Governor Schwarzenegger Announces Budget Agreement

 

Governor Arnold Schwarzenegger today announced a 2005-2006 budget agreement with Legislative leaders that does not raise taxes, contains no new borrowing, pays down our debt and invests in education, transportation, public health and public safety. 

 

"Together we have reached the best budget agreement California has seen in years, proving again that when we are a unified team we are unstoppable. This budget does not raise taxes or increase borrowing. It provides $3 billion more for our schools, provides $1.3 billion more for crucial transportation projects and invests in both public health and safety," said Governor Schwarzenegger. "This is a budget to put us on the path toward rebuilding California. Now we must work together to reform and repair our broken budget process and break the cycle of budget deficits so that nothing will stand in the way of creating more prosperity and opportunity in California than ever before."

 

The 2005-2006 budget agreement:

 

- Is balanced and contains no new taxes and no new borrowing.

- Funds education at the highest level in the history of California by increasing K-14 funding by nearly $3 billion and going beyond Proposition 98 requirements. 

- Pays down our debt and invests in public safety and local services by paying back all of the $1.2 billion in funds owed to cities and counties one year early.

- Puts $1.3 billion in gas taxes into California's roads and transportation system by fully funding Proposition 42 for the first time so Californians can spend more time at home and less time on the road.

- Invests in health care through education programs that will increase the number of nurses in the face of a growing nursing shortage.

 

Specifically, the budget agreement provides the following in the areas of: education funding, transportation, local government funding and increasing the number of nurses in California.

 

Education:

 

- This year, total education funding including California State University and University of California funding will rise to more than $61 billion, the most ever spent on education in California.

- State funding to K-12 and higher education will total $50 billion, more than 50 percent of the state budget.

- True to the Governor's May budget proposal, education will receive a $3 billion increase, going beyond Proposition 98 requirements. 

p Per pupil spending will increase to an all-time high of more than $10,000.

- University of California and California State University student fees will continue to be lower than comparable universities across the country.

- California Community College fees will remain the lowest in the nation.

 

Paying Back Cities and Counties Early:

 

This budget pays off all of the $1.2 billion state debt to cities and counties one year early. This means:

- More savings for taxpayers and more funds for important local services like law enforcement, firefighting and vital health services. 

- A reduction in next year's budget debt.

 

Investing in Transportation:

 

The new budget will fully fund Proposition 42, putting $1.3 billion in taxes paid at the gas pump directly back into transportation construction. The budget's investment in roads and transportation infrastructure will create jobs, improve our economy and get Californians out of traffic so they can spend time doing the things they enjoy.

 

Increasing the Number of Nurses in California:

 

By 2010, California will have a shortage of 47,600 nurses.  That shortage will have grown to 116,000 vacant nursing jobs by 2020.  In March, Governor Schwarzenegger announced the release of $13 million in funds to support statewide nursing job-training and education initiatives.  In April, he announced the California Nurse Education Initiative, a public-private partnership to provide an added $90 million in funding for nurse education. This budget expands upon that initiative with an additional $20 million to help California produce more nurses by: 

 

- Offering loan forgiveness to graduate level nursing students to encourage more nurses to become faculty.

- Purchasing simulators to create regional simulation laboratories so that more nursing students have access to clinical education facilities.

- Increasing slots in high-demand nursing programs within the California Community College system.

 

The 2005-2006 budget will put California on the path toward rebuilding to make our state great once again. However, California still has a budget system that allowed the state to incur a $22 billion debt which the Governor inherited upon taking office.  Without reform, that system could bring the state to the brink of bankruptcy again.  Reforming the budget process is essential to keeping California on the path of progress.

Southwest California Legislative Council Supports

Vehicle License Fee Gap Funding ($593 Million)

 

The Southwest California Legislative Council (SWCLC) is urging Governor Schwarzenegger and the State Legislature to adopt a state budget that includes $593 million for early, partial repayment of the 2003 vehicle license fee (VLF) gap loan, AND $25 million as appropriated by the Legislature’s Budget Conference Committee for “hardship” payments relating to the unpaid balance of the VLF gap loan (cities or counties), or booking fee subventions (cities and special districts). 

 

The Legislature has not passed the state budget.  During the Senate and Assembly floor debates on the budget, some legislators spoke up strongly in support of restoring the $593 million appropriation for early, partial repayment of the $1.1 billion 2003 VLF gap loan that had been proposed in the governor’s May budget revision and adopted by the Senate, but not adopted in the budget bill sent to the respective house floors by the Budget Conference Committee.

 

We understand that negotiations involving the governor and legislative leaders are ongoing.  There is a real need in these, as in all negotiations, for give and take among the parties.  The governor and the Director of the Department of Finance continue to speak out in support of using a portion of the state’s one-time increase in revenues to reduce the state’s overall deficit by paying down a portion of the VLF gap loan in FY 2005-06.  The League strongly supports this approach as one that is fair to cities and counties, positive for the state’s fiscal health, and which will restore much-needed funding to pay for vital local services. 

 

Additionally, we support the Budget Conference Committee proposal to allocate $25 million in hardship payments for VLF (cities and counties) and booking fees (cities and special districts).  Cities, special districts and counties are each contributing $350 million this year and next year to help the state solve its budget problem.  An appropriation to help local governments facing particular hardships is an appropriate use of the state’s one-time revenue increases.

 

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