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California's FY 2013 Budget: More Ground to Cover

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.
The majority of the IT items identified in the FY 2013 budget relate to the operations and management costs for telecommunications, hardware, software, and other technologies used by departments. There were no new major IT projects mentioned, but funding for several ongoing large projects was once again included in the new budget. A total of $39 million was allotted for the Financial Information System for California (FI$CAL) project, as well as $96.5 million for the Enterprise Data Revenue (EDR) project, and $158 million for the California Justice Information System (CJIS).
Analyst’s Take
Governor Brown’s FY 2013 budget seems to be on par with his plans for reducing the state’s deficit over the next several years. The budget is slightly larger than the previous proposed budget, but still aims to cut spending in order to dig California out of its financial hole. The governor’s plans to make deeper cuts and implement temporary taxes will not be popular, which even he admits, but they may be just what California needs. Brown’s FY 2012 budget made drastic cuts and managed to reduce the state’s deficit from more than $26 billion to $9.2 billion for FY 2013, so continuing in that vein seems like a necessity.
The prudent 2013 budget most likely means that, as with the previous budget, there will be fewer dollars for technology contracts, and that money provided for technology will be used for IT operations and management services, and to maintain existing systems. California has come a long way in the past year, but there is still more ground to cover. Funding may increase, and the deficit may decrease, but it will still be several years before the state sees its pre-recession spending. As long as Brown continues to make wise cuts, and the state spends what money it does have cautiously, California will bounce back and continue its recovery.
Subscribers have access to expanded analysis, including detailed budget data, here.
*Note: The budgetary numbers presented by Deltek may not reflect the numbers presented in most government and media announcements. The numbers presented by Deltek are All Funds values, which include all state funds, as well as non-government cost funds and reimbursements. The values presented by most announcements include only state funds, which consist of General Funds and other funds.*

 

 

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