Budget Questions: Test your skill Frame: focus on process and revenues…cuts will be discussed after release of Gov’s Budget Summary

What is the size of the 2009-10 General Fund (as measured by revenues and transfers)? A: $89.5 billion B: $89.5 million C: $102 billion D: $50 billion

A: $89.5 billion

What is the current projected budget gap between now and the end of 2010-11? A: $10.7 billion B: $20.7 billion C: $6.3 billion D: $14.4 billion

B: $20.7 billion ($6.3 billion in 2009-10 and $14.4 billion in 2010-11)

By what date does the Governor have to submit his initial Budget Summary to the Legislature? A: June 15 B: December 1 C: January 10 D: June 30

C: January 10 (this is mandated by the Constitution)

By what date is the legislature supposed to pass the budget bill? A: June 15 B: December 1 C: January 10 D: June 30

A: June 15

In which month was the budget passed for 2009-10? A: February B: December C: June D: January

A: February (and then it was amended in July)

True or False: As things currently stand, the Governor is legally capable of slashing state workers’ wages to the federal minimum wage if the budget is not passed on time.

TRUE Where things are currently: The Governor issued the Exec Order, Controller Chiang went against it. The Sac Superior Court, citing White v. Davis of 2003, said Schwarzenegger did have the right to do this. We will have fully submitted our appeal to this decision by the end of the month. Chiang, other unions also appealing. The appellate court will likely issue a decision this spring, which can then be appealed to the state Supreme Court.

Which of the following tax changes was NOT a proposal made in the recent Commission on the 21st Century Economy (or, “Tax Commission”)’s report? A: Do away with the state Sales Tax B: Flatten the Personal Income Tax C: Do away with the Child Care Tax Credit D: Do away with Corporate Tax E: Do away with the Renter’s Tax Credit F: Adopt an untested new tax, the “Business Net Receipts Tax”

What taxes were temporarily increased in the budget passed in February What taxes were temporarily increased in the budget passed in February? (Pick all that apply.) A: State Sales Tax B: Corporate Income Tax C: Personal Income Tax D: Vehicle License Fee

A: State Sales Tax C: Personal Income Tax D: Vehicle License Fee only corp tax wasn’t increased (-State sales tax went up 1% […state rate is usually 6.25 percent—5 percent for the General Fund, 1 percent for specified local purposes, and 0.25 percent to pay off the deficit-financing bonds. The SUT on gasoline is diverted to transportation-related special funds.] -VLF went up from .65% to 1.15% -PIT brackets went up .25%)

When do these temporary tax increases expire? A: Never B: In January C: June 30, 2011 D: After Schwarzenegger leaves office

C: June 30, 2011 D: After Schwarzenegger leaves office

About what % of all General Fund Revenues come from the state’s “big three” taxes (Personal Income Tax, Sales and Use Tax, and Corporate Income and Franchise Tax)? A: 10% B: 100% C: 95% D: 50%

C: 95%

In which fiscal year does the LAO predict that sustained revenue growth will begin again?

C: 2012-13

True or False We will see “new” revenues beginning in the middle of 2010-11?

True Increase in estate taxes for the state (briefly explain restoration of state “pickup” tax exemption. Beginning in 2011-12, this is a projected $1.8 billion per year)

True or False The bank bailout was part of the $787 billion ARRA recovery act funds.

False The Recovery Act provided $787 billion for $288 B (37%) in tax breaks to individuals and business $154 B (19%) for infrastructure, energy, science $144 B (18%) in state fiscal relief $112 B (15%) for healthcare, education & training $81 B (10%) on support for low income households The public confuses the $787 billion for ARRA with the bank bailout ($700 billion TARP) and the auto bailout & doesn’t understand how ARRA was structured   Of that, $18.5 billion was awarded to California so far. As reported by the state government in California, the stimulus has saved over 110,000 jobs. Currently a second stimulus package is being discussed, but no decisions have been made and the right is putting pressure on Congress to worry more about the deficit than about jobs and working families.

Which of the following was an actual statement by the LAO in a recent presentation? A: “The next two years will be better than this year” B: “Who knows what will happen over the next two years?” C: “The next two years will be brutal”

C: “The next two years will be brutal” This was followed by…”We do expect relief after that. Our task – at the state and local level – is to hang on until then.”)