• Medi-Cal: Eliminate certain optional benefits (primarily dental).
• SSI/SSP: Monthly grant reductions of $20 to $35.
• IHSS: Cap on state participation in wages of $9.50, plus benefits, and share-of-cost for prospective clients
• Higher Education
  • Adopts Governor’s UC and CSU proposals:
    o       No funding for “compact.”
    o       10% across-the-board cut.
    o       Reduced costs for retirement contributions.
    o       Not cut: Governor’s proposed cuts to CalGrants (including competitive grants and “de-linking” with fee increases).
    o       “Triggered” cuts (if federal funds don’t come):  Additional cut of $75 to $150 million each to UC and CSU (offset by increase in CalGrants, if segments increase student fees).
• State Employees
  • Assumes savings associated with furloughs, eliminates two state holidays, and makes changes to overtime rules.
• Transportation
  • Cuts funds for public transit operations, but does not suspend Prop. 42.
• Judicial
  • Unallocated reductions to the courts, including additional “triggered” cuts.
• Local Government Public Safety Programs
  • Fully funds local public safety programs from a new dedicated tax source (partial reduction in the current year).

Revenues:

• $12.5 billion (reduced to $10.7 billion, if federal funds “trigger” pulled).
• Length of time for taxes depends on passage of spending cap, if cap fails, taxes in place in 2008-09, 2009-10, and 2010-11.
• Sales tax:  Increased by 1 cent, through 2011-12.
• VLF:  Increased to 1%, through 2013-14, if cap passes (2011-12, if cap fails).
• Separate 0.15% raise to pay for local law enforcement programs (saves General Fund $600 million).
• Personal Income Tax Surcharge .25%
• “Triggered” down to .125%, if federal funds become available.
• Dependent Credit Exemption (Personal Income Tax) reduces size of credit to the level of personal credit, for up to 5 years, if cap passes (2011-12, if cap fails).

Borrowing:

• $5.4 billion:
  • $5 billion from lottery securitization (requires voter approval in special election in May or June).
  • $400 million in loans and transfers from various special funds.

Spending Cap:

• Limits spending to rolling 10-year trend in revenues, amounts above the 10-year trend would go into the “rainy day fund.”
  • Allows adjustment of the spending limit to accommodate new tax increases.
  • Money can be removed from the “rainy day fund” when revenues fell below a “current-service” level budget.
  • Reduces the annual deposit from 3% to 1.5% (other 1.5 dedicated to education).
  • 1.5% annual deposit ceases when fund is equal to 12.5% of revenues.
  • Revenues above the trend line after the “rainy day fund” is full can be used for various one-time spending purposes, which can help balance the annual budget.
  • Addresses the Prop. 98 maintenance factor issue, ensuring that base funding to the schools is restored by $9.3 billion over time (separate ballot measure).

 Economic stimulus requests not necessarily related to the budget:

• Unlimited Public Private Partnerships for transportation through 2017 and up to 4,500 beds in corrections reentry facilities.
• Use of “design-build” in 10 state transportation projects, 5 local transportation projects, 10 Redevelopment Projects, and 5 other state office buildings.
• Clarified the schedule options that can be voted on by employees.
• CEQA exemptions for 8 specific projects.
• Diesel agricultural equipment eligible for Carl Moyer Program.
• CEQA exemption for the sale of surplus state property.
• Single Sales Factor Apportionment
  • Allows most multi-state businesses to apportion income to California using only their percentage of sales in California. Effective in tax year 2011.
• Film/TV Production Credit 
  • Provides a credit of 20 percent or up to 25 percent of the qualified production cost of qualified motion pictures or TV series that are produced in California. 
  • Producers must apply to the California Film Commission for a credit allocation. Allocations begin 2009-10, and first credits could be claimed for 2011.  $500 million in allocations would be available over five years.
• Small Business Hiring Credit 
• Provides a credit of $3,000 per full-time equivalent employee added by small businesses (20 employees or less). The credit will be available for the 2009 and 2010 tax years. 

 Legislative/Election Changes:

• Open primary initiative
• Restricting legislative pay increases initiative

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