State Deficit Balloons to Nearly $16 Billion

Governor pushed for tax increase to prevent deeper spending cuts.

By City News Service

Gov. Jerry Brown proposed steep cuts across a variety of programs Monday to close a nearly $16 billion state budget deficit, but Los Angeles Unified School District and university officials said the impact on their budgets will remain unknown until November, when voters weigh in on proposed tax hikes.

“We’re going to have to cut deeper,” the Democratic governor said in Sacramento while releasing his budget revision.

“But cutting alone really doesn’t do it,” Brown said. “That’s why I’m linking these serious budget reductions – real increased austerity – with a plea to the voters: Please increase taxes temporarily on the most affluent and everyone else with a quarter of a cent sales tax.”

Brown said the state’s budget deficit ballooned to $15.7 billion since January, when it was estimated at about $9.2 billion. His revised budget includes billions of dollars in cuts – including a proposed four-day workweek for some state employees that would reduce them to 38 hours and allow some offices to be closed once a week. There are also proposed cuts in home-care funding and Medi-Cal payments.

Funding for schools and the state’s two major university systems will remain in question, however, until the November election, when Brown asks voters to approve a bump in the state’s 7.25 percent sales tax rate to 7.5 percent, and to increase the income tax rate on people earning more than $250,000 a year.

If the proposals fail, another $6 billion in cuts will take effect Jan. 1 – much of them impacting education.

This makes all the numbers in the budget dependent on an election that has not happened yet, and thus makes final local budget decisions, extremely difficult if not impossible,” LAUSD Superintendent John Deasy said. “If the measure passes, this will give schools some badly needed funds that have been promised over the past several years. If voters do not pass the initiative, the results are so catastrophic it is simply untenable.”

The California State University and University of California systems would each face another $250 million cut in their budgets – likely meaning more program cuts and tuition hikes.

“We very much appreciate the governor’s hard work to avoid further direct cuts to higher education,” said Charles Reed, chancellor of the Long Beach-based CSU system.

“Nevertheless, all Californians should be concerned about the serious long-term damage to student access to the California State University that is posed by the $250 million trigger cut.

“Combined with last year’s $750 million cut, no easy options remain,” he said.

Steve Montiel, spokesman for the UC president’s office, also said the financial picture for the universities will remain in doubt until November.

“We will continue to seek a long-term funding agreement with the state that will provide the stable fiscal footing needed to preserve the university’s quality, access and affordability,” he said.

Assembly Speaker John Perez, D-Los Angeles, said Brown’s budget proposal “makes clear that a significant budget problem remains.”

“We will continue to work with the governor and the Senate to close the remaining budget problem, which will require the Legislature making tough cuts and the voters approving temporary revenues,” Perez said. “… Through an open and transparent process, we will craft an on-time, balanced budget by June 15.”

Sen. Bob Huff, R-Diamond Bar, said the ballooning state budget was predictable given the spending plan that was approved by the Democratic legislature last year.

“As state revenues have been increasing, total spending has also increased by $20 billion since the 2007-08 state budget,” Huff said. “… Despite an 11 percent unemployment rate, 2 million Californians out of work and California being ranked the worst state in the nation to do business eight years in a row, the governor and Democrats have no proposals to help grow the economy or to help our small business community.

“Republicans believe we must get people back to work, which in turn will responsibly increase our state tax revenues,” he said.

Los Angeles County Chief Executive Officer William Fujioka noted that the county has seen more than $1.4 billion in state funding cuts over the past four fiscal years.

“The biggest state budget impact to Los Angeles County, by far, continues to be the shift in responsibility for certain public safety and health-related programs from the state to counties, which was part of last year’s budget,” Fujioka said. “How these programs are funded, both in this budget and in future budgets, remains a major unresolved issue for our county.”

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May 17, 2012  Copyright © 2012 Eastern Group Publications, Inc.

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