As Expected, Lower-Than-Hoped Cash Triggers $1 Billion Budget Cuts

Confirming what had already been predicted, Gov. Jerry Brown said Dec. 13 that lower-than-expected revenue estimates required imposing $1 billion in additional budget cuts on public schools, universities and aid for the developmentally disabled and the elderly.

But while the reductions won’t fall as heavily ion public schools as initially thought, the Democratic governor stressed this round of cuts, which mostly take effect January 1, is just the beginning.

Within 30 days, Brown will present his proposed spending blueprint for the fiscal year beginning July 1, 2012, which contains a nearly $13 billion gap between revenue and spending commitments, according to predictions by the Legislative Analyst.

“More (cuts) to follow in January,” Brown told reporters at a Capitol press conference. “It’s not the way we’d like to run California but we have to live within our means.”

Brown said he would present a budget in January that includes receipt of $7 billion in new revenue – the result if voters approve a ballot measure the Democratic governor wants to place on the November 2012 ballot which would temporarily boost state income and sales taxes for five years.

Even if voters OK that proposal, which Brown conceded would be a tough sell, the remainder of the budget hole – at least $5 billion – would be filled with cuts.

Brown also said he would present another series of spending cuts like the ones just triggered  as part of his budget that would cover the $7 billion if voters reject his tax increase.

“None of this is pleasant,” Brown said. “You cut or you tax. There’s no third way.”

The package of cuts was part of compromise that closed out last year’s budget. Brown and legislative Democrats banked on receiving $4 billion more in revenue that previously thought.

If the money didn’t materialize a series of spending cuts would occur, the worse the cash shortfall the deeper the cuts.

The closer the hole came to $4 billion, the more would be taken from public schools up to $1.8 billion, the loss of more than seven days of instruction.

In its November Fiscal Outlook, the Legislative Analyst predicted that by June 30, 2012, the state would be $3.7 billion short of its estimate, requiring most of the cuts to schools to be imposed.

But Brown said revenues were buoyed by higher-than-expected income tax collections in October and that the state would fall only $2.2 billion short of its $4 billion target, necessitating cuts to schools of just over $330 million – nearly $250 million in the form of state aid for bus transportation to and from campuses.

The remaining $80 million repsents the loss of half an isntructional day although districts can cover the loss in revenue but reductions in other areas rather than classroom time. 

Community college students will also see their fees rise by $10 per unit to $46, effective May 1.

Of the other roughly $600 million in reductions that will take place, one-third of fall on the University of California and the California state university system.  Each shoulders $100 million reductions.

These come on top of sizable whacks in the budget, which took $1.4 billion from UC and CSU.

Neither UC nor CSU has been shy about increasing tuition to help cover past cuts but say they can absorb the additional $100 million without doing so.

Also slated for  $100 million reductions each are services to the developmentally disabled and in-home care.

The Department of Developmental Services was reduced by nearly $570 million in the budget. Subsidies for in-home care were cut by $413 million.

To save another $15 million, state support for local libraries will be eliminated.

 “You can’t provide money you don’t have,” Brown said.




Filed under: Budget and Economy

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