LAO Analysis Finds Gov. Brown’s Budget Plan Mostly Balanced

Gov. Jerry Brown's (D) fiscal year 2013-2014 budget proposal is "roughly in balance," according to a Legislative Analyst's Office report released Monday, the Sacramento Bee reports.

LAO recommended that lawmakers generally follow Brown's budget plan (Yamamura, Sacramento Bee, 1/15).

Details of Brown's Budget Proposal

Upon releasing his budget plan, Brown said that -- if implemented -- it would leave the state with a budget surplus of $851 million. The plan projects $98.5 billion in revenue and transfers. It estimates $97.7 billion in spending.

Brown's plan includes an expansion of Medi-Cal to individuals with incomes up to 138% of the federal poverty level.  The expansion -- included in the Affordable Care Act -- is expected to add up to 1.5 million newly eligible adults to the program.

Medi-Cal is California's Medicaid program.

Additional health and human services-related items in the proposal include:

• A 4.9% increase in funding for In-Home Supportive Services -- which provides services for the elderly and people who are blind or have disabilities -- and an assumption that the state will be able to implement a 20% reduction in service hours on Nov. 1 to obtain $113 million in savings;
• Increases in Supplemental Security Income and State Supplemental Payout grants for low-income elderly, blind and disabled beneficiaries of $20 per month for individuals and $30 per month for couples; and
• A $142 million increase in funding for Cal-WORKs, the state's welfare-to-work program.

The budget proposal also allocates $1.6 billion for a court-appointed federal overseer to manage continued improvements in the state's prison health care system (California Healthline, 1/11).

Details From LAO Report

Legislative Analyst Mac Taylor said that California is likely to generate $2.1 billion less in revenue and savings than Brown expects.

Taylor said, "That's not a startling difference" between the two budget forecasts (Megerian, Los Angeles Times, 1/15).

In November 2012, LAO projected a $1.9 billion deficit over the next fiscal year.

According to Taylor, the gap between LAO's earlier projection and Brown's budget plan is related to higher tax revenue, increased savings and repayment of loans (Lin, AP/Fresno Bee, 1/14).

In addition, Taylor said that Brown's proposal does not address the growing cost of public retiree health care benefits and teacher pensions. He said, "There's no plan as to how we pay those off."

LAO estimated that unfunded obligations for retiree health care services would total $62.1 billion, while unfunded obligations for teacher's pensions would total $64.5 billion (Los Angeles Times, 1/15).

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