An Early Prediction on What the New Year Will “Likely” Bring

(Editor’s Note: California’s Capitol tries to gather information from a fairly large pool of sources. What follows is a prediction that seems to encapsulate what a number of knowledgeable people have said is likely to happen next year – “likely” being the operative word. The only certainty for 2011 is, to paraphrase the Betty Davis admonition, “Fasten your seatbelts it’s going to be a bumpy ride.” It’s actually “bumpy night” in All About Eve. Here’s the prediction with some explanatory additions:)

Gov. Jerry Brown will introduce a budget in January that will cut drastically, continuing the drive he started in his budget conferences to keep temporary tax increases set to expire next year on the books at least awhile longer.

Doing so would reduce the projected $25.4 billion budget shortfall by roughly one-third.

The harsh cuts are necessary, in part, because an electorate that is, at best, skeptical of government won’t vote for taxes without seeing actual cuts.

As has been the case in the last two budgets, public schools will take the brunt of the reductions, probably between 2 percent and 4 percent of the $49.5 billion contained in the budget enacted in October, a record 100 days late. That translates into roughly a $1 billion to $2 billion reduction. However, $2 billion of the $49.5 billion this year was advanced from the fiscal year beginning July 1, effectively doubling the impact of whatever number actually appears in the Democratic governor’s budget proposal.

Again, part of the reason for the education cuts is that it’s one of the few things voters will tax themselves to protect or improve.

It’s likely the Legislature will pass a budget similar to that proposed by Brown and will do so well short of the June 15 deadline. Again, to convince voters they’re taking care of business and use the magnitude of the spending reductions to “campaign” for retaining the temporary taxes.

Interest groups with a “do-gooder” image – like the PTA for example — will qualify an initiative to continue the temporary tax increases.

If voters reject it, there’s still an early budget in place, which generates additional savings, easing the following fiscal year’s projected shortfall.

(Not to belabor the point: “Likely” is the operative word.)


Filed under: Budget and Economy

No Comments »

No comments yet.

RSS feed for comments on this post.

Leave a comment