California’s Share of Federal Economic Stimulus Cash

While the package of bills created to close California’s estimated $41 billion gap between revenues and spending commitments was never the subject of a single public hearing, one of the bills in the package creates a future public hearing. 

And an interesting one at that. 

Some good things happen to California’s budget, depending on how much of a share of federal economic stimulus cash the state receives. 

The Department of Finance estimates that California will receive at least $7.8 billion. However, if the state receives $10 billion or more, the funds would be used to reduce one of the temporary tax increases, reduce spending cuts by $950 and forestall the need to borrow $5.4 billion in short terms notes known as Revenue Anticipation Warrants. 

Prior to any of that happening, there has to be a public hearing on the subject attended by Mike Genest, director of Governor Schwarzenegger’s Department of Finance, and State Treasurer Bill Lockyer or their designees.  

That’s the gist of AB 16 XXX. The hearing has to be held before April 1, 2009. At this hearing, the two men will determine if new federal revenues total $10 billion or more. 

If so, the revenue anticipation warrants won’t be issued and a personal income tax surcharge of .25 percent will be halved to .125 percent, cutting revenue from the increase  – as well as taxpayer write-offs against federal taxes —  from $3.6 billion to $1.8 billion. 

Spending cuts totaling $947 million would also be erased. AB 16 XXX doesn’t say which cuts but Section 8.30 of AB 1 XXX, the 2009-2010 budget act, does. 

(Editor’s Note: Should one link to AB 1 XXX, go to the end of the bill then move slowly back through the sections – the final one is SEC. 99 — until reaching SEC 8.30.) 

The University of California and California State University system would each get $50 million back, restoring the budget’s across-the-board cuts made in addition to the $132 million proposed by the governor.  

 California’s judicial branch would get back $100 million cut from the $1.7 billion  that pays for trial court costs.  Another $70.6 million in cuts would return to pay for creating new judgeships. Compensation for superior court judges is increased by $9 million as well. 

The 4 percent reductions in the grants paid to welfare recipients contained in the budget would disappear, a $147 million expense. Another $78 million would used to maintain the state’s wage contribution level to In-Home Support Services workers at $12.10 per hour, rather the budget’s reduction to $9.50 an hour,  

Support checks to the state’s poorest aged, blind and disabled would not be cut by $20 a month for individuals and $35 for couples, a $267 million expense. 

Elimination of some optional benefits under Medi-Cal, the state’s health care program for the poor, would be avoided by spending $129 million in stimulus money. 

And a 10 percent cut in children’s medical services and the South Los Angeles Medical Services Preservation Fund is avoided with another $54 million in federal money. 

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