California lawmakers approved an $86 billion budget late Tuesday that imposes deep spending cuts but does not extend tax hikes. Despite optimism on the part of the majority party, the plan is already coming under fire for proposed cuts and it hasn’t even been signed by Governor Jerry Brown.
Tuesday night’s approval of SB 87 includes a taking of $1.7 billion from redevelopment agencies if Brown signs companion bills AB 1X 26 and AB 1X 27, which effectively eliminates the agencies. If they are signed, both the California Redevelopment Agency and the League of California Cities plan on filing lawsuits to stop this action, which they consider unconstitutional.
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According to a release from the LCC, legislators were not given a chance to vote on SB 1X 24, an alternative revenue plan proposed by CRA.
“No party should be allowed to go it alone on such an important budget,” said Kevin Korenthal, a member of the Newhall Redevelopment Committee. “Having said that, it is RDA's that have exceeded their authority (Los Angeles City for instance) that have ruined it for the responsible redevelopment efforts like that of Santa Clarita.”
The budget is a disappointment for Governor Jerry Brown, a Democrat who spent months trying to convince Republican legislators to put an extension of personal income and sales tax increases before the voters.
Unable to do so, Brown and Democratic legislative leaders cobbled together a plan that calls for a total of $14.6 billion in cuts. Much of the bloodletting was agreed to in March, but this week's deal would add at least $2.5 billion in additional reductions.
"Putting our state on a sound and sustainable fiscal footing still requires much work, but we have now taken a huge step forward," Brown said.
Los Angeles County Supervisor Michael Antonovich was critical of the plan, saying that the budget would hurt local governments.
“The state’s realignment plan is a Trojan Horse that will financially break the backs of local government,” he said. “While nationally, Democrat and Republican governors are providing leadership in renegotiating labor agreements, cutting costs and lowering taxes, Governor Brown is taking California in the opposite direction.”
“Just shifting the bankrupt state’s programs on the backs of local governments does not resolve the problem,” Antonovich added. “It only breaks the back of local taxpayers and disarms public safety.”
“It is time to focus on structural reforms-- not band-aids that allow business as usual. The state needs to reform, consolidate and eliminate unnecessary and overlapping departments, and commissions and reform the antiquated Civil Service and pension systems.”
Overall the Department of Health and Human Services would be slashed by $5 billion, while the Department of Corrections and Rehabilitation would see a cut of $1 billion. The state's two university systems would each lose $650 million in funding.
The budget hinges on the state bringing in $4 billion in more in tax revenues in the coming year than was initially expected. The improving economy has pushed the state's tax collections billions of dollars above estimates in recent months. Brown expects the windfall to continue into fiscal 2012, which starts Friday.
If tax revenue comes in lower than expected, the budget also would impose an additional $2.6 billion in cuts to higher education, corrections and in-home support services for the elderly and disabled.
The proposal would slash billions in spending for children, the sick, and the elderly, said Senate President pro Tem Darrell Steinberg. And it would hurt the state's economy, he said.
"This budget is the most austere fiscal blueprint California has seen in a generation," Steinberg said.
If anticipated tax revenues come in between $3 and $4 billion, there will be no additional cuts. If revenues fall between $2 and $3 billion, the following cuts will be instituted:
- $200 million cut to UC and CSU system
- $100 million cut to In Home Supportive Services hours
- $100 million cut to Department of Developmental Services
- $80 million but to public safety programs
- $30 million cut to community colleges, triggering a $10 per unit fee hike
- $23 million across-the-board cut to childcare funding
- $20 million cut to Department of Corrections and Rehabilitation
- $16 million cut to California State Library in library grants
- $15 million cut related to Medi-Cal Managed Care
- $15 million cut to California Emergency Management Agency
- $10 million cut to Department of Social Services in anti-fraud grants
If revenues fall lower than $2 billion, the state will impose up to $1.9 billion in cuts to education, including a $1.5 billion reduction to K-12 schools that will allow districts to drop seven classroom days, down to 168; cut $248 million, eliminating school bus transportation and cut $72 million from community colleges.
All cuts would take effect January 1, 2012, except for classroom reduction, which could begin in February 2012.
Since the budget does not call for tax increases, it requires only a majority of the Democratic-led legislature to approve it.
However, Governor Brown and his fellow Democrats said they plan to put a tax measure on the ballot in November 2012 through a voter initiative -- bypassing the requirement for Republican consent. That's the only way California can afford to pay for the services it provides, they said.
"It is clear that there is no realistic long-term solution to California's structural deficit that doesn't involve new revenues," said Assembly Speaker John Perez.
Though they fended off Brown's tax extensions, Republicans immediately attacked the proposal, saying California needs a budget that will revitalize the economy and create jobs.
"This is a 'Hope without Change' budget," said Senate Republican Leader Bob Dutton. "It relies on the hope for billions of phantom dollars and does nothing, absolutely nothing, to change government as usual. Even worse, it does nothing to put people back to work."
The proposal is a major shift for Brown, who has said for months that the state's $26 billion budget gap should be addressed with a mix of spending cuts and tax extensions. He also was determined to fulfill his pledge to put the extension of personal income and sales taxes before the voters.
However, he could not convince four Republicans to join him so he could get the measure on the ballot. A budget containing a tax hike needs the support of two-thirds of lawmakers.
Republicans have refused to go along unless the budget also contained a spending cap, as well as pension and regulatory reform.
The latest proposal was put together less than two weeks after Brown vetoed a budget approved by the legislature, saying it was chock full of gimmicks and contained legally questionable maneuvers.
Lawmakers had raced to pass a spending plan by June 15 to meet a voter-imposed deadline that required the legislature to pass a balanced budget or forfeit their pay.
However, state controller John Chiang determined that the budget was actually unbalanced. So lawmakers, who earn $95,291 a year and $142 per diem for each day they are in session, have gone without pay since mid-month. 
Additional reporting by CNN