Report: State now over $3 billion behind on revenue collection

Trigger cuts could be imminent

A revenue forecast released Wednesday by the state’s nonpartisan Legislative Analyst’s Office suggests that imminent cuts to higher education in 2012 are likely, estimating a projected $12.8 billion state budget shortfall in the next fiscal year.

The forecast projected that the state would end the current year with a $3.7 billion deficit below the level assumed from the 2011-12 budget package passed in June. If corroborated by state Department of Finance projections on Dec. 15, the deficit would trigger $100 million in cuts to the University of California in early 2012 — on top of $650 million already cut from the system this year.

Under the current budget plan, public higher education funding is pinned to revenue collection targets. Since the projected deficit falls above the target of a $1 billion deficit, a $100 million cut to the university will go into effect as a result of the current budget plan unless the state Department of Finance’s current year deficit projection falls below $1 billion.

Legislative Analyst Mac Taylor said in a video on the office’s website that the current year deficit projection is a “ceiling” estimate, meaning that the state Department of Finance’s projection will be lower. He added that the deficit projected for the next fiscal year is over $10 billion lower than last year’s projection.

But Ana Matosantos, department director of finance, said in a statement that despite the lower deficit projection, cuts to higher education are still likely.

“The budget the Governor signed recognized that economic uncertainty could force the trigger cuts to take effect,” she said in the statement. “Some level of trigger cuts will likely occur, but the exact amount will be known in December.”

The report cites a slower than expected economic recovery rate as well as high state unemployment as reasons for the budget shortfall. Taylor also said in the video that past short-term solutions to budget problems exacerbated the issue.

“We used a lot of one-time solutions, and once those solutions go away, your problem re-emerges the next year,” he said in the video.

A statement from Gov. Jerry Brown’s office also said tough economic times were the reason for shortfalls in revenue, adding that past administrations had contributed to the problem.

“California’s budget gap is the result of a decade of poor fiscal choices and a global recession,” said Gil Duran, press secretary for Brown, in the statement. “Next year, we’ll continue to make the tough choices necessary until the problem is solved.”

The report projects that the state budget shortfall will be between $8 billion and $9 billion in the next two fiscal years and $5 billion by 2017.

UC spokesperson Dianne Klein said in an email that should the trigger cuts go into effect, the university would implement “short-term strategies” to absorb the blow of a $100 million cut to funding, including “moving funds around.”

She said in the email that there would be no midyear tuition increase.

“We are working vigorously to secure stable, longterm funding for UC — from the state and other sources — that will provide desperately needed stability and predictability for the University, our students and their families,” she said in the email.

Damian Ortellado covers higher education.