SACRAMENTO (AP/KCBS) – Gov. Jerry Brown’s proposal to slash spending and extend tax increases to balance the state budget is just the first step in a long process.
Lawmakers on both sides of the aisle are already exploring major changes.
A State Senate hearing on Thursday will be the next step toward crafting a compromise to close a $25 Billion deficit.
KCBS’ Doug Sovern Reports:
Brown said Monday he will ask a deeply divided California electorate to decide what they want from state government and how much they are willing to pay for it, bringing the state’s fiscal crisis home to every Californian.
In unveiling the first spending plan of his administration, the Democratic governor called for personal sacrifices from every citizen while deep cuts are made to programs that many hold dear, such as universities, community colleges and medical care for the poor.
He also intends to ask residents to extend for five years a series of temporary sales, income and vehicle license taxes or risk a “drastic breakdown” in state government.
“Here’s the problem: We’re very divided … My job is to find some common core here that we can agree on,” Brown said. “I’m just going to lay out the facts. Whatever they decide, obviously will be the will.”
His budget projects the deficit at $25.4 billion over the next 18 months.
To close it, Brown called for $12.5 billion in spending cuts, including reductions in welfare, social services and higher education, as well as $12 billion in funding shifts and new revenue if voters agree to extend taxes.
Brown also is seeking to fundamentally restructure state government, shifting a host of responsibilities, from incarcerating low-level offenders to providing foster care, to local governments.
Brown said his spending plan for the fiscal year that begins July 1 is intended to end the state’s continual deficits and balance the budget for the next several years without borrowing money to do so.
“It’s better to take our medicine now and get the state on a balanced footing,” Brown told reporters in releasing his plan.
Among the hardest hit areas would be recipients of Medi-Cal, the state’s health insurance program for the poor. Doctors’ visits would be capped at 10 per year, a $5 office co-payment and a $50 emergency room co-payment would be added, and there would be caps on the annual benefits for items such as hearing aids and medical equipment. Brown also is seeking to eliminate the adult day health care program that serves about 27,000 Californians.
Community college fees, among the lowest in the nation, would increase to $36 per unit from $26, and colleges would lose about $400 million in funding.
He said the only area of state spending he would protect is K-12 education, but that assumes voters approve the tax extensions. If they do not, or if the Legislature fails to muster the two-thirds vote needed to place the question on the ballot, cuts will be even deeper, Brown said, hinting that schools could be hard hit.
The governor wants the Legislature to call a special election in June to ask for tax extensions that are due to expire this year. The move would likely require some support from Republican lawmakers because of the two-thirds rule on tax increases. They were quick to reject the idea.
KCBS’ Chris Filippi Reports:
“There are not enough votes in the Assembly Republican Caucus to place the same tax increases that voters overwhelmingly rejected less than two years ago back on the ballot,” said Minority Leader Connie Conway, R-Tulare. “Californians have sent a strong message at the polls that they want Sacramento to make government live within its means.”
So why not leave it to voters to decide?
“I think it’s the responsibility of the legislators who are here to vote and that’s what we intend to do,” said Assemblyman Jim Nielsen, R-Yuba City, vice chairman of the Assembly Budget Committee.
Voters rejected an extension of those taxes in May 2009 as part of a complicated series of measures placed on the ballot by the Legislature and Schwarzenegger, whose popularity was plummeting at the time.
Senate President Pro Tem Darrel Steinberg, D-Sacramento, said Brown’s proposed cuts to state programs include many social safety net provisions that Democrats hold dear.
“The $12 billion expenditure reductions is an exchange for the privilege of asking the people to decide whether or not they want these taxes extended for five years,” he said.
Brown acknowledged that Republican lawmakers will be hesitant to support the ballot measure but said he was confident he could get enough support to push ahead with the special election.
He also said he expected help from a number of interest groups representing business, labor, education and community associations.
“I think there are a significant number of people who have an open mind,” Brown said. “I think people will want to defend and protect California as they have come to understand it.”
The tax extensions will be coupled with deep cuts to a state government that already has sustained years of recession-induced reductions.
Hundreds of people from various unions, community organizations and activist groups held rallies outside the state Capitol in Sacramento and the governor’s office in Los Angeles, protesting the proposed cuts.
Leo Perez, 34, of Los Angeles, who suffers from multiple sclerosis and uses a wheelchair, held a sign reading, “I am human.”
He said he fears losing funding from the state’s in-home supportive services program that helps pay for things like grab bars so he can move around the bathroom.
“The state’s been bankrupt but (IHSS funding) is going to save the state money,” he said.
Brown’s cuts and restructuring also include eliminating redevelopment agencies and ending tax breaks available to businesses that operate in depressed areas designated as enterprise zones. Counties would also monitor parolees, keep low-level offenders in county facilities rather than state prisons, and take over child welfare services like adoptions and foster care.
If voters approve, revenue generated by the sales tax and vehicle license fees would go to local governments to help pay for the changes, but it is unclear where the money would come from when the taxes would end in five years.
The shift in responsibilities to local governments could also lead to massive job losses at the state level _ as many as 4,000 jobs in corrections and hundreds in health and human services, Brown’s budget proposal said.
The governor also is seeking an 8 to 10 percent cut in pay for state workers who aren’t covered by union-negotiated contracts, which he said would save the state about $308 million.
That actually could be an improvement for some state employees who currently are furloughed three days a month, said Patrick Whalen, general counsel for California Attorneys, Administrative Law Judges and Hearing Officers in State Employment, one of six unions operating without a contract.
Brown also wants a $1 billion rainy day fund.
Brown is proposing an $84.6 billion general fund budget, slightly less than the $86.5 billion adopted under former Gov. Arnold Schwarzenegger’s last budget.
The state’s general fund revenue comes largely from sales, income and corporate taxes.
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