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Editor's Report

On presenting California's 2007–2008 budget, Governor Schwarzenegger said, "This budget is a responsible budget. This is a budget that lives within our means but still provides crucial services. It is a budget that moves California not right or left, but forward. I am proud of where we have come from and I am excited about where we are going.

February 19, 2007

On presenting California's 2007–2008 budget, Governor Schwarzenegger said, "This budget is a responsible budget. This is a budget that lives within our means but still provides crucial services. It is a budget that moves California not right or left, but forward. I am proud of where we have come from and I am excited about where we are going."

Although, almost immediately, State Legislative Analyst Elizabeth Hill said, "We believe that the fiscal benefits of many of the budget's key proposals are overstated" and worried that financial risks were higher than usual. The governor's office responded by saying the analyst's office was using outdated data, and that later information was even more optimistic.

According to the governor's website:

Since the governor took office in November 2003, Gov. Schwarzenegger has focused on economic growth to increase the state's revenue. In that time, California has added more than 680,000 jobs and the state's general fund revenue has increased from $76 billion to $101.3 billion. The state also recently hit a 30-year low in the unemployment rate. In addition to spurring economic growth, Gov. Schwarzenegger has taken a disciplined approach and slowed the growth in state spending. In the proposed budget, general fund expenditures will increase by only 1 percent — the lowest rate of growth in general fund spending in five years.

The proposal includes $1.6 billion in pre-payments of the Economic Recovery Bonds (ERBs) and $88 million of other budgetary debt re-payments. This will bring the amount set aside to repay the ERBs to $7.4 billion in just four years since the bonds were first issued. As a result, the ERBs are on schedule to be fully retired in August 2009, 14 years ahead of schedule. The budget also creates a $2.1-billion rainy day fund.

Other important budget highlights include:

  • K-12 Education: This budget fully funds Prop. 98 at a record $56.8 billion. Total per pupil spending for K-12 has increased from $9,559 to $11,584 or a 21-percent increase since the governor took office. Year over year, Prop. 98 funding increased by $1.8 billion and total per pupil spending increased by $344. Continuing the governor's longstanding commitment vocational education, the budget provides $52 million to expand Career Technical Education course offerings and programs.
  • Higher Education: The governor has continued to fund the Higher Education Compact, investing $7.5 billion of general fund money in our state colleges and universities, an increase of 6.9 percent.
  • Health and Human Services: General fund and other state spending for the agency is $38.1 billion, a 3.7-percent increase over the current year. That includes $8.8 million to fund 15 new positions to begin implementation of our new affordable prescription drugs program, $32 million to add 73,900 more kids to our Healthy Families Program, and $217 million needed for cost-of-living adjustments for aged, blind and disabled SSI/SSP recipients.
  • Transportation: The governor's budget proposes total expenditures of $16.8 billion in 2007–08 for roads, highways, mass transit and intercity rail, vehicle licensing and registration, and highway law enforcement. This is an increase of $845 million from the 2006 budget. Total statewide transportation resources, which are estimated to be approximately $23.8 billion in 2007–08, will see a major increase from $21.2 billion in the current year due to the transportation bond. This includes $1.4 billion for the full funding of Prop. 42.
  • Environment: The budget provides $36 million to begin implementing our new landmark Global Warming Law and $6 million for the Air Resources Board to continue development of the Hydrogen Highway. This will provide matching funds for up to eight publicly accessible hydrogen fueling stations and will prioritize funding for stations that generate hydrogen from promising renewable technologies, such as biomass, solar and wind energy.
  • CDCR: The budget proposes spending $10 billion for the operation of our prison system and investing $10.9 billion over the next several years via the Strategic Growth Plan to reduce overcrowding and recidivism. The budget also sets aside $150 million to upgrade our prison health care as required by the federal receiver. Additionally, the budget includes $193 million to implement Jessica's Law and other legislation increasing supervision of sex offenders.

The entire state budget can be found on the web at the Department of Finance's website at http://govbud.dof.ca.gov/.

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