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Tuesday, May 15, 2012 7:15 AM UTC

Calif. gov. urges budget cuts amid $16B shortfall

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Topics: From the Wires,

SACRAMENTO, Calif. (AP) — California Gov. Jerry Brown called on state lawmakers to embrace austere cuts and urged voters to approve tax hikes in outlining a revised budget Monday.

Brown proposed $8.3 billion in cuts across education, health care and welfare programs in laying out a plan to address the state’s $15.7 billion shortfall, an amount equal to 17 percent of the state’s discretionary fund. He warned that additional cuts are ahead if voters reject his tax-hike initiative in November.

“Cutting alone really doesn’t do it,” Brown told reporters in releasing his $91 billion general fund budget plan. “And that’s why I’m linking the serious budget reductions — real increase to 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, a Democrat, also is asking state workers to share the pain by taking a 5 percent pay cut, most likely by reducing their work hours. The pay reduction would be handled in contract negotiations with the state’s public employee unions.

In addition to the cuts, Brown hopes to close the deficit with $5.9 billion in new revenue from the tax initiative he proposed earlier this year that would temporarily add a quarter cent in the state sales tax and collect higher income taxes on those who make $250,000 a year or more.

If voters reject the tax increases in the fall, Brown is proposing $6 billion in additional automatic spending cuts, almost all of which would fall on K-12 schools. The so-called trigger cuts could mean that some districts would have to cut the school year by up to three weeks.

Brown said the cuts are real and will impact every school in the state. He likened California’s fiscal challenge to the federal government and European nations, including Greece and Spain.

“Given the decade of fiscal disconnect, I’ve committed to righting the ship of state and getting it into balance,” Brown said. “What that means is that things that are good in and of themselves have got to be stopped or curtailed if we are going to have balance. Otherwise we borrow and sink deeper into debt.”

Brown said California’s sputtering economic recovery is putting a heavier-than-expected drag on state tax revenue. The state has been blocked from making cuts to Medi-Cal and In-Home Supportive Services in court and by federal requirements.

The revised budget deficit is $6.5 billion more than the $9.2 billion gap Brown anticipated in January.

Brown called for cuts that would reduce child care for mothers trying to get off welfare, in-home supportive services for the needy and health care for the poor, as well as cut funding to courts and postpone payments to schools. Those reductions come on top of tens of billions of dollars in state budget cuts implemented since the recession started in late 2007.

Another $2.5 billion would involve delaying paying debt and other internal borrowing.

Democrats who control the Legislature said they would cut as much as they can while trying to preserve what they deem essential services. Senate President Pro Tem Darrell Steinberg, D-Sacramento, said Democrats are not looking for a public fight with the governor.

Republicans said the majority party has refused to enact reforms such as public worker pension and teacher accountability.

“When you have unsustainable policies, you have unsustainable budgets,” said Republican Senate leader Bob Huff of Diamond Bar.

Brown said his balanced approach was a fair and reasonable way to balance the budget. The sales tax increase would last four years while the income taxes on the wealthy would be raised for seven.

Public schools, which account for about 40 percent of state spending, would see a funding increase of 16 percent if voters approve Brown’s tax initiative. More money also would flow to the state’s three higher education systems, which have been the subject of student and faculty protests as courses have been cut and tuition has soared in recent years.

More Judy Lin.

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