California working to close $15.7 billion budget gap (with related video)
California Gov. Jerry Brown has outlined sizable spending cuts he says are needed to help the state close an unexpected $15.7 billion budget deficit. One of the cuts is a 5 percent reduction in salaries and benefits to state workers. The 5 percent cut will be achieved through a reduced workweek or a commensurate reduction in work hours and pay. To make it work, the governor wants state employees to work a four-day, 38-hour week.
“This budget reflects the fact that the nation’s economic recovery is proceeding more slowly than anticipated,” Gov. Brown said. “Lower tax revenues, coupled with federal government obstructions that blocked billions in necessary cuts, have created a deeper budget hole. More painful reductions will be necessary as a result, but education and public safety must be protected.”
In a speech (see video), Brown urged Golden State voters to approve a tax-raising initiative that he is supporting on the November ballot. The temporary tax initiative would ease budget woes by raising income taxes by up to 3 percent on people who earn $250,000 a year, and raise the sales tax by one-quarter of 1 percent. The income tax hike will be in effect for seven years, and the state sales tax increase will be in place for four years.
The November initiative aims to increase money for schools and provide constitutional protection for public safety funding. If the tax initiative does not pass in November, $6 billion in additional state budget cuts will go into effect on Jan. 1, 2013.
The latest budget revision proposes deeper cuts than those outlined this past January. It increases cuts by $4.1 billion, bringing total cuts to state employee compensation, welfare, health care, higher education, courts and other government programs to $8.3 billion. The governor’s proposed budget, which will take effect July 1, also will slash $1.2 billion from the state’s Medi-Cal program.
Through the budget revisions and executive actions, the governor has trimmed billions from state prison costs and tightened control on a number of government perks, including cell phone access, travel and state vehicles. He has eliminated 30,000 state government positions.
Go here for Gov. Brown’s May 12 presentation on the 2012-2013 state budget.