California governor addresses huge budget gap by begging for taxes

Gov. Jerry Brown reveals his plan to close California’s $16 billion budget gap. (Photo credit: Rich Pedroncelli, Associated Press)

“I’m linking these serious budget reductions … with a plea to the voters: Please increase taxes temporarily,” said Jerry Brown, the Democratic governor of California, at a press conference where he revealed his plan to close the state’s $16 billion budget gap. His plan hinges on the state’s voters approving a 1/4 cent sales tax increase and raising the income taxes of those who earn more than $250,000 per year. If these taxes do not pass, he warns, the state’s public schools would face a $5.5 billion cut, and its public universities would lose $500 million.

The governor’s plan already imposes some large budget cuts to Medi-Cal, welfare, child care, and home-based services for the elderly and disabled.

The plan was announced today after the revelation that California’s budget deficit, originally projected in January to be $9.2 billion, is actually going to be $15.7 billion. The huge gap between those two figures stems from less revenue being collected than expected, slower economic recovery than expected, and court rulings that prevented the governor from implementing some of the budget cuts he wanted last year, he claimed.

So what all is included in the new budget plan? The governor proposes the following cuts:

  • Medi-Cal, California’s health care plan for low-income individuals and families, would lose $1.2 billion.
  • CalWORKS, California’s welfare program, would lose $1 billion.
  • $225 million would be cut from In-Home Supportive Services that aids the elderly and disabled. Included in this cut is a 7% reduction in aid workers’ hours.
  • State employees would all take a 5% pay cut and state government offices would only be open four days a week.
  • People convicted of minor crimes would be incarcerated in county jails instead of prisons, a plan that could save $1 billion.
  • The state court system would take a $300 million cut, and all courthouse construction projects would be delayed, saving $240 million.
  • Local redevelopment agencies would lose $1.4 billion.

If voters approve the governor’s proposed tax increases, not only will there be no further cuts this fiscal year, but state spending would actually increase by 5.6%, including $6 billion extra for public schools. If the measures are rejected, however, the budget would impose even stiffer cuts to schools and other services:

  • $5.5 billion would be cut from public K-12 schools and community colleges, essentially forcing schools to close for three extra weeks.
  • UC and CSU schools would lose $250 million each. This would force schools to raise students’ tuition once again, by as much as 9%.
  • Lifeguard services at state beaches would be eliminated.

There is some good news on California’s horizon, though. Facebook will be going public Friday, putting its stock on NASDAQ and potentially netting the state as much as $1.5 billion in taxes. And the state will get $300 million from a court settlement after the fallout from the mortgage crisis.

All of these budget proposals will need the approval of the state legislature. Some measures, such as the tax increases, will be put on the November ballot for voters, and measures regarding state employee pay will need to be negotiated with state public-sector unions.

Sources: Los Angeles Times, Fox News, Reuters, Associated Press, and Wall Street Journal.