The California Budget Crisis
What We Stand For
We believe California’s budget should invest in services and infrastructure for the future. We oppose arbitrary across-the-board budget cuts and believe that all options, including revenue increases, must be on the table in budget negotiations. The Governor and the Legislature have an obligation to protect California's people and our future.
The economic meltdown has revealed that California's finance system and budget process can't deal with a real crisis. While it is now possible to pass a state budget with a simple majority vote of the legislature, we believe the failure of our finance system is partly due to the continued requirement of a two-thirds vote to raise revenues.
The League’s Responses to the State Budget Crisis
May 2012 – The Governor issued a revised budget on May 14, 2012. The news is daunting with the budget gap growing from an estimated $9.2 billion in January to $15.7 billion in May. This increase is attributed by the Governor’s office to “reduced revenue outlook, higher costs to fund schools, and decisions by the federal government and courts to block budget cuts.”
In light of the somber outlook, even greater cuts are being proposed to the social safety net for the most vulnerable. At this critical junction, it is vital that California voters realize that an increase in revenues will have to be part of the equation in order to achieve a balanced budget. More significantly, the state will need additional tax revenues to attain a level of financial stability while still providing much needed basic services which impact all of us. Read our statement regarding the May revised budget numbers.
May 20, 2011 – The LWVC commends the Governor’s May Revise budget for its realistic, balanced approach that continues existing taxes. Read our press release.
March 4, 2011 – With time running short for a special election in June to be called, we urged the legislature to let the voters have a choice about extending taxes. Read our statement.
January 12, 2011 – California Budget: Painful Reality: We applaud the governor’s budget proposal that faces up to the reality of California’s structural deficit and works toward long-term solutions. Read our statement.
August 17, 2009 – We issued an alert urging Californians to tell their legislators to support real reform by reducing the two-thirds vote requirement for passing a budget.
August 2, 2009 – LWVC President Janis Hirohama’s op-ed on the need for budget and fiscal reform appeared in the North County Times. We noted that the dysfunctional process highlighted the need for reform, and urged serious consideration of changes such as eliminating the two-thirds vote rule for the budget and revenue increases and a review of the tax system, including tax breaks.
July 28, 2009 — The legislature and Governor have finally passed a $24 billion plan to address the huge deficit in the 2009-2010 state budget. In a press statement today, the League called for efforts to move on to reform of our dysfunctional fiscal system. We lay much of the blame for the failure of our finance system on the requirement of a two-thirds vote to pass a budget or raise revenues. Reform of our system of taxation is also needed.
July 15, 2009 – The Commission on the 21st Century Economy will suggest changes to state and local revenues on or before September 20, 2009. Read our letter to the Commission that expresses concern that their emphasis on achieving stability is taking undue precedence over other issues, such as achieving a fair and equitable structure and adhering to principles of an effective tax system such as simplicity, efficiency, predictability and ease of compliance and administration. We offer our suggestions for other ways to improve California's revenue and budgeting systems.
June 12, 2009 – The budget conference committee is meeting to deal with a projected $24 billion deficit. Read our letter to the Governor and legislative leaders that advocates a balanced approach, including new revenues as well as targeted cuts to programs. Protecting the safety net for those most in need must be a priority. Read our press release.
We opposed the ballot measures 1A, 1C, 1D, and 1E in the May 19, 2009 special election because they are NOT the solution to our long term financial crisis, the continuing structural deficit in the state budget and flawed budget process. And voters agreed: read our press release. Why did we oppose the changes? Read our pre-election press release and our flyer.
February 2009 – The Legislature and Governor have passed legislation to cover the $40 billion deficit projected for the 2008-09 and 2009-10 fiscal years. Read the enacted budget for 2009-2010.
See also the California Budget Project’s summary of key provisions.
February 10, 2009 – The League of Women Voters of California sent a letter to the four legislative leaders and the Governor strongly opposing a “hard” spending cap as part of a budget deal. We believe imposing such a limit would do nothing to solve the current situation, but would mean that future budgets could not repair the damage now being done to needed state services, let alone meet future needs.
January 14, 2009. We joined a broad spectrum of citizen’s groups at the State of the People event to speak out for the future of our state. Read our press release. Also, the LAO released its latest report on California’s Cash Flow Crisis.
How Did We Get To This Point?
Read our summary of the situation and issues.
- On December 17, state officials halted funds for thousands of California public work projects until the budget is balanced, and possibly longer. To read more, visit the Sacramento Bee article and view their PDF listing the roads, levees, schools, prisons and other projects being put on hold.
- State Controller John Chiang says (PDF of statement) that California will start paying some employees and contractors with IOUs by February.
- The Governor has made his 2009-10 budget proposal and the discussion has begun.
November 17, 2008. The LAO’s analysis lays out the horrific cuts facing California and suggests remedies.
August 21, 2008. Read the League’s letter to legislative leaders and the Governor about policies we would support for closing the budget gap. For more about our rationale, read Budget "Reform" Lacks Vision.
What You Can Do
Take the updated Next 10 California Budget Challenge.
Read other letters and statements we have signed:
- Letter to the Governor and legislative leaders opposing rollback in implementing environmental and public health laws (May 6, 2008)
- Forward Together: A Budget for All Californians (January 2008)
- Letter to the Governor from the Green California coalition (January 4, 2008)
- Letter to the Governor about public transit (December 21, 2007)
California's Infrastructure Needs
Investing in the state's infrastructure is an important budgetary consideration. Click here to see policy recommendations and an update on water infrastructure proposals.
Other Resources about the State Budget
Find more information about the California State Budget.
- The Budget Process. 270K from the State Senate
- Department of Finance: California Budget
- Legislative Analyst's Office:
- California Budget Project
- California Budget Challenge (from Next Ten)
- Governor's Budget Issues Web page
- Budget Web pages of the Senate Republican Caucus and Senate Democratic Caucus
- Assembly Budget Committee
- Senate Budget and Fiscal Review Committee
See also California State Government links.
League Budget Articles
Read a series of articles we've written about the state budget.
- Cloudy Days on the Budget Watch (June 2007)
- LAO Raises Warning Flags about the Budget (December 2006)
- The State Budget Outlook . . . Is the Glass Half Full or Half Empty? (March 2006)
- Infrastructure: A Hot Topic (January 2006)
- Making the Tax System Reflect California's Economy (April 2005)
- Tax Expenditure Reform Bill (April 2005)
- Budget Perspectives (January 2005)
- A Year Later: How is California Doing? (December 2004)
- Mixed Results on Local Measures (December 2004)
- What is a Structural Budget Deficit? (July 2004)
- Funding Schools Adequately Is it Possible? (April 2004)
- Structural Budget Gap Begs for Reform (April 2004)
- The Governor's Proposed Budget (April 2004)
- County Budgets/County Services (November 2003)
- Tax Shift Funds State Debt (October 2003)
- Why Does it Matter? (July 2003)
- Something to Think About-Doing the Math ( July 2003)
- What About Tax Expenditures? ( July 2003)
League Letters about State Legislation
Here are some letters and statements we have sent about state budget legislation:
- Letter to Senator Kevin Murray, Chair, Conference Committee on Infrastructure Bonds, on "Infrastructure Bond Proposals" (March 2006)
- The League endorsed "Fighting for California's Future", a 2005 statement of principles for a fair and sustainable solution to the ongoing budget crisis.
- In support of regular review of tax expenditures. (August 2004)
Call to Action
We asked Governor Schwarzenegger to sign the California Tax Expenditure Accountability Act. (August 2004)
Budget Accountability Act
The League supported Proposition 56, the Budget Accountability Act, on the March 2004 ballot. This initiative was designed to alleviate the legislative gridlock that has increasingly bogged down the state budget process.