Cuts alone can’t cure California

Gov. Jerry Brown was right in January when he said that the state shouldn’t try to solve its budget problems just through spending cuts. Nevertheless, when Republicans blocked Brown’s plan to ask voters to extend four temporary tax increases in June, the Legislature enacted a budget built around deep reductions in spending — some $15 billion worth — and optimistic projections about the California economy. Unsurprisingly, those projections proved quixotic, and now Sacramento is on the verge of having to cut millions, and possibly billions, more from education, social services and public safety to stay out of the red. Those cuts are among the automatic spending reductions mandated by the state’s 2011-12 budget in the event of a revenue shortfall.

So Brown is trying again. This week he unveiled a proposed ballot initiative to raise up to $34 billion over the next five years through higher income taxes on upper-income Californians and an increase in the state sales tax. The money would flow to public schools and community colleges through a special fund walled off from the rest of the state budget. Brown’s initiative would also write into the state Constitution a recently enacted “realignment” that reassigned some public safety duties to local governments, and would dedicate a portion of sales tax revenues to fund it.

It’s too soon to judge the merits of Brown’s proposal, which is just one of several competing tax measures that could be on the ballot in November. In the meantime, though, voters should take stock of the cuts the state has already made. Among other things, they’ve resulted in larger class sizes and shorter years at public schools, higher tuition and fees at state colleges and universities, and longer delays at the courthouse. Next week we’ll find out how much more the state will have to cut from those and other programs because of the revenue shortfall; according to the legislative analyst’s office, those reductions will include $1.4 billion from public schools and $230 million from higher education.

New revenues are clearly necessary. But one unmistakable lesson from Sacramento’s seemingly endless budget crisis is that the state’s existing tax structure is too volatile, with revenues skyrocketing when the economy is strong and crashing when it’s weak. That cries out for an overhaul of the tax code, not just a tweaking of the rates. Another lesson is that revenues are too often earmarked by law for specific programs, making it harder for lawmakers to adjust priorities and adapt to changing circumstances. But a third is that the polarization around taxes and the budget forces policymakers to lower their sights and focus on what’s achievable rather than what’s ideal. Now that Brown has offered his proposal, lawmakers, budget reform groups and others should come to the table with an open mind and a willingness to compromise.