Frequently Asked Questions about California’s Budget Process

Frequently Asked Questions about California’s Budget Process By Chris Micheli

            What are the main parts of the California state budget? They are the Budget Bill, Budget Bill Junior, Trailer Bills, and Supplemental Reports.

            What is the Budget Bill? This bill contains the appropriations and “Budget Bill Language”. Note that only a Budget Bill (or BBJ) can contain multiple appropriations. It requires a majority vote for passage and the bill takes effect immediately. There is just one Budget Bill.

What is the “Budget Bill Jr.”? This is the bill that amends the main Budget Bill by making changes to multiple appropriations. There are often multiple BBJs.

What is a Trailer Bill? This bill makes the statutory changes needed to implement the budget. It is the same as any other bill, but it takes effect immediately with a majority vote if it contains an appropriation related to the budget bill and is listed as a “trailer bill” in the Budget Bill.

What is a Supplemental Report? This is a separate report that requests specific actions be taken by state agencies and departments. It does not have the force of law.

What are the three main dates for the state budget? They are the following:

•      January 10 – Constitutional Requirement for Governor to propose the budget.

•      June 15 – Constitutional Requirement for Legislature to pass the budget.

•      July 1 – Fiscal Year begins.

What is the role of the respective budget committees? The Assembly Budget Committee and the Senate Budget and Fiscal Review Committee are charged with adopting the state budget and the respective trailer bills.  Once the Governor’s budget proposal is released by January 10, both budget committees’ staff prepare a summary overview of the Governor’s budget.

How do the budget committees review the budget? In early March, the Assembly and Senate subcommittees begin holding hearings and taking testimony from the Department of Finance (DOF), LAO, respective state agencies and departments, and members of the public. Most of the work on the budget occurs at the subcommittee level.

What is prepared for the subcommittee hearings? Prior to these hearings, the budget committee staff members examine the budget proposals and prepare agendas that include an explanation of the Governor’s budget proposals and the staff’s recommendations whether to accept, modify, hold open, or reject the budget proposals. Sometimes the Governor’s budget proposals are “held open” for further discussions. The minority party staff prepare similar information for their members.

 

What happens during the month of May? The Governor releases the May Revise of the budget in mid-May, after April tax receipts are known. Thereafter, the subcommittees must conclude their deliberations within two weeks or so.

 

Where can the Governor’s budget be found online? The Governor's budget is on the DOF website under the E-BUDGET tab.

 

What is the physical size of the state budget bill? The budget is over 1,300 pages in length and contains the details of the Governor's proposed budget spending for the upcoming fiscal year.

 

What are the budget line items? Each budget item is assigned a 10-digit code and includes the state department, purpose and funding source.

 

What is the jurisdiction of each budget subcommittee? The legislative budget subcommittees (which are known by numbers in both the Assembly and Senate) have the following subject matter jurisdictions:

·         Education (Senate Subcmte #1 and Assembly Subcmte #3)

·         Resources, Environment, and Transportation (Senate Subcmte #2 and Assembly Subcmte #4)

·         Health and Human Services (Senate Subcmte #3 and Assembly Subcmtes #1 and #2)

·         State Government (Senate Subcmte #4 and Assembly Subcmte #5)

·         Public Safety and Judiciary (Senate Subcmte #5 and Assembly Subcmte #6)

 

What is a “budget change proposal”? Often referred to as a BCP, they contain proposed expenditures and budget changes to existing levels of service that are used to prepare the Governor’s budget.

 

What is a “deficiency” request? It is when an agency or department has an unanticipated increase in its costs (regardless of reason) that exceed the funding that was appropriated for the agency or department in the state budget. In these cases, the agency or department will request a deficiency appropriation in separate legislation.

 

What is budget control language (BCL)? It is language contained in the budget bill that provides conditions on the use of a specific appropriation contained in the budget.

 

What are “Finance Letters”? They are proposals made by the Director of Finance to the chairs of the budget committees in each house to amend the Budget Bill and the Governor’s Budget from the form submitted by January 10 in order to reflect a revised plan of expenditure. 

            Can budget trailer bills only be passed in conjunction with the main budget bill? Budget trailer bills can pretty much be enacted any time after the budget bill has passed as long as there is a nominal appropriation in the bill and it is tied by language to the budget bill. And this can be done by a majority vote on each floor of the Assembly and Senate.

            Do the budget committee chairs introduce the budget bills as a courtesy to the Governor? Under Article IV, Section 12(c)(2) of the state constitution, “the budget bill shall be introduced immediately in each house by the persons chairing the committees that consider the budget.”

            Does the Governor’s May Revise provide the only changes to the January 10 budget proposal by the Administration? “Finance letters” are revisions to the Budget Bill proposed by the Department of Finance.

            Do the federal and state governments use the same fiscal year? The 12-month period on which the state budget is planned begins July 1 and ends June 30 of the following year. The federal fiscal year begins October 1 and ends September 30 of the following year.

            Do budget trailer bills need an urgency clause to take effect immediately? No, the Budget Bill and other bills providing for appropriations related to the Budget Bill may be passed by a majority vote to take effect immediately upon being signed by the Governor or upon a date specified in the legislation pursuant to Article IV, Section 12(e)(1).

What must be included in the Governor’s January 10 budget proposal? The Governor is required to submit to the Legislature, with an explanatory message, a budget for the ensuing fiscal year containing itemized statements for recommended state expenditures and estimated state revenues. Although it can be introduced prior to or on January 10, this initial budget is referred to as the “Jan. 10 Budget.”

What bill(s) must be passed by June 15? The Legislature is required to pass the budget bill by midnight on June 15 of each year. Only the Budget Bill itself must be passed.

Must the Governor sign the Budget Bill by June 15? The Governor is not required to sign the budget by June 15. The only requirement is for the Legislature to pass it by that date.

Can the Governor consider other appropriations bills prior to the Budget Bill? As a general rule, no. Until the budget bill has been enacted, the Legislature is prohibited from sending to the Governor for consideration any bill appropriating funds for expenditure during the fiscal year for which the budget bill is to be enacted.

Is there an exception for appropriations bills to be acted upon prior to the Budget Bill? Yes, emergency bills recommended by the Governor or appropriations for the salaries and expenses of the Legislature. The Governor will make a statement that he or she is recommending the bill as an emergency bill that should be considered prior to the enactment of the budget later in the session.

Can any bill contain multiple appropriations of funds? No, only the budget bill and the budget bill junior contain multiple items of appropriation. Budget trailer bills and other non-budget appropriations bills cannot contain more than one item of appropriation.

What is the vote requirement for bills making appropriations from the General Fund? They must be passed by a 2/3 vote, except appropriations for the public schools and appropriations in the Budget Bill and in other bills providing for appropriations related to the budget bill.

What are “other bills providing for appropriations related to the budget bill”? These are only bills identified as related to the budget in the Budget Bill passed by the Legislature. The Budget Bill enacted each year has a section toward the end of the bill that identifies by number all of the budget-related bills for that year.

Must the budget passed by the Legislature be balanced? Yes, the Legislature is prohibited from sending the Governor, and the Governor is prohibited from signing into law, a budget bill that is not balanced on paper.

Does the public know the amount of revenues anticipated to be received? Yes, the estimate of revenues anticipated being received in the General Fund must be contained in the Budget Bill that is passed by the Legislature.