California's Governor Budget: Lawmaking Process

The process of turning the governor's January budget proposal into law in California is a multi-step, multi-month process that involves the governor, the Legislature, lobbyists, interest groups, and the public. The state's budget provides a framework and funding for critical public services and systems, from child care and health care to housing and transportation. It is a lengthy process that begins in the summer and continues through the fall, with the governor releasing their proposed state budget by January 15th. The budget proposal is then reviewed and revised by the Legislature, which consists of the Senate and Assembly, who work together to form a Conference Committee to negotiate and agree on a single proposed budget. The governor then reviews and signs the final budget by June 15th, which takes effect on July 1.

The governor proposes a budget by 10 January

The California state budget is a complex, multi-step process that involves the governor, the Legislature, lobbyists, interest groups, and the public. The process begins with the governor's proposal, which is required by the state constitution to be introduced by January 10. This proposal serves as a rough draft, outlining the state's anticipated finances and expenditures for the upcoming fiscal year. The governor's office predicts the budget surplus or deficit based on expected revenue from federal funds, state taxes, and other sources.

The Director of Finance, as the chief financial advisor to the Governor, plays a crucial role in this initial stage. Under the policy direction of the Governor, the Director of Finance issues instructions and guidelines for budget preparation to agencies and departments. These agencies and departments submit their baseline budgets and Budget Change Proposals (BCPs) to the Department of Finance for review and analysis. The BCPs propose changes to the existing budget level, and the Department of Finance coordinates the preparation of the Governor's Budget package.

The Governor's Budget package includes the Governor's Budget Summary, which outlines the governor's goals, objectives, and policy perspectives for the forthcoming year. It also includes the Governor's Budget, a detailed presentation of authorized expenditures and positions by department for the past, current, and upcoming budget years. The Governor typically unveils the budget at a formal press conference.

The budget proposal must be balanced, meaning that if the proposed expenditures exceed estimated revenues, the Governor must recommend additional funding sources. The Governor's Budget must also be accompanied by a Budget Bill, which itemizes recommended expenditures and is introduced in each house of the Legislature. The Constitution mandates that the Legislature pass this bill by June 15.

The budget process in California is a dynamic and intricate procedure that involves the collaboration of various entities and is subject to political interactions, relationships with other governments, public input, legal issues, economic factors, and more. While the process can be challenging to navigate due to the state's complexity and dynamics, it is designed to ensure an orderly and formalized approach to fiscal decision-making.

The Senate and Assembly draft their own budgets

The Senate and Assembly budget committees and subcommittees meet and discuss the spending plan. However, these discussions mostly frame ongoing negotiations with the governor. This is typically the stage, after the May revision, when the Legislature makes decisions on major programs such as education, corrections, and health and human services.

The Senate and Assembly begin the process of drafting their own budgets immediately after the governor releases his proposed state budget, which happens every January. Groups with "budget asks" appeal to legislators, particularly members of the Senate and Assembly Budget Committees, to incorporate their budget asks into the Legislature's version of the budget.

"Budget asks" go through a hearing process, which is different from the hearing process for bills. Instead of starting in one house (Senate or Assembly) like a bill, budget asks are heard simultaneously in both houses by each house's "budget subcommittees." Groups with "budget asks" often testify at these hearings to make their case for funding. They explain why their programs should receive money in next year's state budget. Through this process, the Assembly and the Senate craft their respective proposed budgets.

Eventually, both the Senate and Assembly have their budget proposals. Leaders from each house, including the Senate President and the Assembly Speaker, then get together, forming the "Conference Committee." Their job is to hash out differences, negotiate, and come to an agreement on a single proposed budget. "Budget asks" that survive this process remain in the Legislature's budget proposal, which then goes to the governor.

Budget asks are heard in both houses

The "budget asks" or "budget plays" are requests for funding from California's General Fund. They are made by groups to legislators, rather than being written by legislators (like bills). The "budget asks" are heard in both houses by each house's "budget subcommittees". Groups with "budget asks" often testify in these hearings, explaining why their programs should receive money in the next year's state budget.

The Assembly Budget Committee and the Senate Budget and Fiscal Review Committee are the two committees that hear the Budget Bills. They assign the items in the bill to several subcommittees (by major subject areas such as Education or Health and Human Services) which conduct budget hearings. These hearings generally begin in late February, soon after the Legislative Analyst issues their overview of the Governor's Budget.

The Legislative Analyst is appointed by the Joint Legislative Budget Committee and is charged with providing a nonpartisan analysis and recommendations for changes to the Governor's budget plan. In addition to the Legislative Analyst, the Department of Finance and departmental staff typically provide testimony at the subcommittee hearings. Lobbyists and the public may also provide testimony at the hearings.

The budget hearings are an opportunity for groups with "budget asks" to make their case for funding and advocate for their programs. The subcommittees will then make recommendations to the full committee, which will then go to the Floor (full house). A simple majority vote of the house will pass the Budget Bill to the other house.

The governor releases a revised budget in May

The California state budget is a complex, multi-step process that involves the governor, the Legislature, lobbyists, interest groups, and the public. The governor plays a leading role in the budget process, with the power to propose a state budget for the upcoming fiscal year, set the budget and policy agenda, and make changes through their veto power.

The governor releases a revised budget proposal in May, known as the "May Revise". This revision provides an updated economic and revenue outlook, adjusting the governor's proposed expenditures based on revised estimates and assumptions. It also revises, supplements, or withdraws policy initiatives included in the initial January budget proposal.

The "May Revise" is informed by the state's tax revenue, with most state taxes collected by May. This allows the governor to have a more accurate understanding of the funds available in the General Fund. Using this information, the governor can make necessary revisions to the budget, including cuts or additions to specific programs and initiatives.

The "May Revise" is a critical step in the budget process as it provides an updated financial outlook and ensures that the budget remains aligned with the state's fiscal capabilities. It also allows the governor to address any emerging issues or changing priorities since the initial January budget proposal.

The "May Revise" is followed by further negotiations and discussions between the governor and the Legislature. The Legislature has the power to make changes to the governor's proposals and advance their own initiatives. They can add new spending or make substantial revisions, which are then negotiated with the governor. This back-and-forth process continues until a final budget agreement is reached.

The budget process in California is a dynamic and collaborative effort involving multiple stakeholders. The "May Revise" is an essential step in this process, allowing the governor to incorporate new information, adjust expenditures, and ensure the budget remains responsive to the state's needs and priorities.

The Senate and Assembly agree on a single proposed budget

The Conference Committee's proposal is then sent to the Governor for review. The Governor has the power to leave items in the final budget or strike them with a "blue pencil" (also known as a "line-item veto"). The Governor can make whatever changes they wish to the proposed budget before signing it into law by June 15th. The budget then takes effect on July 1st.

The Conference Committee stage is where the Senate and Assembly agree on a single proposed budget, but this is not the end of the process. The Governor's review and potential changes are also an important part of finalising the budget.

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