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Tax hikes won't stop school cuts, California budget advisor says

Legislative analyst counters Gov. Jerry Brown's assertion that higher levies will protect schools from reductions.

January 12, 2012|By Chris Megerian, Los Angeles Times
  • Legislative Analyst Mac Taylor said state revenue will become increasingly unpredictable if government relies more on tax receipts from high earners, whose income can fluctuate dramatically.
Legislative Analyst Mac Taylor said state revenue will become increasingly… (Rich Pedroncelli / Associated…)

Reporting from Sacramento -- Public school funds will probably be cut this year even if voters approve Gov. Jerry Brown's proposed tax hikes in November, the state's top budget advisor said Wednesday.

That analysis undercuts a central premise of Brown's new budget plan: that his tax hikes would save schools from billions of dollars in reductions. Districts are likely to trim spending anyway, said Legislative Analyst Mac Taylor, rather than wait for voters to decide in November.

"Districts have to plan for the worst case," said Taylor, whom lawmakers look to for nonpartisan financial advice.

Brown's budget proposal, unveiled last week, calls for $4.8 billion — the equivalent of three weeks of the academic year — to be cut from schools if voters reject the temporary tax hikes he wants to put on the November ballot. The governor wants a half-cent increase in the sales tax and higher levies on the state's wealthiest residents.

He estimates that the increases would yield $6.9 billion, but Taylor said Monday that they could yield $2 billion less.

Kevin Gordon, a lobbyist and advisor to schools throughout the state, concurred with Taylor that educators cannot count on the taxes passing. He said school officials should make cuts before November.

"The notion of not knowing for sure what funding you'll have is almost laughable if it wasn't so dead serious," Gordon said.

Administration officials said they are working on the issue with schools.

"Legislation, which is being developed in conjunction with school officials, will need to give schools the flexibility to develop contingency plans for this level of cuts," said Director of Finance Ana Matosantos.

School districts, which are still digesting the governor's spending plan, will need the flexibility to make mid-year cuts in their budgets, said Dennis Meyers, spokesman for the California School Boards Assn.

Republicans, who have criticized Brown's tax plan, seized on Taylor's analysis Wednesday.

"Even if the revenues go up, it may be too late to help schools," said Sabrina Lockhart, a spokeswoman for the Assembly's minority Republicans. "That flies in the face of the argument that this will help kids."

Taylor's report gave elected officials credit for taking difficult but important steps, such as cutting expenses, to improve the state's budget situation. Brown's spending plan assumes a much smaller deficit than last year's — $9.2 billion compared to $26 billion.

Part of the new gap would be closed by cuts in welfare, health programs and other services. The rest would be bridged by Brown's tax plan or by cuts in funding for public schools, community colleges, courts, firefighters and even lifeguards at state beaches.

Taylor said state revenue will become increasingly unpredictable if government relies more on tax receipts from high earners, whose income can fluctuate dramatically. That reliance would grow under Brown's tax plan.

"Already, California's budget is dependent on volatile income tax payments by the state's wealthiest individuals, and the governor proposes that these Californians pay more for the next few years," Taylor's report said. "As has become evident in recent years, differing fortunes for these upper-income taxpayers can create or eliminate billions of dollars of projected state revenues."

Brown's office released a statement saying Taylor's analysis "underscores the fundamental uncertainty of our time and, therefore, the financial imperative to be prudent, make the tough cuts now and give the voters a choice on additional revenues."

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