Eleanor Finch
California's budget process is dynamic, with changing instructions, descriptions, forms, and procedures. The state Constitution establishes the rules of the budget process, which include allowing lawmakers to approve spending with a simple majority vote and requiring a two-thirds vote to increase taxes. The governor plays a crucial role in the budget process, proposing a state budget for the upcoming fiscal year and having veto power. The Legislature passes the Budget Act by the constitutional deadline of June 15 and sends it to the governor. The budget passed by the Legislature must be balanced, and projected expenditures must not exceed projected revenues for the fiscal year. The budget process involves negotiations between the governor and legislative leaders to reach an agreement. California's budget decisions aim to express the values and priorities of the state and address essential services such as education, healthcare, and housing.
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What You'll Learn
The Governor's Budget must be accompanied by a Budget Bill
The Budget Bill is a legislative document that outlines the state's spending plan for the upcoming fiscal year. It is crafted by the Governor and their staff, in collaboration with various state agencies and departments, to outline the state's priorities and allocate funding accordingly. The Bill provides a comprehensive framework for the state's finances, covering everything from revenue estimates to expenditures across various programs and services.
The Governor is responsible for submitting the Budget Bill to the Legislature. This typically occurs in early January, at the start of the regular session. The Governor presents the Bill before the Legislature, often with a detailed message outlining their budgetary priorities, policy initiatives, and any proposed changes from the previous year's budget. This marks the official start of the legislative process for the state's budget.
The Legislature then reviews the Governor's Budget Bill and engages in a thorough analysis and discussion of the proposed spending plan. This process involves hearings, negotiations, and amendments as the Legislature works to shape the final budget. The Legislature may make adjustments to the Governor's proposals, ensuring that the final budget aligns with the state's needs and the priorities of the elected officials.
During this legislative process, the Budget Bill undergoes scrutiny by the appropriate committees, including the Assembly Budget Committee and the Senate Budget and Fiscal Review Committee. These committees hold hearings, invite testimony from state agencies and stakeholders, and make recommendations for amendments or changes to the Bill. This part of the process allows for public input and expert feedback, helping to refine and improve the budget proposal.
Once the Budget Bill has been reviewed and amended by the Legislature, a final vote is held in both the Assembly and the Senate. Passing the Bill requires a simple majority vote in both houses. If the Legislature fails to pass the Budget Bill by the constitutional deadline of June 15, it can lead to a loss of legislative pay until a budget is enacted.
After the Budget Bill is passed by the Legislature, it is sent back to the Governor for final approval. The Governor has the power to sign the Bill into law, allow it to become law without their signature, or veto specific items or the entire budget bill. If the Governor chooses to veto any part of the Bill, the Legislature can override the veto with a two-thirds vote in both houses. This back-and-forth process between the Governor and the Legislature ensures a system of checks and balances, resulting in a final budget that reflects a consensus between the state's executive and legislative branches.
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The Legislature must pass the Budget Bill by June 15
The California state budget process is dynamic, with changing instructions, descriptions, forms, and procedures. The state Constitution establishes the rules of the budget process, with the governor taking the lead role. The governor proposes a state budget for the upcoming fiscal year, which gives them the first word in each year's budget deliberations. The May Revision gives the governor another opportunity to set the budget and policy agenda for the state.
The budget process provides an opportunity for Californians to express their values and priorities as a state. The rules allow lawmakers to approve spending with a simple majority vote, but a two-thirds vote is required to increase taxes. Voters periodically revise the budget process by approving constitutional amendments.
The budget process involves strategic cuts, one-time loans, and policy delays to preserve core services. It also includes adjustments to expenditures for school funding requirements pursuant to Proposition 98, caseload, enrollment, or population. The budget process can be challenging, with rising costs across sectors and falling tax revenues. It also involves complex considerations such as expenditures, revenues, and funding sources.
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Projected expenditures must not exceed projected revenues
The State Constitution of California requires that the governor propose a budget for the upcoming fiscal year on or before January 10. The budget must be balanced, meaning that estimated revenues must meet or exceed the governor's proposed spending. This is further supported by Article IV, Section 12(a) which states that if recommended expenditures exceed estimated revenues, the governor must recommend the sources from which additional revenues should be provided.
The Constitution also prohibits the Legislature from sending, and the Governor from signing into law, a budget bill that would appropriate from the General Fund a total amount that, when combined with all appropriations from the General Fund for that fiscal year and any amount transferred to the Budget Stabilization Account, exceeds General Fund revenues for that fiscal year. This is further supported by Article XVI, Section 1, which limits the Legislature's ability to incur debt of more than $300,000 unless a measure is passed by a two-thirds vote and adopted by the electorate.
The Department of Finance is responsible for proposing adjustments to the Governor's Budget through "Finance Letters" in the spring. The Department is required to provide the Legislature with all proposed adjustments, excluding Capital Outlay and May Revision, by April 1. Capital Outlay adjustments are due by May 1, and the May Revision updates, which include an update of General Fund revenues and changes in expenditures for school funding requirements, are due by May 14.
The Legislature typically waits for the May Revision update before making final budget decisions on major programs such as Education, Corrections, and Health and Human Services. Once a subcommittee completes its actions, it reports its recommendations to the full committee. Upon adoption of the budget by the full committee, a recommendation is made to the Floor (full house).
The Constitution also requires that the Legislature pass the budget bill by June 15. This bill must be balanced, meaning that estimated General Fund revenues must meet or exceed General Fund spending. The budget package may generally be passed by a simple majority vote of each house of the Legislature.
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A simple majority vote is required to approve spending
The California Constitution outlines the
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A two-thirds majority vote is required to increase taxes
California's budget process is dynamic, with changing instructions, descriptions, forms, procedures, and law changes. The state Constitution establishes the rules of the budget process. While lawmakers can approve spending with a simple majority vote, a two-thirds majority vote is required to increase taxes. This requirement was established by Prop. 26 of 2010, which expanded the definition of a tax increase and, consequently, the scope of the two-thirds vote requirement initially imposed by Prop. 13 of 1978.
The California Constitution outlines rules for a range of legislative actions, including passing the state budget, increasing taxes, and placing constitutional amendments on the ballot. Some actions require only a simple majority vote in each legislative house, while others, like tax increases, necessitate a two-thirds vote in both the Assembly and the Senate. This "supermajority" threshold holds significant influence, as it sets a high bar for certain budget decisions and policy choices in the Legislature.
The budget process in California involves the governor, who takes the lead role. The governor proposes a state budget for the upcoming fiscal year, giving them the first word in the budget deliberations. The Legislature then reviews and revises the governor's proposals, making alterations and advancing their own initiatives before negotiating an agreement with the governor. The Legislature can provide more funding than required, but it generally serves as a maximum funding level.
The California Two-Thirds Legislative Vote and Voter Approval for New or Increased Taxes Initiative, proposed in 2024, aimed to amend the state Constitution. This initiative would have defined all state and local levies, charges, and fees as taxes, requiring new or increased taxes to be passed by a two-thirds legislative vote in each chamber. Additionally, it would have increased the vote requirement for local taxes proposed by local governments or citizens to a two-thirds vote of the local electorate. However, this initiative faced opposition from various organizations, including the California State Association of Counties, which argued that it would undermine the rights of local voters and officials to make decisions on critical local services.
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Frequently asked questions
The constitutional deadline for the Legislature to pass the Budget Act is June 15.
The Department of Finance must submit all proposed adjustments, other than Capital Outlay and May Revision, to the Governor’s Budget by April 1. Capital Outlay adjustments are due by May 1, and the traditional May Revision adjustments are due by May 14.
The Governor must submit a unified budget to the Legislature within the first 10 days of the calendar year. The budget must be accompanied by a Budget Bill itemizing recommended expenditures, which shall be introduced in each house of the Legislature.
