Fiscal policy report calls for options to close deficit

A report released Thursday from the state’s nonpartisan fiscal policy advisor praised certain aspects of Gov. Jerry Brown’s revised budget plan but also criticized the level of uncertainty voter approval of the tax extensions has created and proposed that there be additional options available to close the state’s $9.6 billion budget deficit.

The report, released by the Legislative Analyst’s Office, states that while Brown’s revised budget’s only available options would be his proposal or an all-cuts budget, the state Legislature actually has multiple options to try to address the budget deficit outside of an all-cuts or all-taxes budget.

At the university level, an all-cuts budget would mean the already approved $500 million cut to the University of California would double to $1 billion, according to a summary of Brown’s revised budget proposal. UC officials have stated that in the event of such a cut, staff layoffs, program closures and a 32 percent midyear tuition increase would be likely.

“Evaluate the whole range of options that are in front of you,” Mac Taylor, the state’s legislative analyst, said at a press conference. “In the May Revision, the Governor said that it came down to a choice between his program and an all-cuts budget. Clearly, that’s not the case. The Legislature has all sorts of options available to it.”

According to the report, options include the adoption of some, but not necessarily all, of the governor’s proposed taxes, additional program reductions, internal borrowing and consideration of other revenue proposals.

While the report agrees with Brown’s proposed revenue estimates and praises Brown’s proposal for “achieving balance” and addressing the issue of the state’s operating shortfall and budgetary debt, it was critical of the plan’s reliance on a vote for tax extensions, stating that it creates uncertainty for schools, counties and local governments.

“School districts, counties, and the state each would face various uncertainties if the Legislature were to opt for the Governor’s apparent plan to seek approval … earlier, rather than later, in 2011-12,” the report states. “At this point, the outcome providing the most certainty would be the Legislature and Governor reaching a budget agreement without going to the voters.”

Brown’s revised budget relies on a combination of cuts and extending taxes — which are set to expire in July — to bridge the state’s budget deficit. Legally, extending taxes does not require Brown to seek voter approval, but while campaigning for governor, he said he would not raise taxes without voter agreement.

Currently, no date has been set for a vote, but Brown previously stated he would like it to occur as soon as possible.
If the tax measures are to go before voters, the report recommends holding an election closer to the end of the 2011-12 fiscal year to create more certainty for schools, counties and local governments regarding the level of funding they could have for the fiscal year.

In response to the office’s report, Ana Matosantos, the state director of finance, said in a statement that she was pleased that the report “confirms that the May Revision is a credible plan that will balance the budget while protecting education, public safety, and other core services.”

“We understand that our schools and local governments want a final budget so they can make plans for next year — so it’s vital to get this choice before voters without delay,” she said in the statement.

J.D. Morris contributed to this report.

Aaida Samad is the lead higher education reporter.

Aaida Samad is the lead higher education reporter.