California budget projects $4 billion more revenue; sets automatic cuts if money falls short

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Mike Roe/KPCC

The California State Capitol building in Sacramento.

The state budget agreement that Democrats plan to vote on today relies on fairly rosy state revenue projections to close a $9.6 billion deficit. The plan also establishes a series of automatic cuts that take effect mid-year if revenue falls short. Here's how the so-called “trigger cuts” will work.

Democrats project the state will collect $4 billion more in revenue by the end of the next fiscal year than previously projected. H.D. Palmer with the state’s Department of Finance says that’s based on the latest analysis.

He says California’s revenues are $4 billion higher than expected for the fiscal year that ends this week.

"Our revenue forecasters at the Department of Finance – career civil servants, non-partisan, don’t put their thumbs on the scales – have said that taking our forecast up by $4 billion is reasonable given all the information they’re seeing at this point."

In December those revenue forecasters will revise their estimates. If the revenues fall at least a billion short of the $4 billion projected, then pre-approved cuts to state services would take effect in January.

Palmer says the depth and breadth of the cuts depends on how much or how little of the revenue comes in.

"The idea was to scale or tier the level of triggered cuts so that the most difficult ones as it relates to K through 12 education would only happen in a worst case scenario."

If California collects at least $3 billion, no cuts would go through. If revenues fall short, the first cuts would be to higher education, corrections and health and human services. And if revenues fall $2 billion short, that’s when the state would cut $2 billion from public schools and would allow districts to shave up to seven days off the school year.

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