From the daily archives: Monday, May 14, 2012

SACRAMENTO — Gov. Jerry Brown rolled out a revised budget proposal Monday that relies on increased income and sales taxes from a proposed November ballot measure to avoid deep cuts to K-12 and higher education.

Elsewhere, he said, cuts are unavoidable. He proposed cuts to hospital and nursing home funding to lower MediCal costs; a 7 percent cut in In-Home Supportive Services; barring colleges and universities that can’t meet minimum performance standards from taking part in the Cal Grant program; reducing state workers’ pay by 5 percent through contract renegotiations; and using assets that used to belong to local redevelopment agencies, among many other efforts, to help fill a $15.7 billion budget gap.

“It’s a difficult budget, and it reflects the fact that revenues are less than expected,” as well as that court and federal government interventions have kept the state from making some cuts it wanted to make this year, the governor said.

“We’re going to have to cut deeper, but cutting alone really doesn’t do it,” Brown said.

He added that his budget is a call for “real increased austerity with a plea to the voters: please increase taxes temporarily” at the ballot box this November.

This past year’s budget kept the crisis from being far worse, Brown contended. Tough cuts have included reducing CalWORKs grants to below 1987 levels; reducing support to state universities by almost 25 percent; and cutting the 20 percent, all while realigning criminal justice to keep more convicts in county jails rather than state prisons and protecting K-12 education and public safety wherever possible.

But that is possible no more, he said. What was estimated in January to be a $9.2 billion budget shortfall is now about $15.7 billion, as revenues have failed to meet expectations month after month. Also, because next year’s revenue projections are a bit rosier, Proposition 98 requires the state to dedicate more money to education, leaving less for everything else. And the federal government and courts have blocked several efforts to reduce spending, including cuts to MediCal and In-Home Supportive Services.

Asked why revenues came in so far below estimates, Brown said the sluggish economy makes an already difficult prediction even harder to make: “The capitalist system is not coincident with your expectations of exactitude,” he said.

His measure calls for a five-year increase in income taxes for those making $250,000 or more per year and a four-year, half-cent increase in the state’s sales tax; 89 percent of the new revenue would go to K-12 education, and 11 percent would go to community colleges. Asked whether he wishes he had asked for more money in this November’s ballot measure, he replied it’s a balancing act: “This is a matter of judgment — what will the people vote for, what is fair, what will address our budget problems?”

The long and short of it is that “we have more spending obligations than we have revenue,” he said, and California must both curb those obligations and raise more money in order to close the gap. “This is our day of reckoning.”

Assembly Speaker John Perez, D-Los Angeles, issued a statement saying the governor’s revised plan “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. To date, the Assembly has held over 60 budget hearings, and we will immediately begin hearing the May Revision proposal. Through an open and transparent process, we will craft an on-time, balanced budget by June 15.”

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