Judy Lin
Calif. gov. urges budget cuts amid $16B shortfall
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.
Brown to detail budget for tackling $16B shortfall
SACRAMENTO, Calif. (AP) — California Gov. Jerry Brown will lay out details of a revised state spending plan Monday after announcing over the weekend that the state’s budget shortfall has swelled to $16 billion.
Brown said the deficit is much larger than he predicted just a few months ago, in part because tax collections have not come in as high as expected and lawsuits and federal requirements have blocked billions of dollars in state cuts.
In laying out a budget plan for the coming fiscal year that starts July 1, Brown will seek to balance the state’s finances in large part on voters approving higher taxes in November. His Saturday budget message and campaign pitch were the same: Raise taxes or endure crippling cuts to schools, colleges and public safety.
Continue Reading CloseCalifornia facing higher $16 billion shortfall
SACRAMENTO, Calif. (AP) — California’s budget deficit has swelled to a projected $16 billion — much larger than had been predicted just months ago — and will force severe cuts to schools and public safety if voters fail to approve tax increases in November, Gov. Jerry Brown said Saturday.
The Democratic governor said the shortfall grew from $9.2 billion in January in part because tax collections have not come in as high as expected and the economy isn’t growing as fast as hoped for. The deficit has also risen because lawsuits and federal requirements have blocked billions of dollars in state cuts.
Continue Reading CloseManhunt closes busy Northern California freeway
SACRAMENTO, Calif. (AP) — Authorities shut down a busy Northern California freeway for several hours Friday, disrupting the morning commute as police search for a man suspected of opening fire at a commercial trucking business and crashing a stolen getaway vehicle on the freeway.
No one was injured in the shooting or crash but police kept closed a stretch of Interstate 80 that runs between San Francisco and Sacramento, bringing traffic to a standstill. Police were searching for the gunman in marshland off the freeway between the cities of Davis and West Sacramento.
Continue Reading CloseNJ firm settles Calif. pension fund kickback case
SACRAMENTO, Calif. (AP) — A New Jersey company that manages prescription benefits has agreed to pay $2.7 million to settle an investigation stemming from an influence-peddling case involving California’s largest public pension fund.
The California attorney general’s office announced Friday that Medco Health Solutions Inc. also has agreed to change its internal procedures.
The California Public Employees’ Retirement System did not renew a contract with Medco last year after an investigation revealed the company paid more than $4 million to Alfred Villalobos to help secure a prescription drug contract.
Villalobos is a former CalPERS board member who acted as a middleman to help companies gain contracts with the pension fund. The state attorney general has charged him with setting up a system of kickbacks to gain influence with pension fund executives.
Calif. Stands To Reap Windfall From Facebook IPO
California's nonpartisan Legislative Analyst Mac Taylor ponders a reporters question of his office's review of Gov. Jerry Brown's proposed $92.6 billion 2012-13 state budget as he discusses the report during a news conference in Sacramento, Calif., Wednesday, Jan. 11, 2012. Overall Taylor's office expects less tax revenue in the coming year than the governor's estimates, possibly requiring deeper spending cuts. (AP Photo/Rich Pedroncelli)(Credit: AP) SACRAMENTO, Calif. (AP) — What’s good for Facebook and its employees could be very good for California’s treasury.
If the Menlo Park company goes public this year, as many have speculated, the state stands to reap hundreds of millions of dollars in capital gains taxes from Facebook investors and employees profiting from stock transactions. That could bring a much-needed windfall to a state government facing a $9.2 billion deficit.
In calculating how much revenue the state can expect in the next year or so, the nonpartisan Legislative Analyst’s Office released a report that considered historical income trends but also budgeted for a revenue bump on the assumption that Facebook and some other California companies will go public.
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