Brown unveils revenue update, automatic cuts

December 13, 2011

By Daniel Weintraub

Gov. Jerry Brown delivered what passes for good news today: the automatic budget cuts built into this year’s budget as a hedge against a revenue shortfall will not be as bad as many feared.

Brown said a recent surge in revenues helped trim the shortfall, and the automatic cuts that would be triggered by that shortfall. The big news: kindergarten-through-12th grade education was spared an anticipated $1 billion cut that would have almost certainly meant a reduction of at least a week at the end of the current school year.

But higher education, local prosecutors’ offices, Medi-Cal and services for the disabled will all be cut. And this probably won’t be the end of it.

This round of reductions stems from the “trigger” Democrats built into the budget when they passed it last June. After failing to persuade Republicans to help them extend a series of temporary tax increases, Democrats balanced the budget with the help of a $4 billion increase in the revenue projection. But, knowing that their new projection was on the optimistic side, they also adopted a series of cuts that were to take effect if a mid-year re-assessment of the revenue picture showed a shortfall.

The non-partisan Legislative Analyst has pegged that shortfall at $3.7 billion, which would have triggered nearly all of the automatic cuts. But today the Department of Finance released a slightly more optimistic forecast, saying revenues will come in $2.2 billion below the summer forecast.

That, in turn, triggered about $1 billion in reductions, most of which will take effect Jan. 1.

They included:

–About $350 million to K-12 education, largely by eliminating state support for student bus transportation.

–$100 million each to the University of California and the California State University system. These reductions will be absorbed by the universities’ reserves this spring, but will add to pressure for higher tuition in the near future.

–About $100 million to community colleges, which is expected to lead to a $10-per-unit fee increase beginning next summer.

–About $101 million to the In-Home Supportive Services program, mainly through an across-the-board 20 percent reduction in service hours for clients.

–About $100 million to the Department of Developmental Services.

–Further cuts to Medi-Cal and subsidized child care, which will make it more difficult for low-income Californians to get access to health care or find a service to watch their children while they work.

Even after all of this, the state will still likely face a shortfall of more than $10 billion next year. Brown and Democrats in the Legislature are planning to place a measure on the November 2012 ballot asking voters to approve an increase in the sales tax and the income tax on high-income earners to help plug that gap.

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