Three legislative budget bills now in print
This week's Assembly-Senate budget bill and Prop. 98 suspension and taxation bills now online
Now online are three budget-related bills expected for hearings and legislative action this week:
AB 107 (Gabriel) / SB 107 (Wiener), the Assembly-Senate budget bill that reflects the joint legislative budget plan approved by the two houses’ budget committees in late May. (By custom, budget-related bills typically go into print in identical versions in each house.)
AB 154 and SB 154: Education finance: Proposition 98: suspension.
Most trailer bill content has been online in some form at the Department of Finance website for weeks or months, including much of the content in the taxation bill. The budget bill to be voted on this week reflects contents of the Governor’s original budget bill from January, as amended by the administration’s May Revision Finance Letters and the joint legislative budget plan, as well as the April early action package. These issues were discussed in dozens of budget subcommittee hearings. A suspension of Proposition 98, however, was proposed by the Governor less than two weeks ago.
The joint legislative budget plan starts a three-year suspension of corporate net operating loss (NOL) deductions and tax credits in 2024—one year earlier than the Governor proposed. This results in the legislative plan having more revenues than the May Revision proposal in 2024-25. The higher revenues allow restoration of some social services, health, and housing cuts in the legislative plan, as well as higher Proposition 98 spending across the 2023-24/2024-25 period. Coupled with some added reductions in proposed spending, including for the prison system, the legislative plan, with its 2024-25 revenues, maintains somewhat higher reserves than the May Revision through 2025-26. The spending restorations and the one-year earlier end of the NOL/tax credit suspension mean the legislative budget plan would result in somewhat higher projected deficits as compared to the May Revision in 2026-27 and 2027-28. Section 45 of AB/SB 167 also notes legislative intent to provide greater assurances that companies unable to use tax credits during the three-year suspension period will be able to benefit from foregone credits in subsequent years via a refundability option.
A summary of the General Fund’s condition in the May Revision and the joint legislative budget plan (sometimes called the Assembly-Senate budget plan, or “two party agreement”) is displayed below. This summary reflects the Proposition 98 plan connected to the suspension amount in AB/SB 154.
Under the Constitution, the Legislature must pass a balanced budget bill on or before June 15. The June 15 deadline emerged over 50 years ago to ensure the Legislature presents a budget plan that reflects its priorities. If AB 107 or SB 107 is delivered to the Governor on Saturday, June 15, the Governor would have until Thursday, June 27 to sign or veto (in whole or in part) the bill. Following passage of the legislative budget bill, other “trailer bills” to implement the budget plan will be voted on in the coming weeks. A later “budget bill jr.” would amend AB/SB 107 to reflect any agreed compromises with the Governor that result from ongoing negotiations with legislative leaders.