Tuesday, December 13, 2011

GOV. BROWN PULLS BUDGET ‘TRIGGER’: Colleges, school bus funding and services for disabled hit

By Steven Harmon Bay Area News Group | San Jose Mercury News http://bit.ly/t4VUPM

Posted: 12/13/2011 12:24:30 PM PST

Updated: 12/13/2011 12:56:50 PM PST

SACRAMENTO -- Gov. Jerry Brown today said he would slash $1 billion in funding for higher education, school buses MediCal and services for the disabled, but K-12 schools will be largely spared from the devastating cuts many had feared.

Because revenue has fallen $2.2 billion short of projections, Brown's administration is being forced to make midyear budget cuts under a plan agreed to by Brown and Democratic legislators last June.

The shortfall, however, is below previous estimates, allowing the state to avoid deeper cuts to public schools that could have including reducing the school year by up to seven days.

"It turns out the cuts are far less than they would have been," Brown said.

School district officials across the state breathed a sign of relief at the news. Although they'll face a $248 million hit for school bus funding, it will be colleges, MediCal, child care, counties, local libraries and services for the mentally and physically disabled that will be hardest hit.

The University of California, already jolted by previous cuts, plans to dip into reserves to absorb a $100 million cut.

Jack Scott, chancellor of California's community colleges, said today he expects the latest cuts will result in a $10 per unit hike to $46, beginning with the summer 2012 terms. That's on top of a $10 fee jump this fall.

Brown and fellow Democrats in the Legislature had hoped for a $4 billion increase in tax revenue through the current fiscal year, which ends June 30. The budget they passed last summer without Republican support was based on those rosy revenue projections, a variety of spending cuts and fee hikes.

Some Democrats have said they plan to push for new taxes in January to offset the "trigger" cuts. But they're unlikely to be successful because they would need GOP votes to reach the two-thirds vote threshold for new taxes -- and Republicans have resisted any new taxes.

One such bill, to close tax loopholes for out-of-state corporations, won a two-thirds majority last summer in the Assembly but failed in the Senate.

Brown, who spent his first six months in office wooing Republicans -- in vain -- on his plan to extend sales, income and vehicle taxes, will now take his cause directly to voters. Last week, he launched a tax initiative for the November elections to raise $7 billion for schools, quickly tipping his strategic hand: He intends to assume the $7 billion in his 2012-13 budget, but will include a provision that would trigger automatic cuts to revoke the spending plans.

Brown hopes the trigger will provide voters with a stark question: To avoid new taxes, would they be willing to take $7 billion away from schools?

The Legislative Analyst's Office last month issued its own forecast, projecting that the state would have to make $2.5 billion in further cuts. But it was the worst-case scenario, providing the Brown administration with some wiggle room.

A number of economic factors were considered in the governor's finance team's revenue projections, including wages, housing permits, unemployment and even U.S. auto sales. The one piece of evidence that the finance department has that the LAO didn't is a preliminary figure showing how much tax revenue the state will collect in 2011.

The governor and Legislature have already made more than $15 billion in spending reductions this year to help close a $27 billion deficit.

The Sacramento Bee contributed to this report.

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