Gov. Jerry Brown wants voters to renew $9 billion in higher sales, income and vehicle taxes in a special election this spring.
The Legislature passed the increases as part of the 2009 budget, and they will otherwise expire by the end of June. Lawmakers’ approval would be needed to put the extension on the ballot.
Brown would ask voters to prolong a 0.25-percentage point surcharge on state income taxes, a 0.5-percentage-point increase in the vehicle license fee, a 1-cent increase in the state sales tax rate and a reduction in the tax credit for dependents, from $300 to $99.
In May 2009, voters rejected a two-year extension of the same taxes in a special election called by Gov. Arnold Schwarzenegger. Brown wants to ask that they reconsider.
The sales and vehicle taxes would approximately equal the cost of many services that Brown hopes to shift to cities and counties. The money raised from the higher income taxes would preserve $2 billion for schools.
Brown also called for a change in corporate tax law that would generate $942 million for the state, mostly by raising taxes on businesses whose headquarters are outside California. Brown’s budget contains no plan to take the business tax hikes to voters.
The governor would also eliminate “enterprise zone” tax credits, which corporations can use to hire employees in or from blighted areas, saving the state $581 million annually.
If voters rejected the tax increases, Brown said, billions more would have to be cut from the budget.
— Anthony York
Brown’s proposals would keep state school funding stable but make deep cuts in higher education.
Community college students’ fees would climb from $26 per credit unit to $36.
The University of California and California State University systems would be cut by $500 million each, and their regents would determine how to absorb the reductions. Typically, cuts of that scope translate into increased fees and reduced enrollment.
Brown would shrink funding for the Cal State system by 18%.
Cal State Chancellor Charles B. Reed said that would “have serious impacts on the state’s economy, limit access for students seeking entrance into our universities, and restrict classes and services for our current students.”
UC President Mark Yudof called Monday “a sad day for California” but said, “The university will stand up and do all it can to help the state through what is a fiscal, structural and political crisis.”
Spending on kindergarten through 12th grade schools, including federal funds, would be $63.8 billion. Brown said he is keeping money for schools basically intact because of the deep cuts made to K-12 in previous years.
Last year, schools had $2.6 billion more to spend, but that was from federal stimulus funds provided on a one-time basis.
— Patrick McGreevy
Brown proposes a $1.7-billion cut in Medi-Cal, the state’s version of Medicaid and the second largest program in the general fund.
Under the plan, the state would cap benefits for prescription drugs at six per month and limit doctor visits to 10 per year, saving more than $217 million. It would also institute co-payments — $5 for doctor visits and $50 for emergency-room services — to save an additional $557 million.
Brown proposes to eliminate the state’s adult daycare program, affecting 27,000 Californians. That reduction would save more than $193 million. He also wants to reduce Medi-Cal payments to healthcare providers by 10%.
Another target is In-Home Supportive Services, which provides house cleaning, transportation and personal care for roughly 456,400 low-income and disabled Californians.
Brown would cut service hours across the board by 8.4%. That would follow a 3.6% cut enacted by Gov. Arnold Schwarzenegger last year.
The Brown administration estimates that about 21,000 recipients would be exempted from the reduced hours because they might otherwise be sent to nursing homes, which the state would likely subsidize.
The proposal also eliminates domestic services such as housework and cooking for residents who live with a care provider — about 48% of all recipients — and minors living with a parent “who is able and available” to provide the services. The cut would affect more than 300,000 Californians and save more than $236 million.
Brown would also raise the bar for In-Home Supportive Services eligibility, requiring a doctor’s written certification that state services are necessary to prevent nursing home care. The budget shows that about 43,000 recipients would lose their services as a result, and the state would save $120.5 million.
— Michael J. Mishak
One of the deepest cuts in Brown’s budget is the elimination of more than half of state funding for CalWorks, the program that provides cash assistance and child care for the poor.
The $1.5-billion cut means monthly grants would be reduced by 13% and lifetime eligibility for the program, which also provides assistance to people who were formerly unemployed and are now back to work, would drop from five years to four years.
Asked at his Monday news conference to name the most painful cuts to make, Brown cited those to the universities and CalWorks.
“People have gotten off welfare and gotten a job, and we’re making their child care more difficult,” Brown said.
The program is California’s answer to the nationwide welfare-to-work movement begun in the 1990s, which provides job training, job search and child care services to people making the transition from government assistance to full-time employment.
Former Gov. Arnold Schwarzenegger proposed eliminating CalWorks, but legislators restored funding in the deal that closed last year’s historically drawn-out budget battle.
A typical CalWorks grant for a single parent with two children is $500 per month, often supplemented by hundreds of dollars in federal food stamps.
About 580,000 California families receive some benefits from the program in an average month. That caseload is projected to drop to about 458,000 if the proposed changes take effect.
Some of the hoped-for savings would still be borne by California taxpayers, because about 200,000 children would become eligible for county general assistance after their parents are terminated from CalWorks, according to an estimate by Frank Mecca, executive director of the County Welfare Directors Assn. of California.
— Jack Dolan
California’s chronically overcrowded prison system would keep most of its funding, but the number of inmates in state lockups would be drastically reduced in coming years.
The roughly $9-billion prison network has emerged as a cornerstone in Brown’s strategy of transferring many government services “closer to the people.” In the case of corrections, that means housing some inmates in county jails instead of in more expensive state prisons.
Brown defines those inmates as offenders convicted of “nonviolent, non-serious, non-sex offenses” who had no previous criminal records.
Some local officials note that county jails are crowded too.
“Right now, we don’t have any additional room, so if we take more inmates we’d have to boot somebody out the door,” said Paul McIntosh, executive director of the California State Assn. of Counties.
But in the long run, McIntosh said, keeping inmates closer to home would save money and might help reduce recidivism.
On Monday, Brown said almost 50,000 inmates sent to state prisons each year stay for fewer than 90 days, and many of those are returning for minor parole violations. Nevertheless, prison officials are required to perform costly screening when they arrive.
Brown also proposed eliminating the Division of Juvenile Justice by 2014. Most juvenile offenders have been transferred to counties over the last decade, dropping the number in state custody from 10,000 to 1,300. But it costs California more than $200,000 per year to hold each one.
— Jack Dolan
About a dozen functions would be shifted to counties, which would take responsibility for such services as psychiatric hospitals and outpatient mental health treatment. The state’s Child Welfare Services, which includes foster care, adoptions and child abuse prevention programs, also would be turned over to counties.
Together, the mental health and child welfare programs now cost the state more than $3.7 billion, and counties would receive that amount to run them. Local officials have expressed concern that Brown might not give them enough funds to carry out the responsibilities he wants them to assume, and said they would reserve judgment until they see more details.
Counties would have to lock up more nonviolent criminals under the governor’s plan, and Brown has earmarked more than $740 million for them to house additional prisoners and parolees.
He wants counties to take on some work now done by state firefighters as well. That would free the Department of Forestry and Fire Protection from having to respond to an estimated 60,000 medical emergencies each year, and counties would get $250 million annually to fill the gap.
Brown hopes the promise of more local control over services will motivate voters to extend billions of dollars in higher sales, income and vehicle taxes that he says are needed to help pay for them.
While empowering local governments, the governor would eliminate some local entities: redevelopment agencies that receive about $1.7 billion a year from local property taxes. The money would go to local services.
Brown’s finance director, Ana Matosantos, said Monday that the governor would push for a ballot measure next year that would make it easier for cities to raise revenue for economic development.
— Anthony York