News

Gov. Brown proposes spending cuts, continuing tax hikes

By Jeff Shuttleworth

Bay City News Service

Gov. Jerry Brown said today that he is proposing to close the state's $25.4 billion budget gap by cutting spending by $12.5 billion and extending temporary tax increases that were enacted under the Schwarzenegger's administration.

The governor's budget proposes total spending of $127.4 billion for the 2011-12 fiscal year, of which general fund spending accounts for $84.6 billion.

In a news release issued by his office, Brown said he is proposing a cut of 8 to 10 percent in take-home pay for most state employees and a "vast and historic" restructuring of government operations.

"These cuts will be painful, requiring sacrifice from every sector of the state, but we have no choice," he said.

"For 10 years, we've had budget gimmicks and tricks that pushed us deep into debt," he said. "We must now return California to fiscal responsibility and get our state on the road to economic recovery and job growth."

He said he is calling for an election in June to ask voters to continue for another five years the temporary tax hikes, which include a 1 cent increase in the state's sales tax, a 0.25 percentage point hike in its income tax and an increase in the vehicle license fee rate.

He said his realignment plan will return decisions and authority to cities, counties and schools and "allow government at all levels to focus on core functions and become more efficient and less expensive" by reducing duplication of services and administrative costs.

The governor said revenue from sales tax and the vehicle license fee will be transferred directly to local governments to finance the first phase of his realignment plan.

Proposed spending reductions include $1.7 billion to Medi-Cal, $1.5 billion to California's welfare-to-work program, $750 million to the Department of Developmental Services, $500 million to the University of California, $500 million to California State University, and $308 million for a reduction in take-home pay for state employees not currently covered under collective bargaining agreements.

Brown's spending plan proposes additional reductions throughout state government, including corrections, the judiciary and resources.

He said the one area of state spending spared from cuts is kindergarten through 12th grade education.

He defended his proposed spending cuts and tax extensions by saying, "Without decisive action, the state's severe budget problems will persist, threatening economic recovery, job growth, public education and the quality of life in California."

"The adoption of this budget will position the state to lead the country as it slowly recovers from the Great Recession," he said.

Comments

 +   Like this comment
Posted by Hardin
a resident of Cuesta Park
on Jan 10, 2011 at 3:19 pm

I applaud Governor Brown in getting a plan out quickly to address this priority issue. However, he missed the elephant in the room:

"Proposed spending reductions include...and $308 million for a reduction in take-home pay for state employees not currently covered under collective bargaining agreements."

The real savings opportunity is with renegotiation of the union labor collective bargaining contracts that determine wage, pension, and health benefits, which is distinctly not covered in this proposal.

It will be interesting to see how the governor addresses this, considering his close relationship with the unions.

This is the same issue that the Mountain View City Council, and City Manager need to deal with as well, if they hope to address the bleeding budget forecasts.


 +   Like this comment
Posted by Proud Sierra Club Member
a resident of Rex Manor
on Jan 10, 2011 at 6:20 pm

Hardin hit the nail on the head!

The collective bargaining contracts are too much. Just look at what out city employee retirements...unbelievable.


 +   Like this comment
Posted by Mark
a resident of another community
on Jan 10, 2011 at 8:09 pm

Asking Brown to propose anything to do the Unions is like asking him to cut off an appendage. Who do you think put him in office?


 +   Like this comment
Posted by Hardin
a resident of Cuesta Park
on Jan 11, 2011 at 8:44 am

On a more positive note, I'm interested in the governor's initiative to redistribute some current State responsibilities back to local control, as this is a structural defect that has allowed for waste and inept management of resources, and allowed funding to fall victim to state politics. Past performance has shown that locally controlled funding can be better managed and spent to address the needs of the community.

Still, while proposing $12.5 billion in cuts, Brown has only touched the surface of his labor cost problem. At $300,000, that constitutes less than 3% of all cuts proposed, a token amount.

In any other business, companies understand that labor costs make up a majority portion of liabilities on the expense sheet, and address this with a reduction of benefits and/or layoffs. The State needs to seriously consider how it is going to manage its labor costs, instead of focusing primarily on cutting services and raising taxes/fees.

Once a bureaucracy exists only to support and sustain a growing bureaucracy, its lost its core function of serving the people, and relinquishes its justification for existence, in its current form.


 +   Like this comment
Posted by Paul
a resident of another community
on Jan 18, 2011 at 9:17 pm

End Welfare for freeloading adults..


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