The 2015-16 Budget: Major Features of the Adopted Plan (Overview of Adopted Plan)

The 2015-16 Budget: Major Features of the Adopted Plan (Overview of Adopted Plan) Translate Our Website This Google ™ translation feature provided on the Legislative Analyst's Office (LAO) website is for informational purposes only. The LAO is unable to guarantee the accuracy of this translation and is therefore not liable for any inaccurate information resulting from the translation application tool. Choose your language: × Skip to main content Home --> Policy Areas Capital Outlay, Infrastructure Criminal Justice Economy and Taxes Education Environment and Natural Resources Health and Human Services Local Government State Budget Condition Transportation Other Government Areas Publications The Budget Propositions and Initiatives Staff Careers About Us Search Overview Education Proposition 98 Higher Education Child Care and Preschool Health and Human Services Other Issues Water-Related Issues Cap-and-Trade Trial Courts Employee Compensation See More Publications Like This Back to the Top --> Tweet June 19, 2015 Overview On June 16, 2015, the Governor, the Senate President pro Tempore, and the Speaker of the Assembly announced a budget agreement. The Legislature passed the budget bill and related legislation on Friday, June 19. The budget agreement relies on the administration’s May 2015 estimates of (1) General Fund revenues, (2) the Proposition 98 minimum guarantee for schools and community colleges, and (3) budget reserve and debt payment requirements under Proposition 2. School and community college funding is the centerpiece of the agreement, as administration estimates of the Proposition 98 minimum guarantee have increased substantially over June 2014 levels. With savings resulting from (1) rejection of various administration proposals, (2) an error in the administration’s Medi-Cal estimates, (3) legislative changes made to the Middle-Class Scholarship Program, and (4) other legislative actions, the agreement makes modest augmentations outside of Proposition 98 above May Revision levels. Below, we summarize the General Fund condition under the budget agreement. General Fund Condition Figure 1 General Fund Condition Under Budget as Passed by the Legislature (Dollars in Millions) 2014-15 2015-16 Percent Change Prior-year fund balance $5,590 $2,423 Revenues and transfers 111,307 115,033 3.3% Expenditures 114,473 115,370 0.8 Ending fund balance $2,423 $2,086 Encumbrances 971 971 SFEU balance 1,453 1,116 Reserves SFEU balance $1,453 $1,116 Pre-Proposition 2 BSA balance 1,606 1,606 Proposition 2 BSA balance — 1,854 Total Reserves $3,059 $4,576 Source: Department of Finance. SFEU = Special Fund for Economic Uncertainties and BSA = Budget Stabilization Account. 2015‑16 to End With $4.6 Billion in Estimated Total Reserves. The budget agreement assumes $115 billion in revenues, a 3.3 percent increase over 2014‑15. (This total is net of the $1.9 billion deposit in the Proposition 2 Budget Stabilization Account [BSA].) The state’s “big three” General Fund taxes—the personal income tax, sales and use tax, and corporation tax—are estimated to increase at a slightly higher rate (4 percent). General Fund revenue growth was much higher in 2014‑15, increasing at a very healthy 7.7 percent rate. General Fund spending is largely flat across 2014‑15 and 2015‑16, increasing at only 0.8 percent. Growth in ongoing programmatic spending, however, is masked by various one-time actions, including one-time spending in 2014‑15 on debt payments and mandate backlog claims, and the end of the “triple flip” mechanism used to finance the state’s prior deficit financing bonds. The budget ends 2015‑16 with $4.6 billion in estimated total reserves, including $1.1 billion in the Special Fund for Economic Uncertainties—the state’s traditional budget reserve—and $3.5 billion in the BSA. Subscribe | California State Legislature | Online Voter Registration | Privacy Policy | Accessibility Legislative Analyst's Office | The California Legislature's Nonpartisan Fiscal and Policy Advisor 925 L Street, Suite 1000 Sacramento, CA 95814 | (916) 445-4656