Governor Proposes More Cuts, Tax Hikes as State Faces New $16B Budget Gap

Figure up from $9 billion projected in January.

Gov. Jerry Brown's revised budget numbers released Saturday show that California's budget deficit is nearly $6 billion more than the governor projected in January.

The New York Times reported that California now faces a $16 billion gap, up from $9 billion, in round numbers. How that'll impact cities, however, remains unclear — at least until voters weigh in at the polls in November on Brown's tax initiative.

"This means that we will have to go much further, and make cuts far greater than I asked for at the beginning of the year," Brown said on Youtube, where he released his original statement. "But we can't fill a hole of this magnitude 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 added.

The governor's proposal would raise income taxes for top wage earners and sales taxes statewide would increase a quarter of one percent, he said.

Bloomberg published a story Monday on the "urgency" of the tax initiative and explained it a little more:

"The plan would temporarily raise the statewide sales tax, already the highest in the U.S., to 7.5 percent from 7.25 percent. It would also boost rates on income starting at $250,000. Those making $1 million or more, now taxed at 10.3 percent, would pay 13.3 percent, the most of any state," the article stated.

John Meyers, a political editor and capitol reporter for ABC in Sacramento, tweeted Monday that statewide, $1.2 billion will be stripped from health and human services, $544 million from courts, $400 million in state worker costs and more cuts to higher education.

We're seeking comments from local residents. What do you think of the new state budget figures? Do you think it will impact you, your business or organization? How?

Sam Roth May 16, 2012 at 03:23 PM
We have to vote for these taxes. Otherwise our children face a bleak future. We have been feeding at the trough(e.g. overly generous pensions) for years and now the bills are due. To sacrifice our children's education is short sighted. Intelligent peope wouldn't think this way.
Mark Burnham May 16, 2012 at 03:33 PM
the california goose is cooked. meanwhile the city of novato that owns and has tens of thousands of square feet of vacant suitable office space available to them is planning on spending $15 million + of state redevelopment funds (tax payer dollars) to build an office at $750 per square foot (which is $500 per sq ft higher than what private developers can do it for). novato city council members: eric lucan, jeanne macleamy, denise athas, madeline kellner & pat eklund ..these 5 are soley responsible for this egregious decision to build. a disgusting example of government's abuse of taxpayer funds.
Mark Schoenbaum May 16, 2012 at 03:41 PM
I will not vote for any tax increases until serious steps are taken to control spending. We need to get reorganize and get rid of the multitude of state baords and commissions. We need to pare out the administrative and supervisory positions. We need to address pensions, work rules and benefits. We need to stop paying UC regents, their staffs and teneured department heads in excess of $400K in salary plus benefits and pensions. We need to address gross mismangement of overtime. We need to address so many areas that our politicians would rather avoid. Their answer instead is to keep raising taxes and fees at every turn and threaten our children, the poor, and the elderly in an attempt to extort more revenue from the taxpayers.
Mark Burnham May 16, 2012 at 03:52 PM
sam i don't see any indication in your post that government spending should be reduced. you simply state that tax payers should pay more because too much has been spent and promised. do you not think that govt spending should be addressed? an intelligent person doesn't spend more than they have they reduce their spending and focus on balancing their own budget. should our goverment and elected officials not have to adhere to this same basic principal of common sense?
Nanette Brichetto May 16, 2012 at 04:38 PM
Absolutely NOT. NO TAX INCREASES. Don't fall for the same old trick our politicians have been playing on you year after year. Jerry Brown got us into this mess with the unionization of public employees. They are over-payed and over-benefited. Jerry Brown needs to start making cuts and fixing this mess. I am sick and tired of hearing the same old B.S.
Sam Roth May 16, 2012 at 04:43 PM
Cutting spending is fine. There are a lot of commissions and boards that we don't need. Unfortunately, the budget deficit is so large that you can't resolve it by spending cuts alone. There has to be accompanying tax increases. The alternative is to cut schools and essential services, which is sort sighted an unintelligent.
janna nikkola May 16, 2012 at 05:31 PM
This article failed to mention the primary cause of California's budget problems -- "unfunded pension obligations" for public employee pensions through CALPERS, which lost $67 billion in 2008-09 alone. Is there any other pension plan on the planet wherein the employer (like California taxpayers) are required to make up for "stock market losses" when they play no part in the investment decisions? Is there a reason why public employees themselves are not monitoring their own pension plan and the high risk investments made by CALPERS trustees and investment advisers? When PERS was originated, investments were required to be in secure bond investments only. This requirement was later amended to allow 25% of the portfolio to be in the stock market. Then it was amended to remove the 25% limit, so now there is no limit. Are California taxpayers really going to allow our cities, counties and the state itself to go down in flames for the sake of a corrupt public employee pension plan over which we have no control? California legislators won't touch this issue because they receive generous campaign contributions from public employee unions. Rather than curbing the pension plan, they make drastic cuts to taxpayer services. So it may take a taxpayer revolt to correct this injustice and this completely unsustainable policy.
Mark Burnham May 16, 2012 at 05:48 PM
janna great points. guess who else is following the same deceptive & abuse of the tax payers pattern that the state of california adheres to? the city of novato and our city council. this bunch passes a sales tax increase because they cannot live within their budget and states this will solve things. of course it doesn't and now the council who has yet to deal with the city's own scary pension issues are comfortable about spending $15 million + on new city offices.. and then in their next breath say they are planning on cutting more vital city services AND looking at laying off more employees. abusive, offensive, and irresponsible.
Carol May 16, 2012 at 07:00 PM
I agree!!! I don't understand why it's always schools, seniors, police, and fire that get cut every time there is a budget issue. Politicians stand before us, wringing their hands, with pained expressions, wondering how to fix it, and then threaten us with cuts to schools, seniors, police and fire - to SCARE us...and like stupid sheep, we vote yes to raise the taxes - to SAVE our kids... They NEVER look at the obscene salaries and pensions for "public" employees... In my book - a job is a job. I don't get this "we serve you so we get special/better benefits and compensation" rhetoric. They work a job just like you and me! Wake Up People!!!
Dave Robertson May 16, 2012 at 08:21 PM
People will vote for taxing the wealthy at a moment's notice. What this signals is that everyone else is next. California has already one of the highest income taxes in the nation. What makes California government so expensive? When are we going to figure out that this whole state is not like silicon valley? Not everyone is going to stick around to keep on paying - certainly not to keep these overbloated California pensions going without modifying them.
Roger May 17, 2012 at 03:05 AM
I understand polls predict the tax measure will not pass.
Mark Schoenbaum May 17, 2012 at 05:07 PM
the politicians have figured out it is easier to get a majority to impose taxes on a minority
janna nikkola May 17, 2012 at 11:22 PM
When Michael Frank first started whining about the $5 million annual budget deficit for the City of Novato, I analyzed his proposed budget for 2010-15 that was being presented to the City Council. Even as he was proposing cutting back on services to the taxpayers, and recommending staff layoffs for the police and fire departments (and no administrative staff layoffs at the time), labor costs for this 5-year period were increasing by 21% and contributions to PERS were increasing by 71% over this 5-year period "due to stock market losses". Rather than spending $6.7 million to renovate the old City Hall building which stands locked up and vacant and is only used twice a month for City Council meetings, that money should have been used to tear down the old wooden structures on Sherman Avenue and building a new City Hall building. Those old red buildings have long outlived their usefulness and serve no real practical purpose, and it's ludicrous to spend $15 million on a "City Hall" Building squeezed into the back part of a parking lot -- and we know that price tag will increase if it's ever built. Even the renovation of the old City Hall was over budget and not finished on time. I do not think the City Council is capable of building a new structure and completing it on time and on budget.


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