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Gov. Jerry Brown's budget plan a 'good starting point,' nonpartisan analyst says

The spending plan is called 'more straightforward,' with several 'bold ideas' for tackling California's chronic deficits. It calls for an extension of tax hikes and steep reductions in public services.

January 13, 2011|By Shane Goldmacher, Los Angeles Times

Reporting from Sacramento — Gov. Jerry Brown's controversial spending blueprint got a welcome boost Wednesday when California's chief budget analyst called it a "good starting point" for tackling the state's chronic deficits.

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The review is far more flattering than the nonpartisan legislative analyst's office offered for many of former Gov. Arnold Schwarzenegger's spending plans. In particular, the budget expert approves of Brown's general avoidance of accounting patches that in the past have substituted for politically unpopular solutions.

"I think it is a more straightforward budget," said Legislative Analyst Mac Taylor, who provides financial advice to lawmakers of both parties.

To address a $25.4-billion shortfall, Brown wants to ask voters to extend billions of dollars in recent tax hikes on their incomes, purchases and vehicles that will otherwise expire this year. He also would cut 20% of state support for public universities, slash California's welfare budget in half and dismantle many programs that help the needy. Few services would be spared from reductions.

However painful, the approach "shows great promise to make substantial improvements in the state's budgetary health — both in the short run and over the long term," Taylor's 40-page report states.

Taylor also embraced one of Brown's most controversial plans: the elimination of the state's redevelopment program for sprucing up blighted neighborhoods, calling it one of several "bold ideas."

"We think this makes sense," Taylor's report states, citing the program's growing costs and "no reliable evidence" that it betters the state's overall economy.

The report was not all good news, though: Some of the governor's budget-balancing relies on overly optimistic assumptions that might not pan out, Taylor said. For instance, Brown counts on $1.7 billion in savings from dismantling redevelopment agencies; Taylor questioned whether that figure was realistic.

Some proposed cuts are too vague, he said, and past cuts from similar areas are tied up in the courts.

The biggest risk is Brown's decision to ask voters to live for five more years with the tax increases that lawmakers passed in 2009, according to the analyst. Should the governor fail to get the Legislature to place the question on the ballot in a June election or to receive voters' blessing, the state would be faced with a gargantuan shortfall before the fiscal year begins in July.

"There's clearly a lot riding on the election," Taylor said.

Taylor also worried about the effect of prolonging the taxes on California's fragile economic recovery. Those levies are already "some of the highest in the country," he said.

Brown wants to use the tax extension to fund many services that could be handled by local governments instead of Sacramento. Taylor endorsed that as good policy, but suggested the state would be staring over a fiscal cliff — again — in the sixth year.

"What happens at the end of five years?" he asked.

Still, the report was largely positive. Sen. Alex Padilla (D-Pacoima) said Taylor's "upbeat" tone didn't surprise him.

"The governor was being honest when he said it was more of an honest budget," Padilla said.

Brown wants the Legislature to approve his plan — including the restructuring of responsibilities between state and local governments — by March.

The accelerated timeline would be a steep undertaking. Asked about executing so complex an overhaul so quickly, Taylor, speaking to reporters at a news conference, visibly exhaled. Twice.

"It's going to be difficult," he said. "Let's put it that way."

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