GOP Budget Plan: $22 Billion, No Taxes

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Legislative Republicans have crunched the numbers on their proposal for erasing some, but probably not all, of the shortfall facing the state over the next 18 months -- a $22 billion proposal that suggests more than $2 in cuts for every $1 in new revenues.

First, those revenues: the GOP plan would grab $6 billion in revenues generated from the state's 10-year-old tobacco tax (Proposition 10) and about $4 billion from a 2004 initiative that hiked the income tax on millionaires. The tobacco tax dollars are designated for childhood development programs; the millionaire's tax dollars are set aside for mental health programs (Proposition 63).

But don't call the plan the "B" word: borrowing.

"We don't consider that borrowing," said Senate GOP Leader Dave Cogdill. The proposal would, however, have to be ratified by voters because that's how the current designations were created. Cogdill says the $6 billion is sitting "idle" in the bank, and could be used to solve the state's short-term cash woes. Assembly GOP Leader Mike Villines calls the money "surplus," adding: "I don't think taxpayers realized they paid money into programs that are surplus. Let's put the question to them: would you rather that [money] go into the budget crisis?"

More on the revenues in a moment.

As for cuts, the proposal includes a trim to the Legislature's own budget (which, in the end, may be the one element that no lawmaker can defend not including, given the low esteem in which the body is held by the public); that proposal calls for a 5% across-the-board cut, including a cut in lawmaker salaries.

But the big cuts come in education (about $905 million beyond plans offered by Democrats and Governor Schwarzenegger) and an additional $86 million in social services programs. The education cuts are mostly in K-12, with about $75 million cut through GOP demands for repeal of the state law allowing in-state college tuition for undocumented immigrants.

The biggest education cut, by the way, is a polite jab to the governor: a $550 million cut in Proposition 49 funding, the afterschool initiative the guv championed in 2002.

(And jab #2 to the guv: a zeroing out of the budget for Schwarzenegger's famed "hydrogen highway," to the tune of $6 million).

The GOP plan also calls for loosening some of the state mandates on how education dollars are spent, as well as some of their pro-business demands that they say will stimulate the economy.

"If we do this today," Villines said to reporters, "it won't be as bad next year."

Back to those revenues... the advocates for Prop 10 and Prop 63 programs say the GOP legislators lack an understanding of how those programs work. In particular, they say the seemingly "surplus" dollars have been committed to valuable programs that are funded through two and three year grants, not annually.

"You might not think the [tobacco tax] dollars are not allocated, or earmarked, but they are," said Kris Perry, executive director of the California First 5 Commission.

"This proposal is like a Trojan Horse," said Rusty Selix, one of the authors of Prop 63, in a written statement. "While it looks like there is a lot of revenue available, inside that package are the costs of caring for thousands of people with severe mental illnesses who are currently succeeding in county programs." Selix says using this money elsewhere would just lead to mental health patients ending up in other state supported programs. "The savings are illusory," he said.

So now what? Hard to say. The proposal released today is not unexpected, and neither is its bottom line position on how to get out of the state's fiscal mess. That being said, it does seem to put the ball back in the court of Democrats to say if any of these ideas are ones they'll consider... in exchange for something else. It also allows GOP legislators to now dismiss criticisms that they haven't come forward with a plan.

[update: Assembly Speaker Karen Bass says in a statement the GOP plan will be vetted tomorrow by her chamber's Budget Committee. "The Republicans have to show they are finally serious about accepting real revenues as well," she said in a statement. "We'll learn tomorrow just how serious they are."

And even less enthusiasm from the governor. The GOP plan "is not a negotiated compromise," says gubernatorial spokesman Aaron McLear, "it's simply a [political] drill."]

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About John Myers

John Myers is senior editor of KQED's new multimedia California Politics & Government Desk.  He has covered California politics for most of the past two decades -- serving previously as Sacramento bureau chief for KQED News and, most recently, as political editor for KXTV News10 (ABC) in Sacramento. He moderated the only gubernatorial debate of 2014, and was named one of the nation's top statehouse reporters by The Washington Post. Follow him on Twitter @johnmyers.

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