Countdown to 2011-12: What’s on the Table?

While there were certainly things not to like about the spending plan passed by the Legislature last week and quickly vetoed by the Governor – such as the costly sale of state office buildings and its failure to tackle the ineffective Enterprise Zone Program – in terms of “hard” budget solutions, it stacks up surprisingly well in comparison to recent years’ budgets. Using the “best available” information, we compared the spending plan prescribed by last week’s actions along with the March spending cuts and estimated that 44 percent of the $27.2 billion total came from spending cuts; 37 percent from additional revenues, higher-than-previously-forecast collections, increased taxes and fees, and increased tax compliance efforts; and 20 percent from loans and other one-time or questionable “solutions,” including proceeds of the building sale and assumptions of increased federal funds. In contrast, the Department of Finance identified 85 percent of the “solutions” used to balance the 2010-11 budget as either not materializing or one-time in nature.

As we’ve previously noted, the depth of recent budget cuts will have a profound impact on low-income Californians at a time when a still-weak economy offers few opportunities to families struggling to make ends meet. Recent cuts to K-12 and higher education will take a lasting toll on the state’s economy. We still believe that the state’s remaining gap should be closed with a balanced approach that includes additional revenues in order to preserve the public structures essential to California’s prosperity. However, this goal may prove elusive without a change to budget rules that allow a handful of legislators to block passage of a spending plan that reflects the priorities of a majority of Californians.

— Jean Ross

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