Despite the election of a new Democratic Governor and nearly 30 incoming freshmen legislators, as the new 2011 legislative session begins, the main source of concern, conversation, and unfortunately continuity, remains the state’s ongoing budget crisis. With the projected deficit estimated at nearly $26.4 billion, Governor Jerry Brown released his first budget proposal since winning election last fall. He has called for $12.5 billion in spending cuts, including reductions in welfare, social services, health care for the poor and a combined $1 billion cut to the University of California and California State University systems. Governor Brown also wants the Legislature to call a special election in June to give voters an opportunity to continue hikes in the income, sales and vehicle taxes (set to expire this year) for an additional five years. His proposal relies on the $12 billion in new revenue that the tax extensions will bring. The only area of state spending being protected by the new administration is K-12 education. In an effort to persuade voters to back his tax extension, Governor Brown also has said he will seek to fundamentally restructure state government, shifting a host of responsibilities from the state to counties and cities, a process he has acknowledged will be complicated and controversial. That includes eliminating redevelopment agencies and ending tax breaks available to businesses that operate in depressed areas designated as enterprise zones. A growing number of cities and counties are lining up in fierce opposition to this portion of the Governor’s proposal, stating that it will stop vital economic growth and cost thousands of jobs. The Governor’s office has said that if voters approve his proposal, revenue generated from the sales tax and vehicle license fees currently set to expire in July would go to local governments to help pay for the changes. Despite the passage of Proposition 25 last November – which lowered the threshold for budget passage to a simple majority – the governor’s proposal to extend taxes will require support from Republicans in the state Legislature who have vowed to oppose all taxes. While Governor Brown campaigned on a promise not to raise taxes without voter approval, this is seen as a politically risky move after Californians rejected an extension of the taxes just two years ago as part of a package of ballot measures supported by former Governor Schwarzenegger. Already … [Read more...]
