The revision of the 2005-2006 budget is scheduled to be released
today and is anticipated with optimism by some, but caution by
others.
Recently, there has been talk in the media and out of Sacramento
about an increase in the California budget this year ““ by a
few billion dollars.
But experts have questioned this figure and say it is not a true
increase because much of that money will not stay in state
hands.
The most likely recipients of additional funds in the May revise
are transportation and K-12 education. The UC does not expect to
see any changes in the funding from the state compared to the
governor’s January draft of the budget.
“We have the compact with the governor, which really
helped to provide some framework and predictability for our funding
from the state,” said Ravi Poorsina, a spokeswoman for the UC
Office of the President.
“We’re confident that he’s going to go through
with (that).”
The university made a compact with Gov. Arnold Schwarzenegger in
May 2004.
It outlined the state funding the UC would receive over the next
several years.
Other areas may see additional funding because this year’s
budget leaves more room to maneuver.
“The good news is there’s more money than they
expected in January,” said Bruce Cain, a professor of
political science at UC Berkeley.
“So therefore, there’s reason to be
optimistic.” .
Cain said he expects transportation and K-12 education to be the
most likely places where additional funding will go.
Some say the motivations for this are more political than
economic.
“The governor has been criticized for taking money out of
the transportation funding and K-12,” said Daniel Mitchell, a
professor of management and public policy at UCLA.
“He may feel that he needs to do something to send off
some of that criticism.”
But some economists say that the increase to funding is not as
good as it looks on the surface.
“There was this extra four billion plus that came in, but
it’s more like a loan or an escrow account,” Mitchell
said.
It is not a sum of $4 billion that can be spent at the
state’s discretion.
The state acquired the money primarily through loans and deals
with various institutions, like schools, casinos and local
governments, Mitchell said.
“There was all this deal making that went on and that
really hasn’t been featured (this year),” he said.
The deals were one source of revenue last year, but Mitchell
also pointed out that the amount of money increases every year,
right along with expenses, so an absolute increase in the size of
the budget is not so important.
More important is that the state continues to have more expenses
than revenue.
“We had a structural budget deficit and we still have a
structural budget deficit,” he said.
But with all the internal sources of revenue exhausted, there
are now fewer recourses for the government.
California cannot borrow more from schools, the casinos or local
governments, Mitchell said.
The state has cut this source of funding not only because there
is no more money to be had, but because many feel that the governor
did not hold up his end of the bargain, said Norton Grubb, a
professor in the School of Education at UC Berkeley.
So with some atmosphere of mistrust and little more money to be
had anyway, the state has fewer places to get money.
“There’s no place else to turn this time around …
There’s no place to fall back on,” he said.
Much of the additional money the state may have needs to be used
to repay debts so it is not available for funding of programs,
Mitchell said.
“Even if we did have some surge in revenue, we’ve
been borrowing money right and left for years,” Mitchell
said.
All that money is going to have to be repaid, which takes a
large bite out of the pool of money in the state’s hands.
But Cain said it can be hard to predict Schwarzenegger’s
budget plans until they are signed and finalized in the summer.
“Arnold is famously, shall we say, able to change his
mind, willing to change his mind,” Cain said. “You
can’t ever say that something is certain.”