California Organizations Respond To Gov. Jerry Brown’s May Revise, Address Potential Impacts
By Tiffany Rider - Senior Writer
June 5, 2012 – As local municipalities continue to face budget cuts, layoffs and restructuring, the State of California faces a higher than expected budget deficit for the upcoming fiscal year, according to Gov. Jerry Brown’s budget revision released last month.
Each May, the governor revises his initial budget proposal for the upcoming fiscal year. The revisions are made based on new realities in sales tax revenues and other cash flow numbers. According to the Governor’s Budget May Revision 2012-13, the $9.2 billion budget shortfall predicted in January has grown to a $15.7 billion problem. The increase is attributed to a revenue forecast that relied on higher sales tax earnings to carry through the rest of the fiscal year. Those revenues were “wiped out by weak final payments received in April 2012,” according to the May Revision summary.
In addition, the state is now required to pay $1.2 billion to K-14 education (inlcudes community college) under Proposition 98 due to year-over-year revenues “increasing by 5.9 percent,” the document reads. A third factor cited in the budget shortfall increase is the action taken by the federal government to block spending reduction measures. Such measures include requiring co-payments for Medi-Cal, a fee for the state’s in-home support services, and cuts to Medi-Cal providers.
While the state has permanently reduced its workforce by 30,000 positions and closed more than half of its ongoing budget shortfall from $20 billion to about $8 billion, the continued negative fiscal outlook not only impacts the economy but the state’s business reputation.
“Certainty is the foundation for economic recovery and a comprehensive budget solution will create the certainty that job creators need,” Allan Zaremberg, president and CEO of the California Chamber of Commerce, said in a statement. “Clearly, any long-term solution to the state’s fiscal challenges will be found in growth and economic development. . . .The Governor and legislators face a unique opportunity to restore confidence to an economy and an electorate both worn out from this seemingly endless budget crisis.”
While this budget deficit is less than the immediate $26.6 billion budget the Golden State faced in 2011, the revision focuses on the need for substantial additional revenues to tackle the shortfall.
“Without a balanced approach to addressing the budget gap – one that includes additional revenues – we face even deeper cuts to schools, colleges, and other core public structures that are essential to the lives of all Californians,” Scott Graves, senior policy analyst for the nonpartisan think tank California Budget Project, said in a statement. According to Graves, the California Sales and Income Tax Increase Initiative, a measure slated for the November 6 ballot with support from Governor Brown, is a “reasonable, sound approach to stabilize the state budget . . . creating a foundation on which to rebuild going forward.”
The tax initiative, as proposed, would increase the statewide sales tax rate from 7.25 percent to 7.5 percent (does not include county or local sales taxes) and create three new high-income tax brackets for a seven-year period. Under the proposed tax brackets, those who make more than $250,000 a year would endure a 10.3 percent income tax; those who make above $300,000 annually would be subject to an 11.3 percent tax rate; and those who make more than $500,000 would be taxed 12.3 percent on income. The additional income tax brackets would be imposed on the top 3 percent of Californians, according to 2009 data from the California Franchise Tax Board.
Considering the spectrum of industries impacted by the state’s budget situation, the following is a collection of statements released in response to Governor Brown’s May Revision. The Business Journal confirmed that the California Manufacturers & Technology Association and the California Restaurants Association did not release statements on the May Revision.
California Charter Schools Association President And CEO Jed Wallace:
“We applaud Governor Brown’s leadership and commitment to protect funding for public education, including charter schools, as reflected in today’s release of the May Revise for the 2011-12 budget. The proposed increase in funding and the elimination of some deferrals will help ensure charter schools can continue to operate and offer choice and quality education to families across the state. Many schools, however, continue to face uncertainty and difficult times. In order to ensure the best possible service delivery to the over 365,000 students that attend charter schools statewide, we urge the Legislature to approve Governor Brown’s budget and proposals, and move forward with long-term solutions that keep any cuts away from classrooms and students.”
California State University Chancellor Charles B. Reed:
“We very much appreciate the Governor’s hard work to avoid further direct cuts to higher education despite the steep growth in the size of the state deficit. Nevertheless, all Californians should be concerned about the serious long-term damage to student access to the California State University that is posed by the $250 million trigger cut. Combined with last year’s $750 million cut, no easy options remain. It will be extremely difficult to avoid impacts to program quality at our 23 campuses or impacts to access for students and the ability to serve them, with long-term consequences for workforce development and job growth in the state. The November election will be critical to preventing this.”
California Faculty Association Message To Membership:
“The governor’s revised state budget proposes no new cuts for the California State University with one huge qualifier – the revised budget he released today increases the possible trigger cut to the CSU from $200 million to $250 million. This makes clear the absolute necessity to support and pass the revenue initiative linked to the trigger, the Schools and Local Public Safety Protection Act, to increase desperately needed revenues to the state. If the revenue initiative fails, the trigger will be pulled and it will make things measurably worse for students in the CSU. However, avoiding the trigger cut will not alone solve the California State University’s problems. Years of devastating funding cuts have been worsened by the way in which management uses the precious dollars the university gets. CSU executives’ lavish pay and perks on themselves while imposing devastating cuts to students’ classes and services. It is vital for California to address how the CSU is managed. Until that occurs, the unrelenting cuts to higher education combined with the misplaced priorities at the top will continue to damage the state’s ability to rebound. . . . CFA will fight, both during the budget process and this fall at the ballot box, to make sure that legacy continues.”
California Employers Against Higher Taxes Spokesperson Peter DeMarco:
“To clarify – AB 1500 is a $1 billion tax increase as defined by the non-partisan Legislative Analyst, otherwise it would not require a 2/3 vote of the Legislature. It proposes to eliminate the primary method companies have been using to determine their tax liability for forty years – there is no ‘loophole’ to close. . . . Given that California’s unemployment rate continues to hover at 11%, we hope that the Governor will recognize that every job matters, and that he needs a strong economy in order to help solve his $15 billion budget deficit. California job creators have been paying their fair share of taxes, and forcing a $1 billion tax increase will only add to the myriad of highest-in-the-nation costs of doing business here. Chief Executive magazine ranked California the worst state to do business for the 8th year in a row, citing such factors as energy, labor land costs, regulatory burdens, transportation congestion and taxes. The Governor needs to keep his promise to Californians by vetoing this tax increase should it come to his desk.”
California Center For Responsible Lending Director Paul Leonard:
“California’s dire budget situation claimed a new casualty in the governor’s May Revise yesterday: $410 million in bank penalty funds from the National Mortgage Settlement intended to assist California homeowners. The governor instead proposed to use the funds to reduce the state’s deficit rather than to help borrowers access settlement programs. Attorney General Kamala Harris worked for well over a year to reach an acceptable settlement with banks that had harmed California homeowners with robo-signing and other mortgage servicing abuses. The $410 million in penalties paid by five big banks had been earmarked to help California borrowers access benefits under the settlement and bring to justice those servicers that broke state law. California needs every dime it can get to balance its budget. But mortgage settlement funds should be off limits.”
American Council Of Engineering Companies – California Executive Director Paul Meyer:
“In his May Revise proposal, the Governor has taken the first real steps in many years towards addressing Caltrans’ overstaffing and workflow issues in an era when there are few resources and even fewer projects to support such a huge department. We applaud Governor Brown for proposing some cuts and opening the door to a full discussion on the issue. There is no doubt that the state can and should do much more. . . . The Governor is certainly on the right track and our organization is heartened to see him addressing important issues for the good of the State and all of its citizens. We support him in this endeavor and assure him that the private engineering sector within California stands ready to help should he choose to pursue these additional opportunities to make Caltrans as efficient and cost effective as possible.”
California Association Of Public Hospitals And Health Systems President And CEO Melissa Stafford Jones:
“California’s most vulnerable patients, those who can least afford it, would suffer reductions in their access to health care under the revised California budget released today. The proposed budget seeks to cut $170 million from public hospital systems, funds used to care for Medi-Cal and uninsured patients. In the simplest of terms, these cuts will impair our ability to provide essential services to patients who need them most, and to implement important steps towards health care reform. . . . If enacted, the proposed budget would undercut our efforts to improve the health of our patients, reduce costs and implement health reform. . . . CAPH is also disappointed by the significant cuts to private hospitals through the hospital fee program. Furthermore, the proposal to increase co‐payments for Medi-Cal enrollees and the significant cuts to CalWorks and the IHSS program will make it that much more difficult for low-income families. We urge the Legislature to reject these cuts and recognize that it is not in the state’s short or long term financial interest to limit public hospital systems’ ability to respond to the health care needs of our most vulnerable communities and help improve the health of all Californians.”
Sierra Club California Director Kathryn Phillips:
“We’re disappointed that state parks closures remain in the budget. State parks play a role in education, recreation and physical health for millions of California children and adults. They also support the state’s tourism industry and local and regional business. . . . [In addition,] Californians shouldn’t have to wonder how much poison they are exposed to each day. The Department of Toxic Substance Control is one entity that helps identify and reduce Californians’ exposure to toxics. We are alarmed by the number of positions the governor is proposing to cut from a department that in recent years hasn’t been able to keep up with demand for its services. We look forward to seeing details about the governor’s proposal to develop new revenues to support timber harvest plans. These plans are often all that Californians can rely upon to make sure the services private forest lands provide society – habitat for wildlife, collection areas for snowpack and water, soil and hillside stabilization – aren’t wiped out by reckless logging. But the agencies that review and enforce the plans have been understaffed and need new funding.”
The Latest News
- UPDATED: $85 Million Increase To Middle Harbor Budget Approved
- Covered California To Provide Online Enrollment For Small Group Health Insurance
- Markets Remain On Slow Growth Trajectory As Pockets Of The Economy Gain Strength
- New Ordinance To Lay Groundwork For Adaptive Reuse Projects In Long Beach
- Port Of Long Beach’s Engineering Bureau Examined By Consulting Firm, May Be Restructured
- Banks Reposition Brick-And-Mortar Retail Strategy As Mobile, Online Usage Increases
- Labor Ordinances To Be Drafted For Airport And Convention Center