May 13, 2012 in Nation/World

California deficit grows to $16 billion

Plan to stave off cuts hinges on tax vote
Judy Lin Associated Press
 
Associated Press photo

Gov. Jerry Brown cited lower tax revenues in announcing the shortfall.
(Full-size photo)

Temporary tax increase

Under Gov. Jerry Brown’s tax plan, California would temporarily raise the state’s sales tax by a quarter-cent and increase the income tax on people who make $250,000 or more. Brown is projecting his tax initiative would raise as much as $9 billion, but a review by the nonpartisan analyst’s office estimates revenue of $6.8 billion in fiscal 2012-’13.

SACRAMENTO, Calif. – California’s budget deficit has swelled to a projected $16 billion – much larger than had been predicted just months ago – and will force severe cuts to schools and public safety if voters fail to approve tax increases in November, Gov. Jerry Brown said Saturday.

The Democratic governor said the shortfall grew from $9.2 billion in January in part because tax collections have not come in as high as expected and the economy isn’t growing as fast as hoped. The deficit has also risen because lawsuits and federal requirements have blocked billions of dollars in state cuts.

“This means we will have to go much farther and make cuts far greater than I asked for at the beginning of the year,” Brown said in an online video. “But we can’t fill this hole with cuts alone without doing severe damage to our schools. That’s why I’m bypassing the gridlock and asking you, the people of California, to approve a plan that avoids cuts to schools and public safety.”

Brown did not release details of the newly calculated deficit Saturday, but he is expected to lay out a revised spending plan Monday. The new plan for the fiscal year that starts July 1 hinges in large part on voters approving higher taxes.

The governor has said those tax increases are needed to help pull the state out of a crippling decade shaped by the collapse of the housing market and recession. Without them, he warned, public schools and colleges, and public safety, will suffer deeper cuts.

“What I’m proposing is not a panacea, but it goes a long way toward cleaning up the state’s budget mess,” Brown said.

Democrats, who control the Legislature, have resisted Brown’s proposed cuts so far this year. Republican lawmakers criticized the majority party for building in overly optimistic tax revenues.

“Today’s news underscores how we must rein in spending and let our economy grow by leaving overburdened taxpayers alone,” Assembly Republican leader Connie Conway said in a statement.

The governor pursued a ballot initiative because Republican lawmakers would not provide the votes needed to reach the two-thirds legislative majority required to raise taxes.

Assembly Speaker John Perez, D-Los Angeles, acknowledged that lawmakers have “limited and difficult choices left to solve the deficit.” Senate President Pro Tem Darrell Steinberg, D-Sacramento, said he wasn’t surprised by the deficit spike given that state tax revenues have fallen $3.5 billion below projections in the current year.

© Copyright 2012 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.


There are 12 comments on this story. Click here to view comments >>

Get stories like this in a free daily email