Even with tax, Calif. could face chronic deficits
SACRAMENTO, Calif. (AP) – Even if voters approve Gov. Jerry Brown’s proposal for higher taxes this fall, his ballot initiative would be only a partial solution to the state’s chronic budget deficits.
California could face shortfalls for the foreseeable future depending on how much Democrats are willing to cut social programs and whether the economy rebounds. In many cases, the financial pain on Californians will persist. College students will still face higher tuition fees, public school teachers still face layoffs and parks are still scheduled to close.
Officials at the University of California, for example, are considering plans to raise tuition by 6 percent this fall. If voters reject Brown’s tax hike in November, the officials warn of a mid-year, double-digit tuition increase or drastic cuts to campus programs and staffing.
“Whether the tax initiative passes or fails, the UC still loses,” said Cheryl Deutsch, 27, a graduate student in urban planning at the University of California, Los Angeles.
The California State University system hiked tuition by 9 percent for this fall and froze admissions for next spring in response to state budget cuts. There are no plans to roll back the tuition increases of recent years even if the tax hikes pass.
Brown announced over the weekend that the projected state deficit has swelled to $15.7 billion through the 2012-13 fiscal year, up from $9.2 billion in January. He previously proposed a tax hike that would fill about half that shortfall and said he would lean on majority Democrats to make deeper cuts to social services and health care programs for the poor.
“What I’m proposing is not a panacea, but it goes a long way toward cleaning up the state’s budget mess,” Brown said in a video message.
His finance spokesman, H.D. Palmer, said the state budget would actually be in surplus each of the next four years if the Legislature adopted his budget as-is.
But that’s a big if. The Democrats who control the Legislature have resisted Brown’s proposed cuts in the past, and were expressing unhappiness with his latest budget proposal just hours after he announced it on Monday.
Republican lawmakers say a good portion of the governor’s proposal and the budget from last year were filled with funding shifts that allowed lawmakers to avoid real program cuts.
“Last year, even half of the so-called cuts were not cuts, certainly not to state government,” said Senate Minority Leader Bob Huff. “They know if they don’t cut the scope of the government, nobody will buy the higher taxes.”
In a way, Democratic lawmakers have added $400 million to the problem by rejecting some of Brown’s early proposals, such as reducing eligibility for welfare-to-work programs. Like the governor, they had hoped to avoid making additional cuts through higher tax collections this spring. Instead, tax revenue ran well below their projections.
Even if Brown’s tax hikes pass and Democrats agree to deeper spending reductions, California could still face a shortfall if the state’s economy continues its slow pull out of the recession. The state had to make additional cuts even after former Gov. Arnold Schwarzenegger and lawmakers agreed in 2009 to increases for two years in the sales, income and vehicle taxes.
Brown has called for a contingency plan to shorten the public school year by as much as three weeks and make deeper college cuts if the tax plan fails. Brown’s tax hike is projected to raise $8.5 billion through mid-2013. Of that amount, the administration projects $5.6 billion will benefit the general fund.
Senate President Pro Tem Darrell Steinberg, D-Sacramento, said even if the governor’s tax hike doesn’t dramatically increase school funding, he said he believes California voters will want to start investing in the state again.
“If they’re looking to end the bleeding and stabilize funding and prepare us for the opportunity to reinvest, then I think – I’m confident – that we can deliver that,” Steinberg said.