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LA Times Forecasts Deeper Cuts

 

latimes.com

 

Deeper cuts to state budget expected

Lower-than-forecast revenue means automatic reductions will likely kick in. A shorter K-12 school year could result.
By Anthony York and Nicholas Riccardi, Los Angeles Times

November 17, 2011

Reporting from Sacramento

Sluggish state revenue is likely to trigger a new round of spending cuts that could mean a shorter school year and millions of dollars slashed from public universities, child care programs and services for the disabled, the Legislative Analyst's Office says.

California's coffers will be $3.7 billion below what lawmakers and the governor assumed in the budget they crafted last summer, said Mac Taylor, the analyst whom legislators look to for nonpartisan financial advice. The new reductions were built into the spending plan, to kick in if state income fell short.

A final decision will be made next month, when Gov. Jerry Brown's Department of Finance releases its own forecast for the rest of the fiscal year, which ends June 30. Taylor said the projections could still change enough to ward off some of the deepest cuts. But his announcement Wednesday was the first official confirmation that reductions are likely.

The grim news prompted outrage from education officials who have already sharply pared their budgets. But it was no surprise to economists who had criticized Brown for balancing the budget by anticipating an extra $4 billion in revenue after he failed to secure Republican support for a ballot measure to raise taxes.

"Short of aliens landing on the planet with a big bucket of cash," said Christopher Thornberg, a founder of Beacon Economics, "there's no way we're going to make [Brown's] revenue projections."

If the economic picture does not improve in December, the new cuts would include a $1.4-billion reduction in public school funds that would even force state-provided student buses to be mothballed. Such severe cuts had Los Angeles schools Supt. John Deasy publicly contemplating defiance Wednesday.

"What comes to mind is we simply won't do it," he said in an interview.

At the urging of teachers unions, legislators barred districts from closing the money gap by laying off teachers. Rather, they would have to cut expenses elsewhere. The state gave them permission to trim up to a week from the school year if they agreed with their local teachers unions to do so.

Kevin Gordon, a lobbyist for several school districts, said he believes it would be almost impossible for local authorities to win permission from labor to curtail the academic year and the Legislature would have to revisit the issue.

"There will be a reshuffling of the deck entirely if it appears schools will have to shoulder the magnitude of cuts" that the Legislative Analyst's Office projects, Gordon said.

In addition to reductions in K-12 education, the University of California and California State University systems would each lose $100 million. Fees at the state's community colleges would increase by an additional $10 per unit.

Counties, already struggling to accommodate more inmates under Brown's current budget, which shifts responsibility for some offenders from the state to local governments, would lose $72 million that pays for the housing of serious juvenile offenders.

Funding for home health aides would be cut by 20%, and services for the disabled would be slashed by $100 million — on top of deep reductions already made in those programs.

That could be the last straw for Michelle Franklin, 45, of Stockton, who receives just under $800 a month from the state to care for her schizophrenic son and an elderly neighbor. If her payments drop by 20%, she said, she may have to commit her child to a state mental hospital.

"I love my son dearly and it's going to break my heart, but if they cut my hours I may have to make the decision to let my son go," Franklin said. "That's going to end up costing the state a lot more in the long run."

Administration officials and Democratic legislative leaders urged calm, holding out hope that December's forecast would be better and enable the state to dodge the automatic cuts. They stressed that the state's finances are in better shape than they have been for much of the decade-long budget crisis.

"California's budget gap is the result of a decade of poor fiscal choices and a global recession," said Brown spokesman Gil Duran. "This year, we cut the problem in half. Next year, we'll continue to make the tough choices necessary until the problem is solved."

But Taylor's analysis shows little relief in sight. It predicts that even with the new slate of cuts, the state will face a $13-billion shortfall in the next fiscal year. That gap would be so severe it would be difficult to close without going below the minimum funding that state law guarantees for K-12 education.

The good news, Taylor said, is that the annual deficit is expected to gradually dwindle into the range of $5 billion by 2016, a better long-range picture than he has seen in years.

The cuts will become official Dec. 15 if the projections don't improve, then be phased in over subsequent months. In September, Brown vetoed a bill that would have allowed the Legislature to reconfigure the cuts, saying it would be reckless to alter them. On Wednesday, Taylor said it would be "unwise" to do so.

A bevy of interest groups are trying to change them anyway.

Jean Hurst, a lobbyist with the California State Assn. of Counties, said her members would ask the administration to reconsider taking $72 million in juvenile lockup funds from them. She noted that the move would come as counties implemented Brown's "realignment" plan by keeping inmates who would have otherwise gone to prisons.

"To pull additional funds out of our base of safety services is a huge challenge," she said.

Social service advocates and unions representing home health workers vowed to sue to stop what they described as "devastating" cuts to services for the disabled. They joined labor groups and many Democrats in calling for tax hikes to be placed on the 2012 ballot to stave off more reductions.

Both university systems have said they believe they can absorb their potential cuts, though this year's austere budget led Cal State trustees to approve a 9% fee hike Wednesday.

anthony.york@latimes.com

nicholas.riccardi@latimes.com

Times staff writer Howard Blume in Los Angeles contributed to this report.

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