California FY 2013 Budget: More Ground to Cover

Deltek Analyst Erin Brady reports.

California Governor Edmund Brown presented his proposed budget on Jan. 5. In last year’s budget, even after many cuts, Brown faced a $12.5 billion deficit. The reality coming into FY 2013 is a $9.2 billion deficit that includes $4.1 billion that will be carried over from FY 2012. In his state-of-the-state address on Jan. 18, Brown acknowledged the success of the massive cuts from the previous budget, but admitted that more cuts and temporary taxes are necessary to continue pulling California out of its financial hole. The governor said he understands these measures will not be popular, but contends that continuing to amass additional debt in order to “do good” will not benefit the state in the long run. These potential cuts and temporary taxes will likely result in California continuing to be cautious on how and where its money is spent.
The FY 2013 budget increased slightly over the previous fiscal year by approximately 2.08 percent. This seems to be on target with Brown’s plan to continue paying down debts instead of adding more. Spending for several verticals also increased year over year. The top vertical gains were in health care (22.56 percent), and general government services (42.91 percent). The top vertical decreases were in natural resources/environment (20.08 percent), and economic development/regulation (41.15 percent).
The top vertical IT budgetary reductions were in health care and homeland security, both with a 100 percent decrease. These reductions are based on values given for these verticals in the state’s FY 2013 budget, and do not indicate that IT spending will be cut completely. The top vertical IT budgetary gains were in public finance, with a 75.70 percent increase; and natural resources/environment, with a 100 percent increase year over year.
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