In a proactive move to address California’s budget challenges, Senate Leader Mike McGuire (D-North Coast) and Senate Budget & Fiscal Review Committee Chair Scott Wiener (D-San Francisco) have unveiled a California State Senate Early Action Plan, “Shrink the Shortfall”, a strategy by Senate Democrats to mitigate the deficit through decisive budgetary measures. 

Recent assessments reveal a concerning increase in the projected budget deficit, now standing at an additional $15 billion, with an estimated shortfall ranging between $38 billion to $53 billion. 

The Senate’s proactive plan aims to alleviate the deficit by more than $17 billion, narrowing the projected shortfall to a range of $9 billion to $24 billion. This early intervention paves the way for subsequent budget negotiations later in the year, allowing a concentrated effort to address the remaining gap while safeguarding California’s recent advancements in core programs. 

By combining $17 billion in program reductions with other strategic solutions and endorsing the Governor’s prudent proposal regarding the Rainy Day Fund, the plan marks the initial phase of the annual budgetary process, geared towards achieving a balanced and timely budget. 

Most of these solutions were initially proposed by the Governor and include various measures such as:  

  • $3.3 billion: Program Reductions 
  • $4.7 billion: Revenues/Borrowing 
  • $3.9 billion: Fund Shifts 
  • $3.2 billion: Delays 
  • $2.1 billion: Deferrals  

The General Fund solutions impact to the Senate Subcommittee on Education Finance (which covers higher education) include around $1.87 billion in 2023-24 and 2024-25, specifically focusing on $829 million in program reductions, $550 million in delays and $499 million in deferrals.  Specifically, the plan approves the Governor’s proposal to: 

  • Reduce the School Facility Program by $500 million, bringing the total General Fund appropriation since 2022-23 from $4.1 billion to $3.6 billion. The General Fund allocation is expected to support the program until funds from a November 2024 bond can be administered. 
  • Delay $550 million for the Preschool, Transitional Kindergarten, and Full-Day Kindergarten Facility Program. School bond discussions for the November 2024 election include early education facilities. 

The plan incorporates the Governor’s suggestion to use $12.2 billion from the Rainy Day Fund, leaving about $13 billion for future budgetary needs. This approach ensures the Rainy Day Fund remains viable for at least three years, from 2023-24 through 2025-26. The solutions outlined are essential for balancing the budget, regardless of any changes in shortfall forecasts and are included in the early action plan to allow the Legislature to focus on more challenging solutions throughout the remainder of the budget process.