California, With Revenue Shortfalls, Will See More Budget Cuts

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December 14, 2011
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LOS ANGELES — The California Legislature passed a budget in June relying on optimistic projections of how much money the state could bring in with a growing economy. But to the surprise of few, not all of that money has materialized.

Gov. Jerry Brown said Tuesday that the state was about $2.2 billion short of its projected $88.5 billion income and that that would force hundreds of millions of dollars more in cuts to the budget, primarily to state colleges and universities as well as to health care. Under the budget the Democratic-controlled Legislature approved, if revenues are more than $1 billion short of projections, automatic reductions specified in the budget — known as trigger cuts — will go into effect.

The cuts will mean the elimination of $248 million in state financing for public school transportation and are almost certain to increase fees for college students. Still, the projections fell short of the doomsday predictions that some had worried about, which would have cut as many as seven days from the school year in some public schools. Now, schools will lose about $80 million, amounting to about $13.18 per student.

“I think we are very fortunate that at least we got half the revenue,” Mr. Brown said, announcing in a Sacramento news conference the nearly $1 billion in cuts. “So we did hope for more and we got more, but not quite as much as we wanted. The cuts are far less than they could have been. It was much wiser to assume the $4 billion, than to make the $4 billion in cuts.”

But the cuts remain drastic, with $100 million cut for in-home health care and other reductions to child care, libraries and services for the disabled. The University of California and the California State University systems, already suffering from steady cuts, will each lose an additional $100 million.

The superintendent of the Los Angeles Unified School District, John Deasy, said he would file a lawsuit on Wednesday to try to prevent the state from ending financing for public school buses.

Last month the state Legislative Analyst’s Office projected a higher shortfall of $3.7 billion, which would have meant even deeper cuts. But state budget officials said their projections were based on more recent state income and corporate tax receipts, which are higher than the earlier report predicted.

In some ways, the large cuts could make it easier for Mr. Brown to sell voters on his plan to increase taxes in order to pay for services. The governor is planning to ask voters next November to increase the state sales tax temporarily and to increase taxes on the state’s highest earners, which he says would raise $7 billion a year. A poll released this week by the Public Policy Institute of California showed that 60 percent of voters support such a measure.

Mr. Brown and his fellow Democrats argue that the problem is not that the state is spending too much, but that the revenues are not enough to pay for services that most citizens want, like schools and programs for the needy.

“Relative to the wealth of California, our spending is low,” the governor said.

He invoked a Latin phrase to explain his view: “Nemo dat quod non habet — it means no man can give what he does not have, and the state cannot give what it does not have.”

“We can’t go around spending in the way people would like when the tax revenue doesn’t generate it,” he added.

State Senator Bob Huff, a Republican and the vice chairman of the budget committee, derided the governor’s plans for increased taxes.

“Lost in the slick sales pitch for higher so-called temporary taxes, though, is the fact that our tax revenues are up over last year,” Mr. Huff said in a statement. “Raising the tax rates at a time our state is struggling to emerge from a recession and high unemployment is not the answer, and will strangle our recovery.”

To read more, visit: http://www.nytimes.com/2011/12/14/us/california-revenue-shortfall-to-force-cuts.html

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