Friday, 06 January 2012

Governor Jerry Brown Warns of Education Cuts if Taxes Rejected

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Gov. Jerry Brown unveiled a new budget plan Thursday that calls on California voters to approve $6.9 billion in new taxes that would apply to sales purchases and income on the state’s high earners (those making over $250,000 a year). The budget was inadvertently published on the state’s Department of Finance website, leaving the Governor’s office scrambling to arrange a news conference Thursday to detail the plan.

In hawking his 2012 budget proposal, Brown warned voters that without the temporary new taxes, which would be scheduled to expire in 2016, the state would have to drastically reduce its education budget — which, the Governor noted, would likely shorten the school year by three weeks. If voters accept his proposal, Brown suggested, the state could undergo serious debt reduction while reversing recession-era cuts to K-12 schools, which have already shortened the school year and inflated student-teacher ratios.

"With the tax program, we will eliminate the budget deficit finally, after years of kicking the can down the road," Brown contended.

If the tax increases are not implemented, state officials cautioned, the reductions to public education would automatically go into effect, including $4.8 billion in cuts for public schools and community colleges and another $400 million in cuts for higher education. In addition, California courts would suffer a $125-million reduction and spending would be reduced for firefighting in public forests.

Some critics have questioned the administration’s angle in selling the budget to the public, as the strategy wields education, a politically sensitive sector of state economies, to push a tax policy agenda. "This budget proposal is the largest ransom note in California political history," charged Dan Schnur, director of the Jesse Unruh Institute of Politics at the University of Southern California. "Brown is essentially telling voters to either support his initiative or there’s going to be three fewer weeks of school next year." Further, Schnur averred, "There’s no guarantee of success, but this is probably the most politically viable course he could take to build support for the initiative."

Moreover, Republican lawmakers railed against Governor Brown for the tax hike, asserting that the state deficit is already tempering itself as the economy is recharging and more tax revenues are streaming in.

Being a common theme in state budgeting, the school funding piece of the budget is the "most convoluted," reported the Sacramento Bee:

If voters approve his tax measure, K-12 schools and community colleges would receive nearly $4.8 billion more than they do in the current fiscal year, for a total of $52.5 billion in state and local tax revenues.

Even without taxes, schools are owed about $2.4 billion more this year because of growth in state revenue and past promises made by state leaders. If the taxes fail, Brown proposes erasing that $2.4 billion for classrooms through an accounting maneuver that counts school bond debt payments toward what the state owes education. Two education lobbyists said that would be legally questionable.

It would leave K-12 districts with roughly the same amount they get this school year. But school advocates say they would have to borrow more money to keep programs at their current bare-bones level because of how the state delayed past payments.

Brown congratulated himself on the progress of California’s fiscal shape that has evolved during his administration, due to gradual improvements in the state’s economy and a catalog of spending reductions planted in the current budget. While the state is still confronted with a shortfall of $9.2 billion next year, it is a sharp drop from the $26.6 billion shortfall last year, the Governor boasted.

Democrats in the state legislature overwhelmingly support the tax hike, but said Brown would face heated opposition if more spending reductions were proposed. Darrell Steinberg, the Democratic president pro tem of the California Senate, asserted that estimations show notable spikes in revenues over the past month. "If that trend continues even slightly, we may avoid the need to make the kinds of cuts the governor now suggests," Steinberg affirmed. "While in the end we may have to cut more, doing it now should be a last resort."

While many critics hail the Brown administration’s "achievements" in mitigating the state’s budgetary shortfalls, the tax increases ought to cause alarm to voters, particularly when California ranks 49th in the group’s State Business Tax Climate Index and has the third highest tax rate on individual incomes, according to the nonpartisan Tax Foundation.

But to ease such concerns, the Governor and Democratic lawmakers assure that the new taxes are "temporary," and media outlets are sure to validate this point, as one local publication indicated: "The governor’s tax plan would generate $7 billion ... a year, for five years, then the taxes go away. The legislative analyst projects the state’s budget deficit next year will be $13 billion."

The taxes will "go away" in five years? Given the ultra-liberal Democratic-controlled legislature, one might suggest that Californians ought to be wary of on any California tax that is branded as "temporary."

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