SAN FRANCISCO – California prison officials have proposed a downsized spending plan that would eliminate more than $4 billion of lease revenue bond authority.
The proposed plan is partly a response by prison officials and Gov. Jerry Brown’s administration to a U.S. Supreme Court order to reduce prison crowding in the state, and also to help reduce the rising burden of prison costs on California’s general fund.
If lawmakers go along with the proposal, it would delete $4.1 billion out of $6 billion of lease-revenue bond authority granted by the Legislature in 2007 through legislation, saving $7.4 billion in debt service costs, according to the administration.
“It is a massive change,” said Matthew Cate, secretary of the California Department of Corrections and Rehabilitation, during a news conference to release the plan on Monday.
Cate said the spending blueprint would save $1 billion in next year’s budget and $1.5 billion annually afterward.
State finance director Ana Matosantos said during the same press conference that aggregate corrections spending as a share of the general fund would fall to 7.5% by fiscal 2016 if the plan is accepted, from 11% two years ago, which was up from 3% three decades ago.
“This plan reverses that trend,” Matosantos said.
The proposal works in tandem with Brown’s “realignment” program, which started on Oct. 1, to shift non-violent, low-level offenders from state prisons to county jails, allowing the state to stop building more prisons.
The governor’s program followed a Supreme Court order last year to reduce overcrowding in the state’s prisons.
“California is finally getting its prison costs under control and taking the necessary steps to meet federal court mandates,” Brown said in a statement Monday.
According to the plan, $1.9 billion of the bond authority will be used or has already been allocated for projects currently underway.
If prison bonding authority is reduced, it would follow a trend set by the governor of easing the state’s debt burden.
The Democratic Brown has overseen less bond issuance as he has tried to make the most of what the state already has by asking agencies to use unspent bond proceeds before asking for more borrowing.
Cate described the proposed changes as an early look at part of the governor’s annual budget revision that will be released in May.
In January, Brown unveiled a $92.6 billion spending plan for fiscal 2013 that attempts to tackle a deficit of $9.2 billion with cuts and tax increases. However, tax collections have come in short compared to projections in the governor’s budget, which will likely be addressed in the May Revise.
As part of his spending plan, the governor is pushing for a referendum that would raise billion of dollars by raising taxes on the wealthy that would go toward education and help relieve some budget pressures.
So far, at least one ratings agency has reacted positively to the governor’s fiscal planning.
Standard & Poor’s recently raised its outlook on the state to positive from stable, which is where the other two agencies have the credit.
But both Standard & Poor’s and Fitch Ratings still rate California as the weakest state in the country, while Moody’s Investors Service has the state two notches higher at A1 and above Illinois.
