Days before Gov. Jerry Brown releases his revised budget proposal for the coming year, Republicans in the state Assembly have offered their own outline they say would balance the budget without renewing temporary taxes that have expired or about to do so.
Republicans are clearly hoping to corner Brown and Democratic lawmakers by making education funding the centerpiece of their plan. They say they are proposing the same level of spending Brown has already offered for education, and no further cuts to the state’s universities.
Brown is widely expected to say that unless the state extends the temporary taxes, deep cuts to schools are inevitable. With their plan, Assembly Republicans will claim that education spending can be protected without extending the temporary taxes.
The Republican plan also spares $500 million in local public safety funding and scraps Brown’s proposal to shift an array of services to cities and counties.
With those assumptions in mind, the outline seeks to erase what would be about a $14 billion gap between current spending trends and revenues projected in January.
The plan counts on revenues coming in $5 billion higher than projected in January. Half of that amount — $2.5 billion — is already in the state’s coffers, thanks to a healthy spring of tax collections buoyed by a recovering economy. The Republicans assume another $2.5 billion above and beyond Brown’s January projection will come to the state during the 12 months starting July 1. That revenue alone would wipe out about a third of the remaining shortfall.
Another big revenue bump: the Republicans want to shift about $2.4 billion to the state’s general fund from three special funds created by voters when they adopted cigarette taxes to fund anti-tobacco programs and children’s services and a personal income tax surcharge on million-dollar earners to finance mental health programs. The Republicans say they money they want to shift is all held in reserves for those programs, although advocates for the programs say otherwise. The funds were created by Proposition 99, Proposition 10 and Proposition 63.
The GOP lawmakers are also counting on at least $2.4 billion in changes Brown has recommended but the Legislature has yet to adopt, including the elimination of local redevelopment, $1.3 billion in cuts to state programs and a $100 million fee on managed care health plans.
They want to take another $1.1 billion out of payroll costs, which they say represents a 5 percent cut, and save roughly another $1 billion with efficiencies in Medi-Cal and medical care in the state prisons.
The plan says the state could save another $1.3 billion by using electronic recording in the courts rather than human court reporters, by contracting out transportation and dining services at facilities for mentally ill people and developmentally disabled people, and by implementing an across-the-board 10 percent cut in state operating expenses and equipment costs.
It’s not clear how the Republican plan would compare to Brown’s beyond its first year. One thing is clear: the $2.4 billion borrowed from the reserves in ballot measure funds would have to be repaid, and the same amount could not be borrowed again next year. So that could leave a big hole in the budget. On the other hand, Republicans say their assumption that state revenues will grow by $2.5 billion next year beyond the governor’s projections is conservative. If more revenue comes in, it could make up for other holes in their plan.
Brown’s most recent proposal calls for $11 billion in new revenue from the expiring taxes. He wants to renew those higher taxes for another five years.
Daniel Weintraub is editor of the California Health Report at www.healthycal.org.