same as the May Revision, but more is funded within the existing guarantee which results in less use of the Prop 98 Rainy Day Fund.
Updated Proposition 98 Proposal: The Administration recently updated its Proposition 98 proposal, to include a suspension in the 2023-24 fiscal year. The suspension will result in higher ongoing funding for schools in future years than the Governor’s original proposal. The Legislature continues to examine the new proposal.
While revised budget details on this proposal have yet to be released, CASBO will continue to monitor the conversations and will share additional details as soon as language is released.
What’s Next
The Legislature must pass a balanced budget bill on or before Saturday, June 15. The Governor will have until no later than Thursday, June 27, to sign that bill. Trailer bills, which include language that will provide additional details of the proposal, will emerge in the coming weeks to implement statutory changes related to the budget.
