Californians hoping for an easier budget year need to buckle in and brace themselves: This isn't going to be that year. State tax collections, which had shown signs of recovery, appear to have slowed to a discouraging crawl. Clearly, they won't erase this year's $18.9 billion budget hole – a shortfall so large it's roughly equal to the amount California spent last year on prisons,community colleges, and the California State University and University of California systems combined.
Yet while the solutions won't come easy, priorities should. As policymakers tackle another shortfall in a still-sputtering economy, they should support the public structures that have long been the backbone of our economic prosperity – our world-class universities, community colleges and schools – and help those Californians hardest hit by the economic downturn. To do that, they must choose a balanced approach over ideological rigidity.
Why is California facing yet another budget gap? California faces chronic challenges – an outdated tax system and a two-thirds vote requirement for passing a budget and any tax increase – that spell trouble even when the economy is strong. Tax cuts enacted over the past 15 years cost the state more than $10 billion in 2008-09 and mean that California doesn't bring in enough revenue to support its schools, universities and other public services even when times are good.
Recently, however, the weak economy has exacerbated the state's budget woes. The depth of the downturn has pushed the number of unemployed to record levels. Sagging home prices and lagging earnings have pushed revenues down while, at the same time, increasing demand on a host of public services – including food stamps; Healthy Families, the state's affordable health coverage program for children; and Medi-Cal, the state's publicly supported health program.
Last year's unprecedented budget gap – so large that California was missing approximately $3 out of every $10 it needed to pay its bills – led Gov. Arnold Schwarzenegger and the Legislature to slash many services to the bone. Californians who once saw Sacramento's problems as distant from their own know students who have been turned away from universities and are seeing the impact of budget reductions on their neighborhood schools. In just two years, budget cuts have reduced per pupil spending in California's public schools by $1,500 per student – a drop of nearly 25 percent – pushing our schools to 45th in the nation in per pupil spending. The governor's proposed budget calls for even deeper cuts.
The bad news isn't likely to let up soon. California's economic struggles, along with its very significant shortfalls, are expected to continue into the future. In good times, lawmakers had the luxury of taking rigid positions against one budget solution or another.
This year, if we want to pave the way for economic prosperity, we need a balanced approach.
Lawmakers have already taken steps to trim spending, and more cuts are no doubt yet to come. Like most states, California needs federal dollars to help prevent even deeper cuts, which economists tell us could damage an ailing economy and the services people depend on.
But in the same way that a family facing tough times might consider taking on a second job, lawmakers need to talk about bringing in more revenues.
How might we do this? Policymakers could start by reversing recent corporate tax breaks. Slipped last minute into recent budget deals without a single public hearing, these tax cuts could cost the state upwards of $2 billion per year when fully implemented. Policymakers could increase tax rates on the highest-income Californians – reverting to levels the state imposed in 1991 – a change that could raise between $4 billion and $6 billion. They could also eliminate ineffective tax loopholes and impose an oil severance tax. California is the only oil-producing state in the nation without one.
Economic and budget challenges as deep and protracted as California's demand a balanced approach. Californians who care about the state and its future – those of us with the power to wield a pen, write an e-mail, call our legislators – should do all we can to help them remember that.
Jean Ross. California Budget Project.
Read more: http://www.sacbee.com/2010/05/04/2724617/cuts-alone-wont-cure-big-budget.html#ixzz0mzty2cT1