Under the May Budget revision revealed by Governor Jerry Brown on Monday, California will continue to fight looming deficits with cuts, taxes, and borrowing.
“We have a more difficult problem and we’ll have to cut deeper,” said Governor Brown at the press conference. “I’m linking serious budget reductions with a plea to the voters: please increase taxes temporarily.”
Continuing with the status quo in the face of the $16 billion deficit would place California in the same predicament as European nations such as Ireland, Spain, Portugal, and others, he said.
“I don’t jump to austerity,” said Brown. “I don’t take pleasure in cutting jobs or anything else.”
However, the self-described austerity budget would not hit all aspects of government equally. Courts would suffer a one-year budget reduction of $300 million – an end-run at raiding their $562 million reserve fund. That $300 million would be used by the state in other general fund spending. MediCal, CalWORKS, and IHSS would also suffer significant cuts.
However, education would receive a 16 percent increase in funding.
In January, the Governor had proposed a budget that would have dealt with a $9 billion deficit. However Prop 98 education protections have increased by $2.4 billion, $1.9 billion in various shortfall arose, and the federal government blocked $1.7 billion in cuts – all while revenues fell $4.3 billion short of expectations.
In the opinion of Governor Brown, the state felt they had a chance to realize the $4 billion in additional revenues from a strengthening economy, but it didn’t work out. The lost revenue, he said, was a result of a free economy that has ups and downs.
Even some of the best and brightest on Wall Street can gamble wrong, the governor said. Comparing his budget to the recent loss of $2 billion by JP Morgan Chase, Brown described both as “a big miss.”
That “miss” became a target for Republican criticisms.
“Republicans warned the governor last year that he was using faulty revenue estimates when he and majority Democrats rammed through the 2011-12 spending plan,” said Senate Majority Leader Bob Dutton. “This deficit is not only an issue of relying on faulty revenue figures and not being able to control spending, but years of Democrats ignoring the pleas of Republicans to make the structural changes necessary to permanently bring spending in line with revenues.
Despite revenues falling short, the budget does call for recovering revenues over the next five years – and predicts an average annual growth of nearly 5 percent during that time. The budget even forecasts revenues to grow at 11.6 percent growth in 2012/2013 and 10.4 percent growth two years later. The state has only seen double-digit annual revenue growth four times in the last two decades.
Meanwhile, officials at the California State Association of Counties were initially pleased by the inclusion of revenues to for realigned services. That many had been promised by the Governor during their rounds of discussions shortly after his inauguration.
“Governor Brown demonstrated once again his commitment to counties by staying true to his vow to sustain funding for realignment,” said Mike McGowan, CSAC President and Yolo County Supervisor. “Our partnership with this administration remains strong and together we will work to right this ship of state.”
Not all reaction to the May Revise was as positive.
“The proposed cuts to the judicial branch are both devastating and disheartening,” said Chief Justice Tani Cantil-Sakauye. “They will seriously compromise the public’s access to their courts and our ability to provide equal access to justice throughout the state.”
Cantil-Sakauye went on to say that she would be calling an emergency meeting of the Judicial Council to “analyze what this means for the branch and how we can go forward together in preventing the harm these cuts will bring to our residents.”
“It’s my responsibility as Chief Justice to ensure that all Californians have a justice system that supports and protects their rights,” she concluded.