Valley Star

Budget Mess Continues After Revised Deficit Numbers

Schools will take a hit if disappointing state revenues lead to additional budget cuts.

By Kevin Jersey | Staff Writer

Published: Thursday, May 24, 2012

Updated: Thursday, May 24, 2012

 

California schools may once again feel the pinch since revised estimates project the state deficit is almost twice as high as originally thought. Despite numerous spending cuts intended to help balance the state budget, the deficit has swelled to nearly $16 billion, up from the $9-billion estimate released in January.

In anticipation of additional cuts to its budget, the University of California’s Board of Regents is considering raising tuition by 6 percent, though a final decision will not be voted on until July. A CBS News report also states that a much larger increase may be necessary if voters reject a tax initiative proposed by Gov. Jerry Brown.

“What I am proposing is not a panacea,” said Brown in his “Address to the People of California,” released on his YouTube channel, “but it goes a long way toward cleaning up the state budget mess.” His proposal includes a .25 percent sales tax increase and a 3 percent increase in state income tax for individuals earning more than $250,000 per year.

Although he estimates that the tax increase would generate $9 billion in revenue, Brown admits that additional cuts will still be needed. He has also designated $6 billion in cuts that will be triggered if voters do not approve his tax initiative. The Associated Press reports that these cuts would largely be targeted at public schools, resulting in higher college tuition fees and a K-12 school year that would have to be shortened by up to three weeks.

Brown knows that Californians are not eager to accept a tax increase but hopes it will be preferred to the alternative, so he appealed directly to voters.

“We can’t fill this hole with cuts alone,” he said. “That’s why I’m bypassing the gridlock and asking you, the people of California, to approve a plan that avoids cuts to schools and public safety.”

The cause of the higher estimated deficit is two-fold. The courts have blocked many of the cuts proposed in January, including cuts to Medi-Cal and In-Home Supportive Services. Additionally, state income tax revenue has been drastically lower than expected, coming in $2 billion below the original projections.

For this reason, the initial public offering for stock in Facebook has been highly anticipated by the state.

The Wall Street Journal predicts that more than $1.5 billion in tax revenue could be generated from sales of this stock alone. Although this does not eliminate the necessity for cuts, it could decrease the cuts that would be needed.

Brown is reluctant to slash school budgets any further, but he knows he might not have any other options. The governor is determined to eliminate the deficit even if his tax initiative is not approved.

“Given the decade of fiscal disconnect, I’ve committed to righting the ship of state and getting it into balance,” said Brown. “Otherwise, we borrow and sink deeper in debt.”

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