1. California Budget Sandra M. Emerson

2. California Budget Prospects General Fund in the red for next five years

3. Projected Revenue (billions) Source 2007-82008-92009-102010-112011-122012-132013-14 Income 54.350.346.349.054.7458.0261.5 Sales 26.625.426.127.729.4031.2033.1 Corp. 12.010.99.18.58.909.109.5 Other 5.64.85.56.38.009.7011.4 Sum 98.591.487.091.5101.04108.02115.5..▼▼▲▲▲▲

4. Volatile Revenue Areas Corporate Income Tax (NOLs) Personal Income tax < $50K IncomePopulationTax Percent < $50, 00050%6% $51,000 to $100,00020%14% Over $100,000 Over a million 30%.0025 est. 80%** $15 billion (capital gains)

5. The Persistent Gap 2007-82008-92009-102010-112011-122012-132013-14 REVENUE98.591.487.0591.5101108.02115.5 EXPENSE103.6104.5106.3111.7117.08133.52129.155 GAP**-5.1-13.1**-19.25-20.2-16.04-15.50-8.65 Growth▼▼▼▼▼▼

6. Major Spending Areas Education Health/social services And all else including debt

7. Education K to 14 YEAR2008-92009-102010-112011-122012-132013-14 TOTAL$58.1$54.3$55.6$58.3$61.2$64.3 PROPERTY Tax Revenue ($15.7)(15.5)(15.6)(15.9)(16.4)(17.1) General Fund amount $42.4$38.8$40.1$42.4$44.9$47.2 Change-6.4%2.4%4.8%5%

8. Higher Education Projected Expenditures in University Ed. YEAR2008-92009-102010-112011-122012-132013-14 UC3.13.113.163.223.33.4 CSU2.93.00 3.143.23.3 TOTAL6.06.116.166.366.56.7 Change--2%.8%3.2%2.2%3%

9. Health and Social Services YEAR2008-92009-102010-112011-122012-132013-14 Spent31.032.634.636.538.640.9 Change--5%6%5%5.7%5.9%

10. Other 2008 to 2014 Corrections and Rehabilitation average annual increase of 5.3% Transportation annual increase of 4.5% Everything else: 9.2% annual increase Debt services 9.9% annual increase.

11. Outcomes Propositions 1A-1F 1A to 1E to raise revenue defeated. 1F passed- no legislative pay increases during budget deficit.

12. Summary Rise in revenue by 2011 Shrinking gap but persistent through 2014 Based on steady state analysis

13. Comments or Questions?