Modernized lottery and long term reform at center of Schwarzenegger’s proposal.
Governor Arnold Schwarzenegger released a revised budget Wednesday afternoon. The bad news was that the budget deficit went from $14.5 billion to 17.2 billion. The good news is that the Governor thinks he can meet the budget without making cuts to education.
School Districts here in Santa Clarita were frightened that the Governor would hold to his previous proposal of a 10% across the board cut, which would have left them under funded.
Now, however, the Governor plans to fully fund K-14 education in accordance with Prop 98. While the budget still has to be passed through the legislature, school districts are no doubt glad that the Governor appears to be sparing them.
So where will this $17.2 billion dollars come from? Governor Schwarzenegger looked to generate some new revenues to supply both the current budget deficit and a “rainy day” fund. Those funds would come by modernizing the California state lottery with hopes of increasing the return. Then, the state could sell future revenues for immediate cash which could total $5 billion a year. If voters approve that idea in November, then the money would be transferred into a rainy day account for use when times get tough.
However, if voters do not approve the lottery scheme, then a sales tax trigger would set in motion a one cent sales tax increase. That money would then be sent into the rainy day account until it is full, or by 2010, whichever comes first. As it is written currently, the sales tax is then supposed to disappear, and taxpayers should receive rebates.
The lottery change alone will not fix the budget problems though, and therefore some cuts will have to be made, and reform will have to take place.
Governor Schwarzenegger proposed a process that would make it easier for the legislature to make mid-year cuts, which shaved about $7 billion off the budget this year.
And scrapped in the revision was an idea to save the state money by releasing 20,000 criminals from prison early.
Where our elected officials stand:
Our Assemblyman Cameron Smyth issued a statement following the Governor’s announcement in which he praised the education funding, but showed concern for short term fixes:
“I am pleased to see that the Governor decided to increase funding for public education, ensuring that our schools receive the minimum guarantee under Prop 98, even in these tough financial times. I also applaud the Governor for eliminating his initial proposal to release over 20,000 inmates from California's prison system before they have served their time, as well as not closing any state parks. I am concerned however that we continue to rely on stopgap measures, like borrowing against future lottery earnings or a sales tax increase, which amount to nothing more than a band-aid rather than tackle structural deficiencies that will continue to plague our state.” – Assemblyman Cameron Smyth
Assemblywoman Sharon Runner had this to say: “I am glad Governor Schwarzenegger now proposes a budget that more accurately reflects the values of Californians by fully funding Proposition 98 to protect our children’s education, ensuring the public is kept safe from the early release of prisoners and keeping state parks open.
“However, I strongly urge the Governor to remember his commitment to not raise taxes as I will not support a proposal that increases costs to hardworking families who are already paying more for the basics of food and fuel.
“Tax increases are never the answer to our budget problems. We must put an end to years of overspending and re-evaluate our priorities to best meet the needs of Californians.
“I am committed to working with my fellow colleagues to ensure that this year we pass a responsible budget that will limit spending, maximize taxpayer dollars, and lower the deficit.” -Assemblywoman Sharon Runner
The budget still has to pass through the legislature, where it could change.