Legislative Analyst Revises State Budget Deficit

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The independent Legislative Analyst Wednesday announced that California faces a $16 billion state budget deficit next year. That's a billion-and-a-half bigger than earlier projections, but it's not as bad as it could have been. Last week, lawmakers agreed on some spending cuts to reduce the deficit, but they're still about $8 billion short. KPCC's Julie Small reports that means drastic cuts, any way you slice it.

Julie Small: Every year, the state legislative analyst analyzes the governor's budget proposal, and leaves it at that. But this year, Elizabeth Hill felt compelled to draw up a counter-proposal.

Elizabeth Hill: We felt that the magnitude of the budget problem was so significant, and that the approach offered by the administration treated all programs equally, and we were very concerned as to what that did for essential services offered by the state of California to its citizenry.

Small: Hill says the governor's proposal to cut every state program by 10% would hurt schools and people on welfare too much. She's proposing smaller cuts to education and social services, although she says her plan's no walk in the park. Hill also wants to roll back some of the $40 billion worth of tax breaks the state passed in good economic times. Businesses would lose some write offs. Parents would get a much smaller exemption for caring for children. And students at state universities and community colleges would pay higher fees.

Hill: If you look through the recommendations that we have made, they basically affect all Californians in some way. And we recognize that a sacrifice would have to be made by all Californians in order for the state to get its fiscal house in order.

Small: Assembly Speaker Fabian Nunez says Hill's approach backs up what he's been saying about the governor's "butcher block" approach to the budget.

Assembly Speaker Fabian Nunez: Y'know, finding the 10% mark on the budget and say, "OK, let's draw a line here and make a cut across the board." That doesn't work. Instead, what works is a surgical approach.

Small: Nunez says he'd perform the surgery even more carefully. He wants to do away with more tax breaks for the wealthy while protecting the tax credit for parents. Finance Director Mike Genest says that's all well and good, but the governor's made it clear he won't sign a budget that raises taxes.

Mike Genest: The Legislature has the responsibility to send the governor a budget that's balanced, and he has a responsibility not to sign a budget that's not balanced. How you do that by taking off the table any of our 10% cuts, I don't know. I don't think it's possible.

Small: Genest says some of the legislative analyst's ideas to boost revenue won't pay off. Take the entrance fees at state parks. They average about four dollars a person now. Instead of closing parks as the governor suggests, Hill recommends raising the fees by one dollar. But Finance Director Mike Genest insists closing some parks is a better way to go.

Genest: We looked at fees as an alternative to park closure. They didn't pencil out. We think we've got a good fee structure in the parks, that maximizes fee revenue, while not damaging attendance at the parks, because if you raise the fee too high nobody comes, and then you don't get any revenues.

Small: Genest says there's no way out of this budget mess but to cut. Whether those cuts will be closer to what the governor proposed or something along the lines of what the legislative analyst suggests will have to play out in the Legislature. Either way, says Genest, there will be cuts, and they will be substantial.