Tuesday, June 16, 2009

Conference Committee Closes Budget Gap with Cuts and Revenues

After 17 days of public testimony and hearings to close our state’s $24 billion deficit, the Conference Committee has taken action on all budget proposals. As a result of our actions, the conferees have voted to create a budget that includes both cuts and new revenues.

We made some difficult and painful cuts to the budget that we would never consider if our state’s financial circumstances were better. But with the need for state services rising each day, fairness demands that reject the governor’s proposals to eliminate the safety net. In order to maintain the safety net and a minimum of other services Californians value, revenues must be on the table.

Today in Conference Committee, we unveiled and approved new revenue proposals to obviate the need for further cuts. These proposals do not impact most Californians. But they help prevent cuts that would impact most Californians. This is the simple logic at work.

Californians expect their schools to be good, a safety net to be available to the needy, a college education to be affordable for working families, their air and water to be clean, and their parks to be open and kept up. In order to meet their expectations, we must to pursue new revenues. Today, for the greater good, we approved two new tax proposals that won’t impact most Californians.

Establishing a 9.9 percent tax on oil extracted from California would generate $830 million in FY 2009-2010 and $1.1 billion in future years. This precise proposal was part of the governor’s budget proposals last year. Increasing the excise tax on cigarettes by $1.50 per pack generates $1 billion in FY 2009-2010.

Tax increases require a 2/3 vote. Absent the pursuit of new revenues, wider and deeper cuts will be required. Getting new revenues requires a mere 6 Republican votes: 2 in the Senate and 4 in the Assembly. It is undemocratic that the votes of 6 Republicans can veto the votes of 75 Democrats.

Republican legislators and the governor claim the outcome of the May 19 special election is a referendum on new taxes. But the voters also rejected propositions that would have cut social programs for which voters approved new taxes. Therefore, it would be inappropriate to suggest anything other than a balanced approach is what the voters expect to our budget crisis.

While a complete run down of all actions made by the Conference Committee will be made available tomorrow by the Assembly Budget Committee and posted on this blog, here is a sample of the actions taken by the conferees today.
• Education – Adopted $5.5 billion in Proposition 98 reductions for K-14 education, including $4.5 billion to K-12 education. Provided $496 million in Proposition 98 funding for Home-to-School Transportation
• Higher Education – Adopted the level of General Fund reductions proposed by the governor for the UC and CSU system, $1.44 billion in 2008-2009 and $533 million in 2009-2010. The intent is to backfill these amounts with federal funds. Restored full funding for CalGrants. Retained academic preparation programs at UC/CSU.
• Corrections – Adopted a compromise proposal which reduces spending by $787 million, including $402 million in savings by restricting wobbler prosecutions to misdemeanors, targeted commutations, and alternative custody options. We also cut rehabilitation programs by $175 million instead of eliminating them as was proposed by the governor.
• Human Services – Rejected the governor’s proposal to eliminate Multipurpose Senior Services Program and minimized the reductions to other Aging programs. Adopted a compromise proposal restricting in-home supportive services. Domestic services will be provided to individuals FI scores of 4 and above, with critical exemptions for the most fragile recipients.