This morning the Department of Finance released the Governor’s proposed 2009-10 budget. (This is an early release, in advance of the Constitutional January 10th deadline for the Governor’s proposed budget.) Included in the Governor’s budget to address the $41 billion dollar projected state deficit is a proposal that would redirect $275 million of First Five funding this budget year.

Specifically, the Governor’s budget proposes to eliminate the state-level California Children and Families Commission and redirect its funding, along with 50% of the funding for local First Five commissions. Unlike the proposals we have seen to redirect First Five funds to provide health coverage for all children, the Governor’s 09-10 proposal would use First Five funds to support various children’s programs administered by the Department of Social Services, thereby sustaining those programs and relieving pressure on the state General Fund. (Note that the Department of Finance states that this proposal would not reduce existing First Five local reserve funds.) This proposal would likely need to be approved by the voters in an initiative.

The AAP-CA’s policy is that First Five funds should remain dedicated for use in the current First Five structures and process. We need to review forthcoming specifics of the Governor’s budget proposal (and any related initiatives), but at present the proposal certainly seems to run contrary to existing AAP-CA policy.

2. Budget Overview: Key Components (based on The Sacramento Bee’s story 12-31-08):

Today’s proposal by the Governor calls for a temporary increase in the state sales tax, expanding the sales tax to cover some services, a nickel-a-drink alcohol tax, a new tax on oil production and a $12 hike on vehicle registration fees.

It also calls for $15.4 billion in spending cuts, including requiring state employees to take two-days-a-month unpaid furloughs through June 30, 2010 and give up two paid holidays each year.

Other elements include reducing the dependent care exemption on state income tax returns from the current $309 per dependent to $103; carrying over some of the deficit into the 2010-11 fiscal year; borrowing funds from voter-created programs that service the mentally ill and pre-kindergarten children's health services (Prop 63 and Prop 10); changing the operating rules for the state lottery in an effort to make it more profitable, and borrowing $4.7 billion from the private sector.

The first two of these would require legislative approval. The third and fourth would also require voter approval. The fifth, Genest said, would require the financial market to get much healthier than it is now, and the state to have both a balanced budget in place and a "plausible" plan to pay the money back.

3. Next Steps for AAP-CA

We will carefully review the entire proposal to see which components of the Governor’s 09-10 budget we can support and which we may move to oppose, consistent with AAP-CA policy. An AAP-CA letter will be drafted to the Governor and the Legislature advising them of our position. We will be contacting Chapter SGA representatives to begin grass roots lobbying on the budget once this letter is complete. We will also work with our allies, including CMA, in joint advocacy efforts, as appropriate.