Public Finance and Budgeting

In the past three years, the income distribution in the k-12 sector has increased significantly by more than 20%. This increase has been made to correct historical inequalities in district school funding and attain a funding level of over $ 3000 per student (The 2017-18 budget). The increase in funding has also been caused by the sector's adjustments such as k-12 deferrals and mandates, k-12 high-speed internet access, and expanding high-quality CTE programs. Additionally, like the k-12 sector, the higher education sector has also received a relatively large income of more than 17% over the past three fiscal years (. The steady rise in income has been made with the sole purpose of providing affordable and quality education in higher education (The 2018-19 budget). The rise has also been caused by adjustments such as mandate backlog payments, baccalaureate degree pilot program, student outcome transformation programs, full-time faculty, and investing in student success targeting the underrepresented students. Lastly, in the past three years, the largest portion of the income has been distributed to the health and human services sector. However, it has received a lower increase percentage than the k-12 and the higher education sector, around 12% (The 2019-20 budget). This increase has been caused by the adjustments in Children’s Health Insurance Program (CHIP) Reauthorization, health home programs, community care licensing, dental provider rate restoration, and expanding medical for children regardless of immigration status.

Evaluate ethical practices of financial policy on taxes, fees, and charges.

California government adheres to several ethical issues when enacting financial policy on taxes, fees, and charges. The general assumption in the three fiscal years analyzed shows that the state does not adhere to the efficiency tax principle. However, the tax structure ensures equity in personal income tax; it ranges from 15% to 13%, enabling its citizens to make payments according to their tax brackets and reducing tax burdens on certain individuals. However, the state has one of the lowest rates for claiming personal exemption than the other states, meaning it ends up retaining much of the taxes it receives (Brown, 2015). Sales tax, excise tax, and corporate tax have high rates in California than in all other states, bringing up the ethical issue of neutrality and burdening taxpayers. The effect of high rates was evidenced when the state was ranked 48th in the business tax climate report of 2015.

Assess internal/external opportunities and challenges of revenue sources.

Tax being the major contributor of revenue to the California government, assessing revenue sources' opportunities will depend on either elasticity or inelasticity of demand and supply. The government may need to review tax rates upward on the tobacco and liquor sectors as they have an inelastic response to price changes. The government will still collect relatively high amounts from the two sectors. Licenses and permits, especially for mining and lumberjacks, should be increased as they affect the environment to amounts capable of restoring the environment (California State budget analysis, 2020). Externally, the state should try and reduce conditional grants from Canada by collecting more revenue internally. However, the government should evaluate the rates with caution to collect much less revenue as anticipated, leaving individuals with less disposable net income or even making California a business-unfriendly environment for businesses.

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