2008–2012 California budget crisis

none thumb|Furlough at a California Department of Motor Vehicles office in 2009 The U.S. state of California had a budget crisis in which it faced a shortfall of at least $11.2 billion,California 'faces budget crisis' BBC News 2008-12-02 https://news.bbc.co.uk/2/hi/americas/7760249.stm 2009-02-08 https://web.archive.org/web/20090111235333/http://news.bbc.co.uk/2/hi/americas/7760249.stm 11 January 2009 live and projected to top $40 billion over the 2009–2010 fiscal years.California delaying tax refunds amid cash crisis Reuters 2009-01-16 https://www.reuters.com/article/domesticNews/idUSTRE50F6JH20090116 2009-02-08 https://web.archive.org/web/20090212152330/https://www.reuters.com/article/domesticNews/idUSTRE50F6JH20090116 12 February 2009 live 2008 On September 23, 2008, about three months after its due date, Governor Arnold Schwarzenegger signed the 2008–2009 budget.Schwarzenegger signs record-late state budget http://www.sacbee.com/capitolandcalifornia/story/1259330.html Sacramento Bee 2008-09-23 2009-02-17 https://web.archive.org/web/20090526072159/http://www.sacbee.com/capitolandcalifornia/story/1259330.html 2009-05-26 dead http://www.leginfo.ca.gov/cgi-bin/postquery?bill_number=ab_88&sess=PREV&house=B Bill List Leginfo.ca.gov 2009-07-25 Worsening financial conditions since 2007 left the state with a substantial budgetary shortfall.https://www.wsws.org/en/articles/2003/03/cali-m14.html California budget crisis deepens Per the California Constitution at the time, a two-thirds vote in both houses of the California State Legislature was required to pass a budget. In both the original budget negotiations and the attempt to revise the budget, no political party by itself had enough votes to pass a budget. The Democrats in the majority fought to minimize cuts to programs, while most of the minority Republicans refused to accept any tax increase. The original budget was put together by Democrats and some Republicans using spending cuts, internal borrowing, and accounting maneuvers. In November 2008, Schwarzenegger proposed spending reductions, including the following measures concerning state employees:http://www.dpa.ca.gov/news/news/2008/20081106-01.htm Governor's Open Letter to All State Employees Regarding Impact of Proposed Spending Cuts California Department of Personnel Administration 2008-11-06 2009-07-25 https://web.archive.org/web/20090809224605/http://www.dpa.ca.gov/news/news/2008/20081106-01.htm August 9, 2009 dead mdy-all One furlough day per month, equivalent to a reduction in pay of about 5 percent; Elimination of the Columbus Day and Lincoln's Birthday holidays; Employees who must work on holidays would receive holiday credit for later use, as opposed to receiving time-and-a-half pay; Employees would more easily be able to work four ten-hour days per week; and, Overtime pay rules would be changed so that leave time would no longer be considered as part of time worked. In December 2008, Schwarzenegger ordered mandatory furloughs of two days per month for state employees, as well as "layoffs, reductions and other efficiencies" to achieve savings in the General Fund of up to 10%.https://www.gov.ca.gov/executive-order/11310/ Executive Order S-16-08 Schwarzenegger Arnold 2008-12-19 California Office of the Governor 2009-02-05 https://web.archive.org/web/20090724144840/http://gov.ca.gov/executive-order/11310 2009-07-24 live http://www.dpa.ca.gov/news/news/2008/20081219-01.htm Governor's Open Letter to All State Employees Regarding Furloughs and Layoffs California Department of Personnel Administration 2008-12-19 2009-07-25 http://webarchive.loc.gov/all/20090528050130/http%3A//www%2Edpa%2Eca%2Egov/news/news/2008/20081219%2D01%2Ehtm 2009-05-28 dead 2009 Labor organizations filed lawsuits and took other actions in an attempt to stop the furloughs of state workers.Jon Ortiz Appeals Court Denies Union Request to Halt Furloughs The Sacramento Bee 2009-02-06 2009-08-25 http://www.sacbee.com/capitolandcalifornia/story/1604684.html dead https://web.archive.org/web/20090628114028/http://www.sacbee.com/capitolandcalifornia/story/1604684.html June 28, 2009 On Jan. 29, 2009, a Superior Court Judge ruled that Schwarzenegger had emergency furlough power, and on February the 3rd District Court of Appeal in Sacramento said the appeal to the decision came too late and was incomplete, so judges were unable to determine if a halt to state furloughs is legally justified. As part of the furlough, various state offices were closed on the 1st and 3rd Fridays of every month from February 1, 2009 through June 30, 2010, which was estimated to save the State $1.3 billion. By February 2009, California State Controller John Chiang delayed $3.5 billion in state payments (including state tax refunds) for at least 30 days because the state was experiencing cash flow difficulties.Patrick McGreevy Jordan Rau Delay of Tax Refunds and Payments Adds to Californians' Struggles https://www.latimes.com/archives/la-xpm-2009-feb-01-me-budget-suspend1-story.html Los Angeles Times 2009-02-01 2009-08-25 The state legislature passed a budget in February 2009 that depended on the voters approving tax extensions and money redirection into the general fund, which in May the voters did not approve.Steinhauer Jennifer https://www.nytimes.com/2009/06/22/us/22calif.html?pagewanted=all California's Solution to $24 Billion Budget Gap Is Going to Bring Some Pain The New York Times 2009-06-22 A12 26 July 2009 Governor Arnold Schwarzenegger then proposed $16 billion in cuts and also borrowing money from local governments. In the legislature, the Republicans agreed to lower the income of state employees, but the Democrats resisted these proposals and suggested increasing fees to be paid by smokers and oil wells. Neither party agreed to borrowing money from local governments. On April 1, 2009, the state sales and use tax was temporarily increased by one percentage point.Sales and Use Tax Rate Increases on April 1, 2009 https://web.archive.org/web/20090618061500/http://www.boe.ca.gov/sutax/0401TaxIncrease.htm June 18, 2009 The state had been selling bank-guaranteed short-term notes to get cash, but in June 2009 its credit rating was lowered. When the state asked for a federal guarantee of the notes, the Obama administration said it had no legal authority to back state notes and that the state should solve its own problems. On July 1, 2009, Schwarzenegger ordered state workers to take a third furlough day each month.Jim Sanders Furlough Fridays Back - Now Three Days a Month http://www.sacbee.com/latest/story/1993230.html The Sacramento Bee 2009-07-04 2009-08-25 https://web.archive.org/web/20090704112729/http://www.sacbee.com/latest/story/1993230.html 2009-07-04 dead On July 2, 2009, the state government began issuing IOUs to meet its short term financial obligations.https://www.nytimes.com/2009/07/03/us/03calif.html?_r=1&ref=global-home&pagewanted=all Coffers Empty, California Pays With I.O.U.'s Steinhauer Jennifer 2009-07-03 The New York Times A1 26 July 2009 Five days later, Bank of America, Citigroup, Wells Fargo, and JP Morgan Chase announced that they would stop accepting IOUs by July 10. Fitch Ratings dropped California's bond rating from A-minus to BBB.https://www.wsj.com/articles/SB124692354575702881 Big Banks Don't Want California's IOUs Knutson Ryan 2009-07-07 The Wall Street Journal 2009-07-25 https://web.archive.org/web/20090727224504/http://online.wsj.com/article/SB124692354575702881.html 2009-07-27 live On July 24, 2009, the state government passed a budget that included $15 billion in service cuts, including $8.1 billion in education cuts. Eliminated from the final plan included proposals to borrow money from city and county governments and to drill for oil off the coast of Santa Barbara.https://www.nytimes.com/2009/07/25/us/25calif.html?hp California Budget Deal Closes $26 Billion Gap Steinhauer Jennifer 2009-07-25 The New York Times A12 25 July 2009 Chiang announced in August 2009 that the IOU program would end the next month and that California would pay off 327,000 IOUs worth almost $2 billion (~$US-GDP 2000000000 2009 in US-GDP).Jesse McKinley Budget Deal Ending Need for I.O.U.'s in California https://www.nytimes.com/2009/08/14/us/14calif.html The New York Times 2009-08-13 2009-08-25 The budget crisis led to cutbacks and many layoffs at state universities in California. In order to curb the budget shortfalls, the California Board of Regents voted on a 32% raise in all tuition costs for state universities. This led to the 2009 California college tuition hike protests, with dozens of college students protesting the 32% tuition increase.http://www.time.com/time/nation/article/0,8599,1942041,00.html https://web.archive.org/web/20091124083246/http://www.time.com/time/nation/article/0,8599,1942041,00.html dead November 24, 2009 Tuition Hikes: Protests in California and Elsewhere Time 27 November 2009 2009-11-21University of California students protest 32 percent tuition increase - CNN.com https://www.cnn.com/2009/US/11/19/california.tuition.protests/index.html 2024-08-03 www.cnn.com enWollan Malia Lewin Tamar 2009-11-20 Students Protest Tuition Increases https://www.nytimes.com/2009/11/21/us/21tuition.html 2024-08-03 The New York Times en-US 0362-4331 From 2012 and into 2013 With the passage of Proposition 30 in 2012 and a steadily improving economy, for the first time in many years, California Governor Jerry Brown's proposed budget plan for 2013 listed a small surplus. California Governor's budget has surprise: a surplus Reuters 2013-01-10 2013-01-16 Jim Christie https://news.yahoo.com/governor-brown-unveil-california-budget-141509838.html Causes of budget deficit A major source of the deficit was a decline in state revenues from more than $100 billion in 2007 to about $85 billion in 2008—mostly due to declines in personal income taxes, corporate taxes and other taxes.http://www.ebudget.ca.gov California State Budget 1 February 2012 Required legislative supermajorities News reports and commentators have cited the state's various legislative supermajority requirements as a contributing factor to the state budget crisis.http://www.pewcenteronthestates.org/initiatives_detail.aspx?initiativeID=56004 Methodology - Beyond California: States in Fiscal Peril Pew Center on the States Pew Research Center November 2009 2010-08-23 https://web.archive.org/web/20091121120210/http://www.pewcenteronthestates.org/initiatives_detail.aspx?initiativeID=56004 2009-11-21 deadhttps://www.politico.com/story/2010/01/supermajoritys-not-so-golden-rule-032174 Supermajority's not-so-golden rule Jeffe, Sherry Politico 2010-01-29 2010-08-23 The state has a long history of supermajority requirements with a 1933 state ballot measure mandating a two-thirds supermajority to pass the state budget and California Proposition 13 (1978) mandating another two-thirds supermajority to pass tax increases.http://www.latimes.com/news/opinion/commentary/la-oe-mathews-twothirds-20100530,0,105876.story California: ruined by the supermajority Mathews, Joe Los Angeles Times 2010-05-30 2010-08-23 https://web.archive.org/web/20100812154004/http://www.latimes.com/news/opinion/commentary/la-oe-mathews-twothirds-20100530%2C0%2C105876.story August 12, 2010 dead The National Conference of State Legislatures (NCSL) notes that, as of 2008, only 9 states required a supermajority to pass the state budget and of those 9, only 3 (California, Arkansas, and Rhode Island) required a two-thirds supermajority instead of a three-fifths supermajority to pass the state budget.http://www.ncsl.org/default.aspx?tabid=12654 Supermajority Vote Requirements to Pass the Budget: A Legisbrief Staff National Conference of State Legislatures October 2008 2010-08-23 https://web.archive.org/web/20100823120409/http://www.ncsl.org/Default.aspx?TabId=12654 23 August 2010 live The NCSL also notes that, as of 2008, 15 states required a supermajority to raise taxes and that California was among the 10 of those 15 that require more than a three-fifths supermajority (i.e., a 2/3 or 3/4 supermajority).http://www.ncsl.org/default.aspx?tabid=17421 Legislative Supermajority to Raise Taxes—2008 Staff National Conference of State Legislatures 2008 2010-08-23 Reforms Proponents of ending the state's supermajority requirements note that "Since 1980, the California State Legislature has met the June 15 constitutional deadline for sending a budget to the governor only five times (of thirty budget periods). Only ten times has the brokering been done by the July 1 start of the fiscal year."http://www.stateline.org/live/details/story?contentId=503753 California's Proposition 25 would have "majority rule" on budgets Prah, Amela M. Stateline 2010-08-06 2010-08-23 https://web.archive.org/web/20100828024055/http://www.stateline.org/live/details/story?contentId=503753 28 August 2010 live They sponsored California Proposition 25 (2010), a ballot initiative that changes legislative vote requirements to pass a budget, but not tax increases, from two-thirds to a simple majority. California Proposition 25 (2010) was approved in the state's November 2010 general election ballot. See also California state finances References 30em External links Breakdown of Governor Schwarzenegger's plan Jan 2009- Jun 2011 California state budget website California budget crisis California budget crisis Category:Great Recession in the United States Category:Government of California Category:Economic history of California Category:Government finances in California Category:State budgets of the United States Budget crisis Budget crisis Budget crisis California budget crisis California budget crisis California budget crisis