Gov. Jerry Brown proposes deep cuts, tax hikes
Desert Sun (Palm Springs)
Gov. Jerry Brown on Monday unveiled a spending plan to deal with the state’s ongoing deficit through tough medicine for nearly every Californian, including $12.5 billion in spending cuts and a proposed five-year extension of tax increases enacted in 2009.
In releasing his first budget plan, Brown said he wants to end the accounting gimmicks, borrowing tricks and overly optimistic revenue assumptions that characterized the recent budgets signed by former Republican Gov. Arnold Schwarzenegger.
Instead, Brown proposed closing a projected $25.4 billion budget deficit over the next 18 months through the following steps:
Reducing spending for welfare, social services, health care for the poor and community colleges. He proposed a combined $1 billion cut to the University of California and California State University systems.
Restructuring the way government delivers services by shifting a host of responsibilities from the state to counties and cities.
Having the Legislature call a special election in June to give voters an opportunity to continue the current increases in the income, sales and vehicle taxes for another five years.
The taxes are set to expire this year. If approved by voters, the taxes and proposed funding shifts would generate $12 billion in revenue.
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,” the newly elected Democratic governor said in releasing his plan.
The idea of raising taxes did not sit well with Republican leaders. In the Assembly, GOP leaders already announced their caucus wouldn’t support putting the tax extension before voters.
“Voters across California have rejected tax increases to bail out Sacramento and the majority party should respect the will of the people,” Assemblyman Brian Nestande, a Palm Desert Republican who serves as his party’s No. 2 leader in the Assembly, said in a statement.
“There is no choice but to make tough permanent spending cuts. We need to suspend costly programs we can’t afford and target fast-growing areas of government like health and human services and debt service.”
Among the hardest hit areas in Brown’s budget 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 copayment and a $50 emergency room copayment 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.
Brown intends to protect spending for 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 — Brown said the cuts will be even deeper.
Democrats signaled some approval for the plan, which Senate President Pro Tem Darrell Steinberg, D-Sacramento, called “complete and balanced.”
However Sen. Juan Vargas, a San Diego Democrat who represents parts of the Coachella Valley, previously told The Desert Sun he refused to approve deep cuts to the programs that serve “the poor and those who are struggling in life.”
Brown has acknowledged that his plan to realign state and local government will be complicated and controversial.
According to the budget released Monday, the plan includes eliminating redevelopment agencies and ending tax breaks available to businesses that operate in depressed areas designated as enterprise zones.
Counties also would monitor parolees, keep low-level offenders in county facilities rather than state prisons, and take over child welfare services like adoptions and foster care.
Assemblyman V. Manuel Pérez said he intends to fight to preserve redevelopment funding and enterprise zones. One such zone encompasses parts of the Coachella Valley.
“I think the governor has provided us with a starting point in developing a responsible fiscal plan. But it’s a starting point,” Pérez, a Coachella Democrat, said Monday.
“It’s a tough thing to swallow, this deficit we’re in and this budget that’s being proposed.”
Riverside County leaders also plan to fight Brown’s proposal to phase out redevelopment agencies’ funding, which has helped finance the fire station and training center in Thousand Palms, the sheriff’s stations in Palm Desert and Thermal as well as the North Shore Community Center.
Eliminating that revenue will “devastate the local economy, eliminate thousands of projected new construction jobs related to projects, and be the end of the city and county abilities to deliver assistance to retain and attract jobs,” Riverside County’s Economic Development Agency spokesman Tom Freeman said in an e-mail.
“County and city leaders are organizing to make a vigorous fight to keep the funds that belong to local government,” Freeman added.
In order to get the tax extension on the June ballot, lawmakers will have to act quickly to place a special election before voters. Some Republican support in the Assembly and Senate will be needed because of the two-thirds rule.
“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.”
Sen. Bill Emmerson did not indicate on Monday whether he’d support any tax increases, saying Brown’s proposal “gives Republicans and Democrats a lot to consider.
“The complexity of the governor’s budget proposal, however, is classic example of why California needs a two-year budget cycle,” the Hemet Republican said in an e-mail.
“Rather than go through a rushed budget process predicated upon the success or failure of an election to raise taxes, under my two year budget plan, lawmakers would spend an entire year solely focusing on developing a thoughtful, balanced budget.”
Brown is proposing an $84.6 billion general fund budget, slightly less than the $86.5 billion adopted under Schwarzenegger’s last budget.
The state’s general fund revenue comes largely from sales, income and corporate taxes.
Budget plan details
An overview of Gov. Jerry Brown’s proposed budget:
Total spending, including special funds and bond payments, is $127.4 billion for the 2011-12 fiscal year, slightly ahead of the current total spending of $125.2 billion.
General fund spending is $84.6 billion, slightly less than the $86.5 billion adopted for the current fiscal year.
The deficit is $8.2 billion in the current fiscal year and $17.2 billion in the fiscal year that begins July 1.
Breakdown of Brown’s budget proposal
Ask voters during a special election in June to maintain a 0.25 increase in the state income tax rate, an increase from 0.65 percent to 1.15 percent in the vehicle license fee and a 1 percent increase in the state sales tax for another five years. If approved, some of the revenue from the sales tax and vehicle license fees would go to local governments.
Cuts of $500 million each for the University of California and California State University systems.
Cuts $400 million from the California Community College system and increases fees to $36 per unit from $26 per unit, which is forecast to bring in $110 million.
Caps doctor visits to 10 per year and sets maximum annual benefit limits for items such as hearing aids, medical equipment and urological supplies for a savings of $217 million.
Requires co-payments from Medi-Cal recipients of $5 for doctor’s office visits and most prescriptions, and a $50 emergency room co-payment; limits the number of prescription drugs to six per month, for a savings of $557 million.
Eliminates the adult day health care program and other benefits for a savings of $193 million.
Reduces payments by 10 percent to physicians, pharmacies, clinics, transportation, home health and some nursing facilities, for a savings of $709 million.
Extends a hospital fee that expired at the end of 2010 until June 30, for a savings of $160 million.
Caps benefits in the CalWORKS welfare-to-work program at four years instead of five and cuts program funding, for a savings of $533 million.
Reduces the number of hours of help available and cuts benefits entirely to some recipients in the state’s in-home supportive services program for the disabled, saving $486 million.
Brown wants to shift a host of responsibilities from the state to counties, including:
Keeping low-level offenders in county jails rather than state prisons and making local authorities responsible for monitoring parolees, reducing the corrections budget by $458 million. This is forecast to eventually lead to the elimination of 4,000 state corrections jobs.
Transferring responsibility for child welfare services such as foster care, adoptions and child abuse prevention and adult protective services for seniors.
Eliminating local redevelopment agencies.
Realigning emergency responsibilities so the California Department of Forestry and Fire Protection would no longer respond to some 60,000 medical emergencies each year.
Cutting state operations for health and human services programs with federal requirements by 25 percent, which would lead to “hundreds of state positions being eliminated.”
Source: California Department of Finance.
The Associated Press and Erica Felci of The Desert Sun contributed to this story