State Budget Update: California May Lose $2 Billion in Federal Funding

The governor's budget plan, as well as proposals put forth by state Senate and Assembly Democrats, all included an assumption of nearly $2 billion in federal assistance through an extension of the American Recovery and Reinvestment Act (ARRA). Most of the funding received from ARRA could be applied toward health care spending, which would then free up state dollars to help balance California's budget. However, House Democratic leaders dropped the ARRA extension in recent legislation in response to the demands of fiscally conservative members of their party to reduce the bill's overall cost.

If approved by Congress, the reduction in federal funding could pose more trouble for state programs already being eyed for elimination. The governor's May Revise includes proposals to eliminate CalWORKs and nearly all state child care services. The Assembly and Senate Democrats' respective proposals reject most of the cuts and would also restore child welfare funds that were vetoed by the governor in 2009-2010.

Last week, the Budget Conference Committee began meeting to review the three different budget proposals released by the governor, Assembly and Senate. Los Angeles County-based legislators selected for the committee include Assembly Budget Chair Bob Blumenfield (D-Van Nuys), Assemblymember Felipe Fuentes (D-Sylmar), and Senator Alan Lowenthal (D- Long Beach). A full list of committee members is available here.

Further Reading:

• Conference Committee Agendas

• Legislative Analyst's Office: Overview of the Economy, Revenues, and Spending