State to Enact Nearly $1 Billion in Trigger Cuts; Video of Entire Brown Press Conference
Update 5:45 p.m. Here’s a video replay of Brown’s press conference.
Update 2:45 p.m Here’s the blog post on today’s announcement from our Sacramento Bureau Chief, John Myers.
…Brown’s administration pulled the trigger (or, perhaps, declared the pulling… you be the judge) on almost $981 million in state budget spending — from higher education to child care subsidies to juvenile justice and beyond.
“We’re pulling our budget into line,” said the governor in discussing the cuts (PDF) — cuts which were written into the June budget agreement to be entirely dependent on (and thus “automatic”) projections of state revenues for the 12-month fiscal year that ends on June 30, 2012.
That revenue estimate, according to Brown’s economists, is $2.2 billion below what was written into the state budget. That may sound gloomy, but it’s substantially better than last month’s projection by the Legislative Analyst’s Office of a $3.7 billion gap between the budget and reality.
The budget language mandating automatic cuts in such a scenario says whichever forecast — the governor’s or the LAO’s — is most optimistic wins… and so the automatic cut list is smaller than many expected…One thing is clear: the trigger cuts won’t be stayed by any emergency gathering of the Legislature. Not only has the governor resisted such suggestions, but legislative leaders have also nixed the idea on the grounds that there’s no consensus on any sort of Plan B.
The cuts may sound gloomy, but they’re substantially better than last month’ LAO s projection of a $3.7 billion gap between the budget and reality.
“The trigger is the trigger,” said Senate President pro Tem Darrell Steinberg at a Capitol event before the governor’s announcement. “It’s already been legislated.”
…There’s already a temporary restraining order that could block the ‘triggered’ $100 million cut to In-Home Supportive Services. Add to that a federal challenge to existing health care cuts and, as we’re now hearing, a likely lawsuit to block the biggest ‘triggered’ cut to K-12 schools — a $248 million cut in school transportation funds.
Update 1 p.m. Below is some of what the governor said at today’s press conference concerning the almost $1 billion in “trigger” budget cuts that will be enacted because tax revenue has fallen short of what was projected in the spring. (To see the broad categories under which the cuts fall, see this document from the state Dept of Finance.)
And by the way, Brown warned of more cuts coming down the road…
Jerry Brown today, on the cuts…
- “This is not the way we like to run California, but we have to live within our means.”
- Looking at the federal govt and the crisis in Europe, it’s “very clear” that “we don’t’ want to dig ourselves into a hole that becomes virtually impossible to get out of.”
- “I think we’re very fortunate that we got at least half the revenue, and cuts are under a billion instead of 2.5 billion. We hoped for more and we got more, but not quite as much as we wanted.”
On the past overly optimistic projections in the spring and the new projections today…
- It was “much wiser to assume the $4 billion” in extra revenue in the spring “than make $4 billion in cuts that would have been immediate devastation.”
- On his confidence about the new estimates: “Economics is an art and a science and we’re talking about the future, and to some extent it’s prophecy. I notice they use ‘regression analysis,’ I didn’t go past algebra 2, I don’t know what to think about regression analaysis.
(But) I think it’s pretty much in the ballpark.”
On his proposed November initiative that would raise taxes:
- It will be “very difficult” to win, but he thinks it will pass. But “after we win in November, it will still be painful,” because groups “will come around and still want more spending.” Regarding the governorship, “it’s always going to be managing discontent and rising claims on a reluctant taxpayer, and that kind of defines the job.”
- From a progressive point of view, Brown said he’s sure people will think the call for tax increases don’t go far enough, but he tried to find a plan that could pass. “There’s still plenty of hostility to taxes,” he said. (A recent poll found that 60% of likely voters are in favor of the plan.)
Update 12:50 p.m. You can find the specific cuts in this document from the Dept of Finance (pdf).
Update 12:35 p.m. From Bay Area News Group:
Gov. Jerry Brown today said he would slash $1 billion in funding for higher education, child care and school buses, but K-12 schools will be largely spared from the devastating cuts many had feared.
Because revenue has fallen short of projections, Brown’s administration is being forced to make midyear budget cuts under a plan agreed to by Brown and state legislators last June.
School district officials across the state breathed a sign of relief at the news. Although they’ll face a $248 million hit for school bus funding, it will be colleges, child care, counties, libraries and services for the mentally and physically disabled that will be hardest hit.
The University of California, already jolted by previous cuts, plans to dip into reserves to absorb a $100 million cut. Full article
Update 12:16 p.m. From the Sacramento Bee:
Gov. Jerry Brown will slash higher education, child care and school bus service, but he will largely spare K-12 classrooms from mid-year cuts under a revised budget forecast released today.
K-12 school districts were at risk of losing as much $1.5 billion – the equivalent of seven instructional days – under the budget Brown and lawmakers enacted earlier this year. But sources said they will face a smaller $79.6 million reduction, or about $11 per student. That should avert massive reductions in the school calendar or other drastic measures for most districts…
Districts will still face a $248 million elimination of school bus funding. And colleges, child care, libraries, counties and disabled services will all face the knife as well. Some cuts will be more immediate than others, based on how well positioned each program is.
University of California will absorb its $100 million cut by tapping reserves, and activists for disabled residents are challenging a $100 million cut to In-Home Supportive Services in court. But rural and low-income residents may lose free access to library services outside their home area, while some families could lose subsidized child care.
California Community Colleges Chancellor Jack Scott said Tuesday he anticipates the latest cuts will lead to a $10 per unit hike from $36 to $46 starting with the summer 2012 term…Scott believes the new fee hike will remain permanent given the state’s ongoing budget problems. Full article
Update 12:10 p.m.
Official #cabudget revenue estimate: $86.247 bil, $2.2 bil below expectations.
— John Myers (@johnmyers) December 13, 2011
Today at noon, yet another day of reckoning for California…
Jerry Brown’s State Finance Director Ana Matosantos is expected to announce way-more pessimistic revenue projections than anticipated when Governor Jerry Brown — negotiating with his own party — signed the budget under the condition that if the numbers didn’t pan out, automatic cuts would be triggered.
KQED’s John Myers has this to say about the cuts:
It’s important to remember how we arrived with these automatic “trigger” spending cuts in the current state budget. These cuts were a provision demanded by Governor Brown in the handful of days between his veto of the first budget sent to his desk in June and his signature on a revised spending plan on June 28. The governor and Democratic legislative leaders were essentially $4 billion apart in how to balance the budget. And the only way Brown would agree to raise revenue expectations was to backstop the prediction with a series of almost untouchable spending cuts if the revenues didn’t materialize. The governor has always maintained that the only way Wall Street investors would give the state a routine short-term loan (for cash flow needs) was if there was a guaranteed way to cut spending.
It’s also interesting to note that the cuts appear to be quite unpopular with the public, according to recent statewide polls. And yet the governor seems to see them as the tough medicine the state faces without any other credible alternative.
Category: State Budget