Spending 2012-13



Improving Economy Can’t Keep Up With Spending Growth:

The good news is that California’s economy is growing and tax revenue is on the rise. The Governor projects Big 3 Revenues1 to grow by $4.5 billion in 2012-13. This means more money in the bank to fund priorities like our public school classrooms and public safety.

Unfortunately, the Governor’s Budget would increase spending so much next year that it will outpace the state’s revenue growth:

  • The Governor’s January 2012 budget assumes that General Fund spending will grow $6 billion to $92.6 billion – a 7% increase from the adjusted 2011-12 budget2.

Projected Growth

30% Spending Increase Over Next 4 Years

The Governor’s budget proposal assumes that with his tax increase, General Fund spending will increase $30 billion over the next four years. The average annual increase is 7.4% -- with the highest projected increase occurring in 2014-15 where expenditures are expected to grow $9 billion in one year.

Trigger Cuts

Education Spending:

General Fund spending for California’s K-12 public schools is projected to grow by almost $4 billion – from $34.2 billion in 2011-12 to $38.2 billion in 2012-133. According the Legislative Analyst’s office, the increased cost to taxpayers will not result in additional classroom dollars, despite the Governor’s $6.9 billion tax increase.

There are many factors contributing to the lack of a positive impact on programmatic school funding, even if the Governor’s tax increase succeeds. For starters, his initiative admittedly redirects current school General Fund support to other areas of the state budget. Additionally, the initiative authorizes the calculation of the Proposition 98 minimum guarantee to be manipulated.

Finally, the Governor’s 2011-12 budget used one-time funding shifts and new borrowing. Specifically:

  • $2.1 billion is taken out of the Proposition 98 guarantee because the Governor continues to exclude a portion of the state sales tax from its calculation. This is legally suspect. Education groups filed suit against the state for this effort to manipulate and reduce the Proposition 98 constitutional funding guarantee. The Governor’s tax increase initiative asks voters to permanently authorize this reduction in education funding.
  • Of the spending increases, $2.4 billion will backfill one-time solutions used in 2011-12 which means that the increase in General Fund costs will not result in any additional classroom resources.
  • $2.2 billion would retire a portion of ongoing payment deferrals. Paying back the deferral will help schools with cash flow but will not add any more dollars into the classroom.

Health and Welfare Spending:

Accounts of draconian cuts in health and human services have dominated the news recently. However, according to the Governor’s budget health and human services programs are projected to see only a small decline in spending, $254 million or 1%, under the Governor’s proposal3.

However, a December 29th court ruling prohibits the state from reducing In Home Supportive Services (IHSS). This will mean that the state will lose $300 million in Health and Welfare services savings. As a result, costs will be flat year over year. According to the Legislative Analyst’s Office, health and human services program costs would have climbed by $900 million in 2012-13 without the Governor’s proposed budget savings ideas.

Medi-Cal is still the fastest growing health and human services program which is projected to grow an average of 6.8% from 2011-12 to 2016-17.


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1 Big Three Revenues include Sales and Use, Personal Income and Corporation Taxes. Big Three Revenues make up between 80 to 85% of all available funding for General Fund programs.
2 According to the non-partisan Legislative Analyst, spending would top $95.8 billion, a 14.3% growth rate without the Governor’s efforts to reign in fast growing programs.
3 Governor’s Budget Summary 2012-13, page 17