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Governor seeks to wipe out $9.2 billion deficit with higher taxes, cuts in welfare, Medi-Cal


SACRAMENTO -- Gov. Jerry Brown on Thursday unveiled his new budget plan, calling for a $4.8 billion cut in school funding if voters reject tax increases he wants to put on the ballot in November.

Despite the possible cut -- the equivalent of slashing three weeks from the school year -- the proposed budget assumes the state faces a $9.2 billion deficit, a vast improvement over last year's $26 billion gap.

Half of the deficit would be wiped out through Brown's proposed temporary half-cent sales-tax increase and higher taxes on those making $250,000 a year or more -- or by the schools cuts. The rest would be eliminated with cuts in welfare, Medi-Cal and other programs.

"We've cut the structural deficit substantially, and we now have the possibility of eliminating over the next couple of years the deficits that have plagued California," he said at a news conference.

Brown was forced to unveil his budget Thursday because the Department of Finance mistakenly posted it online, four days before he planned to release it.

Brown estimated the total general fund budget for the coming year will be $92.5 billion, about $7 billion more than the current year.

The general fund pays the day-to-day operations of government and is where the budget has been in deficit.

Brown's tax plan would raise about $7 billion a year and would expire in 2017, by which time Brown hopes the economy will have improved enough to bring a healthy flow of tax revenue back to the state.

If voters reject his tax increases, Brown will call for an automatic cut of $4.8 billion from schools.

"Cuts are never nice because government does a lot of good things. But we'll have the tax measure proposal, we'll have some cuts and then we'll have some trigger cuts in the event that the tax measure does not succeed," he said.

The release of the budget for the coming year comes as California enacts $1 billion in so-called trigger cuts across a wide array of state programs, including higher education, busing for K-12 students and services for the disabled.

Those midyear cuts were necessary because tax revenue was much lower than Brown and Democratic lawmakers had anticipated when they passed the current budget last summer.

The Democratic governor said he is willing to call for more automatic cuts if revenue misses the mark again.

But any cuts the state makes are likely to be felt deeper than before. Since the recession began in 2007, California has seen tax revenue drop $17 billion, forcing continued cuts to nearly all state services.

If voters approve his tax plan, Brown will address the $9.2 billion deficit in the coming fiscal year with a near equal balance of spending cuts and revenue increases. If they do not, the state would make $4.8 billion in additional cuts to the K-12 system, $200 million each to the University of California and California State University systems, $125 million to courts and $15 million to forest fire protection.

Regardless of what voters decide, Brown's budget includes $4.2 billion in cuts to the state's welfare-to-work program, Medi-Cal and child care services. He said the cuts to social service programs mean recipients will have the same amount of money in real terms as they did in the 1980s.

"We're making some very painful reductions," Brown said. "This is not nice stuff."

Additionally, about 70 of California's 278 state parks are scheduled to close starting July 1.

The education cuts to be enacted if voters fail to pass the tax increases would undermine Brown's plans to fully fund public schools and make systematic education overhauls.

Senate President Pro Tem Darrell Steinberg, D-Sacramento, took issue with Brown's proposed cuts to welfare and social programs for the poor, saying he wants to wait a few months to see if the economy continues to improve.

"We're not going to rush to make any of these decisions, especially on the cuts side," he said after Brown outlined his budget.

He said teachers, students and the needy have been affected by cuts and believes voters will be supportive of Brown's tax proposal.

"Enough of bloodletting," Steinberg said.

Brown, who failed to reach a compromise with Republicans last year, indicated he would once again bypass the minority party and pass the bulk of his spending plan with Democratic support.

Assemblyman Jim Nielsen, R-Gerber, vice chairman of the Assembly Budget Committee, called the governor's plan of raising taxes "business as usual" by Democrats and criticized Brown for not imposing spending restraints, such as a spending cap.

This story was compiled from reports by the Associated Press and Los Angeles Times.