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[Finance] - Budget Messages of Ronald Reagan, 1970-1972
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[Finance] - Budget Messages of Ronald Reagan, 1970-1972
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Ronald Reagan Presidential Library
Digital Library Collections
This is a PDF of a folder from our textual collections.
Collection: Reagan, Ronald: Gubernatorial Papers,
1966-74: Press Unit
Folder Title: [Finance] - Budget Messages of
Ronald Reagan, 1970-1972
Box: P36
To see more digitized collections visit:
https://reaganlibrary.gov/archives/digital-library
To see all Ronald Reagan Presidential Library inventories visit:
https://reaganlibrary.gov/document-collection
Contact a reference archivist at: [email protected]
Citation Guidelines: https://reaganlibrary.gov/citing
National Archives Catalogue: https://catalog.archives.gov/
PRESS
Budget Message of
RONALD REAGAN
Governor of California
and
Department of Finance
Letter of Transmittal
1970-71 Budget
DEPARTMENT BUREKA OF THE CHE STATE STATE
THE
OF
CALIFORNIA
Transmitted to the
CALIFORNIA LEGISLATURE
Tuesday, February 3, 1970
OF
State of California
GOVERNOR'S OFFICE
CALIFORNIA
SACRAMENTO 95814
RONALD REAGAN
GOVERNOR
February 3, 1970
Budget Message
To the Members of the Legislature of California:
It is increasingly apparent to concerned citizens everywhere
that no government-federal, state, county or city-can continue
an ever-spiraling program of greater spending accompanied by
heavier taxation. On the national level, the President has made
it clear that even the immense resources of our federal govern-
ment can be exhausted by this irresponsible game of leapfrog.
Cities and counties also are finding their tax sources strained to
the limit and new avenues of taxation non-existent.
In this context, I submit to you a budget which could well be
described as a "hold-the-line" document. By careful scrutiny and
the implementation of continuing efficiencies and economies, we
have pared some programs and eliminated others no longer vital
to the California of the 1970's. We have established our priorities
to emphasize those programs of great merit and deep concern to
the citizens of this State.
Overall expenditures, including the General Fund, Special
Funds and bond funds, are projected at $37 million less than
estimated expenditures for the current fiscal year. This is
approximately one percent lower than projected 1969-70 ex-
penditures.
I have long felt that the budget for the State of California
should be prepared as two separate documents. One would show
those expenditures made by state government for and on behalf
of its citizens. The other would list those revenues which are col-
3
lected by the State and returned directly to local government en-
tities for expenditure at the local level; in these instances, the
State is acting only as a tax collector.
If such a distinction were made, and I think it should be, each
of us would have a much clearer understanding of just what it
costs to run state government. With that in mind, I want to re-
view with you some of the highlights of this year's budget, keep-
ing clearly in mind that portion which is spent by the State and
that portion which is merely collected by the State.
The budget for state operations, including both General and
Special Funds, is proposed at $1,821 million, a 7% increase over
the revised estimate for this year.
Approximately $62.5 million of this increase is for higher edu-
cation. When this Administration came into office, $421.8 million
was budgeted for higher education for that fiscal year. This budget
I present for 1970-71 proposes an expenditure for the same pur-
poses of $697 million, an increase in four years of 65.2%-clear
evidence that education is a top priority in this Administration.
This budget also contains $1,655.6 million for public schools,
an amount which represents a 34.6% increase in budgeted allo-
cations in the past four years.
The State is fortunate in having a large number of competent
and dedicated employees. To prevent erosion of their purchasing
power by inflation, we believe that an increase in salaries is
justified. I have therefore allocated funds to cover the equiva-
lent of a 5% pay increase for state employees. Additionally, I be-
lieve the State should increase its share of the payment for
the employees' health insurance and I will support legislation
to raise the State's contribution $2.00 per month per employee
in fiscal 1970-71.
The increase for higher education and pay increases total
$113.5 million. This is 95% of the proposed increase for the
cost of state operations for 1970-71.
Although the funds requested for total state operations show
only a modest increase, this gives little indication of the tre-
mendous effort put forth by this Administration to hold down
state expenditures. We have held the total number of state
positions at slightly less than the current year level and have
continued to resist the constant annual personnel increase which
characterized state employment patterns prior to 1967.
4
Once again I must call attention to the ever-increasing amount
of the taxpayers' money which is going into local assistance for
welfare and Medi-Cal. In each category, expenditures will in-
crease approximately 16% over the previous year and in four
years the respective increase in each field has been 80%
This increase in welfare and Medi-Cal in just four years,
over and above what might be considered justifiable increases
for inflation and population growth, is roughly equivalent to
state support funding for an additional nine-campus University
system.
Once again I will outline to the Legislature some suggestions
for bringing this unchecked spending under control in those
areas where the State has some measure of authority.
This year's budget again increases tax relief for our citizens:
relief granted to senior citizens will go up $1.8 million; relief
to homeowners will climb $20 million, and our continuing effort
to reduce the inventory tax will account for $53.2 million in
tax relief.
I present to you a budget which equitably and fairly divides
available funds among all needs in a manner which brings the
greatest benefit to the largest number of citizens.
Yours very truly,
Ronald Reagan
Governor
5
Letter of Transmittal
Dear Governor Reagan:
Every budget is composed of revenues and expenditures. Turning first to the income
expectations, there has not been a period in recent years when accurate projections were
more difficult to make.
The nation stands at a fork in the economic road. Inflation has run rampant in recent
years and there are those who think it may be beyond control already. On the other hand,
the President is exerting great pressure to bring about stabilization.
As of this date, there are some indications the country may be entering a slight dip or
recession. Nationally, housing starts are down substantially, sales of new automobiles are
well below last year, and Christmas sales were disappointing to some retailers. If these
trends continue, state revenues such as sales and income taxes will show a failure to grow,
or possibly even a decline.
Conversely, the Congress continues to pass bills authorizing expenditures in excess of
levels recommended by the executive, and strikes throughout the private sector show that
upward pressures on wages and prices are strong. If these factors prevail, state revenues
will continue to climb.
For the coming year, the Department of Finance has chosen a middle route, splitting the
difference between low estimates if economic downturn occurs and high estimates if infla-
tion runs unchecked.
Turning to the expenditure side, we are confronted immediately by the spiraling costs of
welfare and medical aid, in many cases mandated by statute. These programs are growing
by 14 percent and 17 percent, respectively, far outstripping the growth in revenues.
Since we refuse to accept the tenets of those who would spend and spend, tax and tax,
we have been forced to sharply and critically rethink spending in areas subject to executive
control.
Much of this study has been highly beneficial, increasing efficiency and improving effec-
tiveness. Programs which are no longer of major importance have been pared. There are
some areas of great need, such as aid to local schools and environmental improvement,
which could have beneficially used a substantial portion of the increases which it was
necessary, under law, to allot to welfare and medical aid.
The major work on this budget was done with consummate skill by my highly respected
predecessor, Caspar W. Weinberger, who resigned December 31, 1969, to accept a position
of nationwide responsibility with the federal government. Through his achievements it is
possible to present a budget which meets with your express desires that spending be held
in tight rein and that there be no need for tax increases.
In accordance with Article IV, Section 12, of the State Constitution, I have the honor
to submit to you the Budget of the State of California for the fiscal year commencing
July 1, 1970, and ending June 30, 1971.
VERNE ORR
February 3, 1970
Director of Finance
79967-401 2-70 2,500
printed in CALIFORNIA OFFICE OF STATE PRINTING
PRESS
Budget Message of
RONALD REAGAN
Governor of California
and
Department of Finance
Letter of Transmittal
1971-72 Budget
THE STATE
EA
CALIFORNIA OF
Transmitted to the
CALIFORNIA LEGISLATURE
Tuesday, February 2, 1971
-
A
**
State of California
OF
GOVERNOR'S OFFICE
SACRAMENTO 95814
CALIFORNIA
RONALD REAGAN
GOVERNOR
February 2, 1971
Budget Message
To the Members of the Legislature of California:
One year ago in my annual budget message, I called attention
to the ever increasing amount of taxpayer money going into wel-
fare and Medi-Cal. That trend has not only continued, but ac-
celerated. In June, 1970, it was necessary to advise the Legisla-
ture that projected expenditures for these combined programs
had already escalated $65 million above initial expectations, be-
fore the fiscal year had commenced.
In November, 1970, it was apparent that even the enlarged
June estimates were too low. Severe program deferments and
curtailments were necessary to prevent extreme fiscal imbalance.
This situation not only is being duplicated in nearly every state
in the Union, but the problem has reached crisis stage in count-
less counties, and at the federal level the programs have been
described as a "mess".
Something must be done, and done immediately.
I am presenting to you a budget which projects welfare ex-
penditures for the fiscal year at below the current level.
Without prompt and affirmative action on all our parts, the
inevitable choice lies between huge tax increases every year, and
the complete elimination of countless worthwhile services our
citizens have a right to expect from state and local government.
We can take the easy path toward ruinous and confiscatory tax-
ation, or we can elect the more difficult alternative of bringing
the programs under control.
3
I have stressed countless times and will repeat again that we
are not endeavoring to deprive the truly needy of the shelter,
food and clothing necessary to sustain them through their tem-
porary hardship. But we are firm in our resolve to strike from
the welfare rolls those individuals and families who are employed,
who are paid a living wage, and who find their ways to taxpayer
generosity only because of the manner in which some of the laws
are written. In order that the truly needy may have enough, we
must rewrite our laws to eliminate those who are less than needy.
The budget which I am presenting can be balanced without
any other legislation than that contained in the budget bill. How-
ever, I believe there is a better course which will more clearly
reflect the generosity of the average Californian. This can be ac-
complished by sweeping welfare and Medi-Cal reform legislation.
Shortly after this budget is placed in your hands, I will suggest
specific programs to accomplish this goal.
There are a number of other areas in this budget worthy of
special comment, and I shall set them forth.
Higher Education
For four years we have afforded higher education one of the
highest priorities in our budgets. Total dollars available for
higher education in the year I became Governor approximated
$415 million. In the current year it will exceed $668 million. This
60% increase has outstripped the increase in enrollments and has
also enabled higher education to keep abreast of rising inflation-
ary costs.
Educational institutions traditionally submit budget requests
which reflect many things they would like to do. It is a tribute
to our educators that they express their goals and aspirations as
definite requests. However, in a time of acute revenue shortage,
there is a great deal which education can do to economize; steps
which have not been taken within the past four years. I hasten
to add that this is not a condition unique to California. Public
and private universities and colleges across the nation are tight-
ening their belts.
I am recommending that the budget for the University be held
at current levels and the State Colleges increased approximately
$6 million. Both units are planning on enrollment increases.
It has long been considered customary that professors in the
State College system teach twelve classroom hours per week and
that those in the University teach nine. During the affluent
decades of the 50's and 60's, it became common practice to recruit
faculty by offering substantially reduced teaching loads in favor
of research and other activities. Our studies of both the Uni-
versity and Colleges have shown clearly that the average teach-
4
ing load has dropped substantially below the norms which Cali-
fornia citizens have grown to expect. In addition, the acute
shortage of faculty which to some degree prompted the reduction
in teaching load as a recruiting device has now ended. In fact, the
pendulum has swung the other way and we have substantial num-
bers of potential professors who are unable to find employment.
In view of these circumstances, it would be grossly unfair to
all other areas of state government not to expect higher education
to accept its full share of the burden. We are confident that the
budget we are proposing, despite enrollment increases and in-
flation, will permit both major segments of higher education to
meet California's education needs in exemplary fashion. The
budget will require an increased teaching load on the part of
faculty in both segments, but it still will not bring the average
teaching load above those standards which have been considered
the norm. With proper administration, it will be quite possible
to admit all qualified California applicants within the monies
made available herein.
Local School Apportionments
The money allocated for local schools is very largely deter-
mined by statutory formulas. Last year the Legislature and the
Executive Branch, working cooperatively, were able to increase
the amount available for local schools by $88 million. Techni-
cally, this was a one-year increase only and it was not necessary
to place it in the budget for the coming year. Despite the State's
serious financial problems, I have made sure that this substantial
increase in funds is carried forward.
Salaries
We have a dedicated and effective group of civil servants. As
California has grown and progressed, the numbers of such em-
ployees have correspondingly increased, and their efforts have
been rewarded with substantial pay increases. During my first
four years, for example, the employees received pay increases
which totaled 20%. In addition, nearly half of our employees
receive each year a merit salary increase of 5%, a condition
which will continue during the budget year.
For the past ten years, pay increases have averaged about 5%
each year, a total which exceeds the cost of living rise during
the same period.
The Personnel Board did not recommend a general pay in-
crease this year, but did suggest areas in which specific classes
of employees might be raised. Just as in any family, there are
years in which it is simply not possible to do all that might be
desired. With unemployment much higher than we would like
5
and thousands of Californians vigorously seeking employment,
many of them anxious to work at any job at any living wage, our
state revenues are down.
Therefore, it is not possible to include a pay raise for employ-
ees in this budget. We are, however, suggesting a package of
benefits which employees have consistently requested. These in-
clude unemployment insurance, a differential of night pay, and
a differential for overtime work, all of which are funded in the
budget. In addition, as promised last year, we are recommending
the funding of an additional $2 per employee per month as the
State's share of health insurance, bringing the total per employee
to $12 per month.
Capital Outlay
California's capital outlay needs have traditionally been met
through a combination of bond funds and some incremental ad-
ditions in the annual budget. Recently, the Regents of the Uni-
versity have increased educational fees and for the coming year
plan to apply these monies to capital projects.
If the Legislature grants the request of the Trustees of the
State Colleges to increase fees, it is highly probable some portion
would be earmarked for building.
Currently California's bonds are selling well and highly de-
sired water treatment facilities, recreational improvements
around reservoirs, community college enlargements, as well as
some park projects and funds for veterans loans, should be suc-
cessfully financed by this means.
California faces grave financial problems. As I indicated in
my State of the State message, their proper solution can only
come about through the cooperative efforts of the Legislative
and Executive branches. California's citizens will be looking to
us in the months ahead.
With this pledge of cooperation in mind, I transmit to you
the Budget for the State of California for the fiscal year com-
mencing July 1, 1971 and ending June 30, 1972.
Ronald Ragan
Governor
6
STATE OF CALIFORNIA
RONALD REAGAN, Governor
DEPARTMENT OF FINANCE
SACRAMENTO
OFFICE OF THE DIRECTOR
Letter of Transmittal
Governor Reagan:
Without doubt each Finance Director feels that the budget he is just com-
pleting for transmittal to the Governor represents the most difficult budget
in the State's history. Certainly that feeling was held by many in the Depart-
ment of Finance this year.
At the outset it was apparent that requests for expenditures were pyramid-
ing far beyond available revenues. All segments of government were cautioned
about the need for extreme economy. Budgets were scrutinized carefully at
many levels prior to their presentation to you.
I cannot recall any segment of state government which did not realize the
fiscal problems which confront us, nor any segment which did not coopera-
tively seek to hold down expenditures. Of course, all budgets represent com-
promise and this is no exception. There are numerous areas of government
that would still prefer to see their individual allocations increased, even at the
expense of some other area. This is entirely normal and represents the need
which any individual operating unit can see, sometimes without a broad com-
prehension of similar needs or even more urgent problems that may exist
elsewhere.
The current year's budget is a large and unwieldy volume, difficult to carry
and confusing to use. We have, therefore, revised and streamlined the format
in an effort to make it more useful, especially for those members of legis-
lative committees who need to refer to it SO frequently.
the honor to submit to you the Budget of the State of California for the fiscal
year commencing July 1, 1971 and ending June 30, 1972.
In accordance with Article IV, Section 12 of the Oerwon State Constitution, I have
VERNE ORR
Director of Finance
February 2, 1971
printed in CALIFORNIA OFFICE OF STATE PRINTING