Jerry Brown signs budget that relies on voter-backed tax hikes

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SACRAMENTO — State lawmakers finished their work on the budget, and Gov. Jerry Brown signed it late Wednesday, ending the haggling over final details of California’s spending plan.

The budget closes the state’s $15.7-billion deficit with cuts in social services and depends on voters approving more than $8 billion in temporary tax hikes at the ballot box in November. Without a higher sales tax and increased levies on the wealthy, the governor says, the state will cut billions from public schools.

The tax question isn’t the only one hanging over the new budget, which takes effect Sunday. Republicans are threatening to withhold votes need to extend a fee on healthcare providers, and a controversy over how aggressively the state can scoop up money from defunct redevelopment agencies could lead to a legal faceoff with local governments.

The budget includes $91.5 billion in general fund spending; total spending is $142.6 billion when dedicated funds and bond money are included. Brown plans to veto some individual items as he signs the budget legislation, according to an administration spokesman, but details are not expected until Thursday.

“This budget reflects tough choices that will help get California back on track,” Brown said in a statement.

Senate President Pro Tem Darrell Steinberg (D-Sacramento), who like many Democrats supports Brown’s tax proposal, said the budget includes tough cuts that will help persuade Californians that state leaders can be trusted with more of their money.

“We are poised to take our case to voters in November,” he said.

Republicans have sharply criticized the budget, saying it relies on gimmicks, as well as taxes that may or may not materialize, to gloss over the state’s problems.

“It’s the typical kind of budget we’ve had in the past that kicks the can down the road,” said Senate Republican Leader Bob Huff (R-Diamond Bar), referring to the persistent deficits of recent years.

Democrats used their majority to push a spending plan through the Legislature on June 15 without a single Republican vote, allowing lawmakers to meet their constitutional deadline and continue collecting their pay. But negotiations continued on lingering issues, and the budget details approved Wednesday make wide-ranging policy changes in welfare, college scholarships and healthcare.

“We went very far out of our comfort zone to satisfy [Brown’s] vision,” said Assembly Budget Chairman Bob Blumenfield (D-Woodland Hills).

Lawmakers tightened work requirements for parents receiving benefits from CalWORKs, the main state welfare program, saving an estimated $469 million. However, counties will be able to grant exemptions — for recipients who are close to finishing job training, for example.

In another change, the state will reduce scholarships for students attending private colleges starting in the 2013-14 academic year. And students won’t be able to use the scholarships, known as Cal Grants, at colleges with low graduation rates.

The budget includes more than $1 billion in cuts from Medi-Cal, the insurance program for the poor, and other health programs. About two-thirds of that savings comes from a plan to move 1.4 million seniors and people with disabilities who receive benefits from both Medicare and Medi-Cal into managed care.

In one of the most controversial moves, lawmakers are eliminating the Healthy Families program, shifting the nearly 900,000 poor children it covers into Medi-Cal over the course of a year. The decision is expected to save $13 million in the new fiscal year, with savings increasing to $73 million two years from now.

The Brown administration has insisted there won’t be gaps in children’s healthcare coverage. But activists are concerned that medical care will be harder to find because doctors get less money for care they provide under Medi-Cal.

Republicans, who have generally championed budget cuts, opposed the elimination of Healthy Families and threatened to withhold votes needed to extend a healthcare provider fee that would generate $183 million for state coffers. A vote on the fee is expected later this year.

“Children’s lives are at stake,” Sen. Anthony Cannella (R-Ceres) said during a debate on the Senate floor Wednesday.

Steinberg accused the Republicans of “selective outrage,” noting that they’ve blocked tax increases that could have avoided some of the healthcare and social-service reductions.

There were more disagreements over property tax revenue that once funded redevelopment agencies, which are being dissolved this year. The state wants $3.1 billion that formerly went to those agencies to help balance the budget, and lawmakers approved a tough new law allowing the seizure of local tax money if cities don’t turn over enough of the redevelopment money on schedule.

Chris McKenzie, executive director of the League of California Cities, called state leaders’ “extreme tactics” unconstitutional and predicted that local governments will end up fighting them in court. Democrats barely scraped together enough votes to pass the bill in the state Senate, though Steinberg defended it as necessary to ensure the state can pay its bills.

The budget could lead to a freeze on college tuition. The state is offering each of the two public university systems $125 million in the 2013-14 fiscal year if they don’t raise tuition in the 2012-13 academic year.

The budget leaves a reserve of $788 million.