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An On-Target State Budget

In general, Gov. Davis offers prudent balance, but his plan to exempt public school teachers from state income tax is, as one teachers union leader put it, "cockamamie."

May 16, 2000

Gov. Gray Davis has never outlined a grand vision for California's future, but his $98.4-billion budget will serve as an adequate blueprint for now. In his allocation Monday of a stunning $12.3-billion budget surplus, the governor struck a solid, prudent balance that should allow California to build for the future in critical areas, especially in education, transportation and health care.

Declaring that "this is a special moment in time" not likely to be repeated, Davis put more than half the new money--generated by an extraordinary economy--into one-time spending. Appropriately, education gets top priority, with nearly $4 billion. About $2 billion each will go to transportation, construction and general income tax rebates.

One major element that begs for revision is Davis' $545-milllion plan to exempt public school teachers from paying state income taxes. The governor believes the unprecedented tax break would elevate teaching to the premier calling in the state, but even some in the teachers unions oppose it. Boldness is always welcome from the usually super-cautious Davis, but creation of a special class of taxpayers is indeed, as one union leader put it, "cockamamie."

California certainly needs new teachers. Davis likened his education plan to the post-Sputnik drive of the 1950s to recruit engineers for the U.S. space and defense programs by offering them a free education. A similar effort to attract high school graduates to study education in college could be the most effective course to bring qualified new teachers into the system.

The teacher tax flaw should not detract from the other benefits of Davis' revised budget. Of the $12.3 billion, he properly proposes to use 57% on one-time-only programs, noting that the revenue windfall--generated largely by the stock market--is not likely to recur. Davis proposes to hold back $1.7 billion as a reserve against declining tax receipts, should the state economy cool. Considering the market's volatility, the Legislature should expand the reserve to $2.5 billion or $3 billion.

Other Davis proposals that deserve commendation include his plan to use current tax revenues for transportation improvements rather than floating a costly bond issue; increasing health care funding by nearly $1 billion, in part to expand coverage to all 639,000 children who qualify for participation in the state's Healthy Families program; $400 million to buy more computers for schools; $300 million to teach English to children and their parents, and $250 million for local government.

Deserving initiatives in the Los Angeles area include $83.5 million for development of the Los Angeles River Parkway and a $96-million grant for joint development of a state-of-the-art crime lab by the city of Los Angeles, Los Angeles County and California State University Los Angeles.

The budget now is in the hands of the Legislature, which will make its own revisions and return it to Davis, who is required to take final action by June 30. Sharp debates are expected on a variety of issues. But Davis has set out a credible spending plan on broad themes that provides important and welcome investments in California's future.

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