Triggering Anxiety

July 2, 2012

As we reported last week, the 2012-13 spending plan signed by Governor Brown rests on the key assumption that voters will pass the Governor’s ballot measure in November. The Governor’s initiative would increase personal income tax rates on very-high-income Californians for seven years and boost the sales tax rate by one-quarter cent for four years. These increases – which would primarily affect the top 1 percent – would raise an estimated $8.5 billion in 2011-12 and 2012-13. Of this total, $2.9 billion would go to public schools and community colleges and the remainder – $5.6 billion – would help close the state’s budget gap and avoid the need for deeper spending cuts than have already been made in recent years. The new revenues would help stabilize California’s fiscal situation and create a foundation on which to rebuild going forward.

What happens if voters reject the Governor’s measure? The budget agreement would automatically trigger $6 billion in spending reductions on January 1, 2013. K-12 schools would bear the brunt of these “trigger” cuts – $4.8 billion, or more than 80 percent of the total – with schools authorized to reduce the school year from the current minimum of 175 days of instruction to 160 days of instruction in each of 2012-13 and 2013-14.

Colleges and universities also would face deep midyear cuts if the Governor’s initiative fails. With the stakes this high, the months leading up to the November 6 election are likely to be anxious ones for parents of school-aged children, university students already struggling with rising fees, and jobless Californians who have gone back to school to retool their skills in a tough job market.

— Scott Graves

Statement: Jean Ross on the Legislative Analyst’s Office Forecast

November 16, 2011

In response to the Legislative Analyst’s Office (LAO) long-term fiscal forecast released today, Jean Ross, executive director of the California Budget Project, released the following statement:

“The LAO’s new forecast underscores the fiscal challenges that California continues to face. The outlook suggests that revenues will lag the optimistic forecasts used as the basis of the 2011-12 spending plan and that shortfalls will persist absent significant additional revenues. Unemployment remains stubbornly high, both nationally and here in California, and state and local government job losses are weakening overall job growth.

“The LAO’s report provides a first look at the state’s fiscal outlook for the remainder of this year and beyond. It is important to note, however, that due to the timing of certain personal income tax payments, policymakers lack critical information needed to develop an accurate picture of the state’s fiscal situation. Still, the budget shortfalls forecast by the LAO highlight the need for policymakers to take a balanced approach to addressing the state’s ongoing budget gaps. Without additional revenues, policymakers will be forced to make even deeper cuts to our public schools and universities and other public structures that underpin a strong economy and are essential to the lives of Californians.

“Policymakers should strive to address the state’s fiscal challenges with a multi-year approach that fosters long-term stability. Deeper spending cuts, such as those that would be imposed by the so-called ‘triggers’ in the June budget agreement, will only serve to slow an already struggling economy.”