Gov. Jerry Brown wants voters to renew $9 billion in higher sales, income and vehicle taxes in a special election this spring.
The Legislature passed the increases as part of the 2009 budget, and they will otherwise expire by the end of June. Lawmakers' approval would be needed to put the extension on the ballot.
Brown would ask voters to prolong a 0.25-percentage point surcharge on state income taxes, a 0.5-percentage-point increase in the vehicle license fee, a 1-cent increase in the state sales tax rate and a reduction in the tax credit for dependents, from $300 to $99.
In May 2009, voters rejected a two-year extension of the same taxes in a special election called by Gov. Arnold Schwarzenegger. Brown wants to ask that they reconsider.
The sales and vehicle taxes would approximately equal the cost of many services that Brown hopes to shift to cities and counties. The money raised from the higher income taxes would preserve $2 billion for schools.
Brown also called for a change in corporate tax law that would generate $942 million for the state, mostly by raising taxes on businesses whose headquarters are outside California. Brown's budget contains no plan to take the business tax hikes to voters.
The governor would also eliminate "enterprise zone" tax credits, which corporations can use to hire employees in or from blighted areas, saving the state $581 million annually.
If voters rejected the tax increases, Brown said, billions more would have to be cut from the budget.
— Anthony York
Brown's proposals would keep state school funding stable but make deep cuts in higher education.
Community college students' fees would climb from $26 per credit unit to $36.
The University of California and California State University systems would be cut by $500 million each, and their regents would determine how to absorb the reductions. Typically, cuts of that scope translate into increased fees and reduced enrollment.
Brown would shrink funding for the Cal State system by 18%.
Cal State Chancellor Charles B. Reed said that would "have serious impacts on the state's economy, limit access for students seeking entrance into our universities, and restrict classes and services for our current students."
UC President Mark Yudof called Monday "a sad day for California" but said, "The university will stand up and do all it can to help the state through what is a fiscal, structural and political crisis."
Spending on kindergarten through 12th grade schools, including federal funds, would be $63.8 billion. Brown said he is keeping money for schools basically intact because of the deep cuts made to K-12 in previous years.
Last year, schools had $2.6 billion more to spend, but that was from federal stimulus funds provided on a one-time basis.
— Patrick McGreevy
Brown proposes a $1.7-billion cut in Medi-Cal, the state's version of Medicaid and the second largest program in the general fund.
Under the plan, the state would cap benefits for prescription drugs at six per month and limit doctor visits to 10 per year, saving more than $217 million. It would also institute co-payments — $5 for doctor visits and $50 for emergency-room services — to save an additional $557 million.
Brown proposes to eliminate the state's adult daycare program, affecting 27,000 Californians. That reduction would save more than $193 million. He also wants to reduce Medi-Cal payments to healthcare providers by 10%.
Another target is In-Home Supportive Services, which provides house cleaning, transportation and personal care for roughly 456,400 low-income and disabled Californians.
Brown would cut service hours across the board by 8.4%. That would follow a 3.6% cut enacted by Gov. Arnold Schwarzenegger last year.
The Brown administration estimates that about 21,000 recipients would be exempted from the reduced hours because they might otherwise be sent to nursing homes, which the state would likely subsidize.
The proposal also eliminates domestic services such as housework and cooking for residents who live with a care provider — about 48% of all recipients — and minors living with a parent "who is able and available" to provide the services. The cut would affect more than 300,000 Californians and save more than $236 million.
Brown would also raise the bar for In-Home Supportive Services eligibility, requiring a doctor's written certification that state services are necessary to prevent nursing home care. The budget shows that about 43,000 recipients would lose their services as a result, and the state would save $120.5 million.
— Michael J. Mishak
One of the deepest cuts in Brown's budget is the elimination of more than half of state funding for CalWorks, the program that provides cash assistance and child care for the poor.