California deficit jumps to $16 billion: Jerry Brown warns of 'far greater' cut

Gov. Jerry Brown released a YouTube video over the weekend to announce that California's deficit has jumped to $16 billion.
Gov. Jerry Brown released a YouTube video over the weekend to announce that California's deficit has jumped to $16 billion.
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Gov. Jerry Brown’s “May revise” presentation today will serve as a splash of cold state budget reality Monday morning, and as the governor’s strongest campaign pitch yet for a November tax increase ballot measure to help fill in a growing budget deficit.

In a video published on YouTube over the weekend, Brown announced the deficit has jumped to $16 billion. That’s nearly $7 billion more than he’d projected in January when he released his budget proposal for the 2012-2013 fiscal year.

He blamed the higher-than-expected deficit on the state’s slow recovery from the worst recession since the 1930s.

“Tax receipts are coming in lower than expected, said Brown. “And the federal government and the courts have blocked us from making billions in necessary budget reductions.”

Last week, the governor told state worker unions to prepare for pay cuts of up to 10 percent. Advocates for health and welfare also say big hits are coming.

In laying out a budget plan for the coming fiscal year that starts July 1, Brown will seek to balance the state's finances in large part on voters approving his November ballot measure calling for higher taxes. His YouTube budget message and campaign pitch were the same: Raise taxes or endure crippling cuts to schools, colleges and public safety.

“Please join me in getting our state back on track and investing in our common future,” said Brown, a Democrat.

Democratic lawmakers who control the legislature have resisted additional cuts Brown wanted made this year to health and social service programs. The recession has eroded many state services that have resulted in teacher layoffs, college tuition hikes, fewer medical benefits for the poor and elderly, and reduced child support programs for low-income mothers.

“Everything is going to hinge on this compromise funding initiative,” said Dean Vogel, president of the California Teachers Association. The state's largest teachers union has donated at least $1.5 million to Brown's tax initiative campaign.

Republican lawmakers say tax increases will only hurt California's economic recovery but the governor said he had to pursue a ballot initiative because GOP lawmakers would not provide the votes needed to reach the two-thirds legislative majority required to raise taxes.

“I've told the governor, I don't disagree that California might need some more revenue, but we have a basic philosophical difference about where you get that,” said Assembly Minority Leader Connie Conway, R-Tulare, in a recent interview.

“The governor wants to tax people that are already paying taxes. We prefer to create more taxpayers. If you have more taxpayers, then you raise the taxes and you raise the whole system.”

Democrats, who control the Legislature, have been unwilling to enact deeper cuts so far this year.

“The size of the deficit and the dwindling of options after years of severe budget cuts also show that our state absolutely needs voters to pair cuts with revenues,” said Assembly Speaker John Perez in a statement.

Under 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 year 2012-13.

The governor is expected to propose a contingency plan just as he did in his January budget. If voters reject the tax hikes, a list of unpopular cuts would automatically kick in. The results could mean three weeks less of school, higher college tuition fees and reduced funding for courts.

Advocates say those trigger cuts could get worse under Brown's revised budget.

“We've already hit some of the bare minimums of what can be cut out of core health programs and other key services,” said Anthony Wright, executive director of Health Access California, a group that lobbies for health care for the poor.

About 20,000 pink slips were sent out to California public school teachers this year, although it's unclear how many will actually be laid off until districts adopt their final budgets.

Brown’s revised budget plan will also include a projected tax revenue windfall from Facebook’s initial public stock offering. A spokesman for the Department of Finance says the money — an expected billion dollars or more — wasn’t counted in January’s proposed budget because the sale wasn’t scheduled. It’s now set for later this week. The “May revise” might also count revenue from the sale of assets from redevelopment agencies that state lawmakers dissolved last year.