A Lot Has to Go Right for Jerry Brown’s First Budget to Work
While Gov. Jerry Brown’s $119.4 billion budget plan may not contain “gimmicks, tricks and unrealistic expectations” he says were used in previous spending blueprints, his proposal is certainly filled with uncertainty.
Not the least of the unknowns Brown’s spending plan is premised on is whether Californians in June will agree to keeping $9.2 billion in temporary taxes on the books for five more years, a central feature of the Democratic governor’s spending plan.
And, even before voters get a chance to decide, enough Republican lawmakers have to vote to place it on the ballot – a two-thirds vote is required.
Nor is it a slam dunk that the fractious Legislature, particularly members of Brown’s party, will embrace $12.5 billion in spending reductions including nearly $3.2 billion of which fall on welfare and Medi-Cal, the state’s health care program for the poor.
California State University and the University of California each take a $500 million hit.
“You can’t manufacture money. We have to face the music,” Brown told reporters when unveiling his spending plan. “This is the best I can figure out.”
Several of Brown’s spending reduction proposals have been pitched previously by GOP Gov. Arnold Schwarzenegger.
But legislative Democrats defended Brown as offering a complete package.
“This is a realistic budget. He has essentially been fair,” said Senate President Pro Tempore Darrell Steinberg, a Sacramento Democrat.
Brown’s appeal to keep temporary taxes on the books for five years is the centerpiece of his budget plan.
If voters reject the idea, as he told reporters January 10, look at the amount of proposed cuts and “multiply by two.”
Lack of the continued revenue from the tax increases could doom Brown’s ambitious shift of a variety of criminal justice programs to cities and counties. The plan is contingent on providing local governments with $5.9 billion by earmarking the 1 percent sales tax increase slated to expire and the higher level of vehicle license fees, also set to expire.
Brown does not reduce state support for public schools, although he can. Because state revenues have dropped, the minimum the state owes schools is some $2.3 billion less than schools are receiving this year.
But Brown made clear that if voters don’t approve extending the temporary taxes, public schools will likely fall from $49.6 billion to $47.3 billion.
Elsewhere in the Democratic governor’s 178-page budget summary are a number of risky moves.
Eliminating redevelopment agencies, to save $1.7 billion, is not going to be eagerly embraced by the California Redevelopment Association and its members, fresh from an election victory in November with Proposition 22.
Saving $924 million by ending the state’s 42 enterprise zones also won’t be easy.
Will local voters let themselves be more easily taxed by allowing increased revenue for economic development to be approved by a 55 percent margin intead of the current two-thirds, as Brown proposes?
Imposing a 10 percent reimbursement rate reduction on doctors, pharmacists and others who provide services under Medi-Cal also won’t be easy, perhaps not even legal.
Two rate reduction proposals by Schwarzenegger were blocked by the federal Ninth Circuit Court of Appeals. The U.S. Supreme Court is weighing whether to take the case.
Brown’s budget is based on the premise the court will take the case and California will prevail.
Much of the savings from a proposed lowering of eligibility for welfare from five years to four and reducing the maximum monthly grant to a family of three from $694 to $604 would be redirected to offset nearly $1 billion in costs in Cal Grants, the state program that rewards higher achieving high school students with college scholarships.
Like Schwarzenegger proposed before him, Bown seeks to lower payments to the state’s elderly and disabled poor to the federal minimum, a drop of $15 a month to $845 for individuals.
Again, like Schwarzenegger, Brown wants to redirect money raised through Proposition 10, which imposed a 50-cent-per-pack tax on cigarettes earmarking the money for early child development programs.
Brown, however, is more ambitious. He wants to use $1 billion of the estimated $2 billion in reserves held by the 58 county First Five commissions that divvy up 80 percent of the money to pay for Medi-Cal services for children under five.
Under the terms of Proposition 10, voters must approve the move. They rejected Schwarzenegger’s proposal in 2009.
Of the $750 million in savings Brown relies on from the $4.5 billion-a-year Department of Developmental Services, the budget spells out roughly $450 million. The bulk of the remaining savings would come from establishing “statewide service standards that set parameters and promote consistency.”
This, Brown asserts, “will result in significant general fund savings necessary to achieve the overall required savings of $750 million.”
If voters don’t approve the tax extensions in June, the cuts will be “extremely difficult,” Brown warned. “Even draconian, if I can use that word. And Dracon was not a very kindly chief executive.”
Filed under: Budget and Economy
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