Analyst Backs Revenue Estimates in Brown’s May Budget Revision
The Legislative Analyst's Office released a report analyzing the revenue projections and other elements of Brown's updated budget plan (Yamamura, Sacramento Bee, 5/20).
Earlier this year, lawmakers approved $11 billion in spending cuts, many of which targeted health and human service programs.
On Monday, Brown released the May revision of his budget plan, which seeks to use $6.6 billion in higher-than-expected state revenue to help close California's remaining deficit. The May revise would:
- Extend a fee on hospitals to bring in $320 million for Medi-Cal, California's Medicaid program;
- Shift beneficiaries of Healthy Families -- California's Children's Health Insurance Program -- to Medi-Cal; and
- Shut down several state boards, including the Managed Risk Medical Insurance Board, which runs Healthy Families and other programs.
In addition to seeking spending cuts, Brown is promoting a plan to extend sales and vehicle taxes for five years. The governor also aims to reinstate a 0.25% income-tax surcharge over four years, beginning in 2012.
Brown hopes to pass the tax measures through the Legislature and then put them before voters for ratification (California Healthline, 5/18).
Praise for Deficit-Reducing Action
In his report, Taylor praised Brown's May revise, saying it offers a "golden opportunity" for California to reduce its deficit.
Taylor also said the updated budget proposal is an improvement over previous budget plans that delayed fixing state budget issues.
The report states, "An improved economic revenue situation, along with significant budgetary solutions already adopted, mean that the state is in a position to dramatically shrink its budget problem" (Buchanan, San Francisco Chronicle, 5/20).
Criticism of Brown's Tax Referendum Push
However, Taylor disagreed with Brown's plan to hold a voter referendum on his tax measures, saying it could worry investors and cause instability for schools.
The analyst said that if Brown insisted on holding a public vote, it would be best to hold the election in 2012, at the end of the fiscal year (York, Los Angeles Times, 5/20).
In his report, Taylor suggested that lawmakers think beyond an all-cuts or an all-taxes budget to close the deficit. The analyst recommended that the state evaluate a "range of options," including a combination of:
- Alternative revenues;
- Additional spending cuts; and
- Funding shifts (Sacramento Bee, 5/20).
Headlines and links to broadcast coverage of Taylor's report are provided below:
- "Analyst: Brown's Budget Reasonable, But Big Unknown" (Russ, "KXJZ News," Capital Public Radio, 5/19).
- "State's Fiscal Analyst Says Governor's Tax Plan Creates Budget Uncertainties" (Small, "KPCC News," KPCC, 5/19).