Brown, Democrats Reach Budget Deal That Includes ‘Trigger Cuts’
On Monday, Gov. Jerry Brown (D) and Democratic lawmakers reached a deal on a budget plan that does not seek a specialÂ election on taxes but does rely on optimistic revenue assumptions, the Sacramento Bee reports.
Both houses of the Legislature are slated to vote on the plan this afternoon, a few days before the new fiscal year begins on July 1 (Yamamura, Sacramento Bee, 6/28).
In March, Brown signed budget bills that included deep cuts to education and health and human services. He initially sought to close the remaining $9.6 billion deficit by imposing additional cuts and holding a special election on taxes. However, Republicans refused to support the tax plan.
Democrats then crafted an alternative budget package that left out the tax measures, allowing them to pass their plan with a simple majority vote. Brown vetoed the plan one day after its passage, saying the package "contains legally questionable maneuvers, costly borrowing and unrealistic savings" (California Healthline, 6/24).
Soon after, state Controller John Chiang (D) announced that he would withhold legislators' pay because an analysis by his office determined that their spending plan was not balanced (California Healthline, 6/22).
A spokesperson for Chiang said lawmakers will start receiving pay again if Brown signs the new budget and the Department of Finance finds it balanced (Goldmacher/York, Los Angeles Times, 6/28).
Details of the New Plan
The new budget plan assumes the state will receive $4 billion in additional revenue in fiscal year 2011-2012 because of stronger-than-expected tax receipts in May and June (Sacramento Bee, 6/28).
If the revenue does not materialize as expected by early 2012, the plan automatically would trigger up to $2.5 billion in further cuts. If the additional cuts are triggered, health and human services programs would face a funding reduction of about $200 million (Harmon, Contra Costa Times, 6/27).
The new proposal also abandons some of the assumptions included in the earlier budget that Brown vetoed. For example, the new plan does not assume the state will receive:
- $1 billion as a result of shifting revenue away from the First 5 early childhood health and education program; or
- $700 million in federal funds for errors in Medi-Cal reimbursement. Medi-Cal is Californiaâs Medicaid program (Sacramento Bee, 6/28).
Some GOP lawmakers have criticized Democrats' new revenue assumptions.
Sen. Robert Huff (R-Diamond Bar), vice chair of the Senate Budget Committee, said the expected $4 billion in additional revenue is "phantom (money) that may never materialize."
Other Republicans said the new plan constitutes a partial victory for the GOP because it does not include new tax measures.
Assembly member Connie Conway (R-Tulare) said Republicans' "steadfast opposition to higher taxes has helped remind Sacramento tax-and-spend liberals of the need to live within our means" (Buchanan/Lagos, San Francisco Chronicle, 6/28).
Headlines and links to broadcast coverage on California's budget situation are provided below.
- "Budget Countdown" (Myers, "The California Report," KQED, 6/27).
- "California Democrats, Brown Craft Budget on Partisan Lines" (Small, "KPCC News," KPCC, 6/27).