On January 10, 2017, Governor Brown released his proposed 2017-2018 State Budget. Once again Brown emphasized “budget prudence” by reiterating “deficits are always much larger in magnitude than surpluses.” Brown continues to discourage spending money on programs that improve the lives of Californians and restoring programs that were once cut.
In the big picture, the Governor’s budget proposes $122.5 billion in General Fund expenditures, a slight reduction from the 2016-2017 budget. It also assumes an increase of $5.2 billion in General Fund revenues compared to last year. Over the course of the next three fiscal years, the 2017-18 budget assumes a $1.6 billion deficit in the next budget year and $1 to $2 billion deficits in future years, if left unaddressed. In addition, the Administration socked away another $1 billion into the Proposition 2 rainy day fund to pad the nearly $8 billion balance and prepare for future deficits.
State Employee Compensation
The Budget adds $1.2 billion for increased employee compensation, health care costs for active state employees and retiree health care prefunding for active employees in 2017-18. This money will cover salary and benefit increases resulting from collective bargaining (20 of the 21 state bargaining units have reached agreement on new MOUs), pay increases due to the increase in the minimum wage, and calendar year increases in health care enrollment.
State CalPERS Contribution
The budget includes $5.3 billion for state contributions to CalPERS for state pension costs. This includes an additional $172 million to cover the costs associated with the recent CalPERS board decision to reduce the current 7.5 percent discount rate to 7 percent over the next three budget years. This change is projected to increase state cost by $2 billion when the discount rate changes are fully implemented.
Civil Service Reform
According to the summary, “the budget includes $2.8 million in reimbursement authority for the Department of Human Resources to expand the capacity of the statewide training center, providing additional streamlined and tailored instruction for civil service employees.” The stated goal is to allow state departments to quickly recruit, hire, train, and develop employees. The budget trailer bill language to implement these changes is not available yet. When the trailer bill is released, ACSS will provide updates.
State Employee Position Increases, Funding Proposals
The budget foresees the creation of an additional 941 state employee positions in 2017-18 for a total of 208,542. Last year, there were 3,000 new positions. Here is a rundown on some of the new positions and funding proposals outlined in the budget summary:
- Department of Consumer Affairs – $22 million – Regulate transportation, storage, distribution and sale of cannabis. Also responsible for licensing, investigation, enforcement, and coordination with local governments
- Department of Public Health – $23 million – Licensing and regulation of product manufacturers.
- Department of Food and Agriculture – $23 million – Cannibis Cultivation Program administrative oversight, issue cannabis cultivation licsenses, perform Environmental Impact Reports.
- Board of Equalization – $5 million – notify new businesses of new tax requirements, update technology systems to register businesses, process tax returns from retail sales.
- Department of Health Care Services – $5 million – implementation of the Public Information Program as specified in Proposition 64.
California Highway Patrol
- IT Privacy and Risk Management – $1.8 million – establish a Privacy Risk Management program, address CHP’s information technology needs.
- Cloud-Based Disaster Recovery Solution – $1.2 million – Replace the tape-based system.
Department of Corrections and Rehabilitation
Transfer of Psychiatric positions to the CDCR – The Department of State hospitals provides in-patient services at three CDCR prisons (California Health Care Facility in Stockton, Salinas Valley State Prison in Soledad, and California Medical Facility in Vacaville). The budget proposes to transfer these services to CDCR effective July 1, 2017, and redirects $250 million and 1,977 positions for this purpose.
Department of Developmental Services
The Budget includes an increase of $597,000 and 4 positions to provide increased oversight of community housing projects, funded through the Community Placement Plan, and to maintain focus on the development of community housing to support the developmental center closures.
Department of Motor Vehicles
- 91 positions for processing and investigating license applications
- 5 positions for implementation of new legislation
Department of Public Health
- Proposition 56 – 57 positions ($223 million) for dental, law enforcement, tobacco prevention programs.
Department of Transportation
- 10‑year funding plan that would generate almost $43 billion from new fees and tax increases.
Department of Water Resources
- Sustainable Groundwater Management Act Implementation - An increase of 29 positions ($15 million) for statewide technical assistance, data gathering on a statewide level.
- Irrigated Lands Regulatory Program – 5 positions ($1 million) for the State Water Board to address contamination of groundwater basins from agricultural practices.
- 5 positions ($2.3 million) and $1.5 million in contract funds to enforce and protect local groundwater resources.
The Governor’s complete budget summary and draft budget can be found here: www.ebudget.ca.gov.
As we delve into the details we will let you know if there are any other budget proposals that impact ACSS and its members. Please let us know if you have any questions.