California is slowly digging itself out of debt, but it faces more problems next year if voters don't pass a $6.9 billion tax measure, state Controller John Chiang told Sonoma County business leaders Thursday.
"Either we increase taxes in California or we cut education," said Chiang, the state's top fiscal officer.
A $5 billion cut in education for 2013 would shorten the school year by three weeks. "The end result is not good for California," he said.
Chiang spoke at an economic conference in Rohnert Park sponsored by Sonoma State University and the North Bay Business Journal.
Gov. Jerry Brown is pushing a November ballot measure that would hike taxes on sales and high-income Californians, with most of the proceeds dedicated to K-12 education.
Without it, he'll be forced to cut education by $5 billion next year, the governor has said.
Brown's proposal - one of three potential tax measures that could appear on the November ballot - lets voters decide what they're willing to sacrifice, Chiang said. He did not take a position on any of the measures.
"He's given us all a choice," the controller said. "We have to work together through these difficult times."
State spending cuts have reduced California's deficit from $26 billion to $8 billion since the governor took office, Chiang said Thursday. Health care and welfare took the biggest hits.
But the state's budget situation has improved as a result, he said.
"From a cash perspective, we're better off than we were three years ago," the controller said. "Governor Brown is moving us in the right direction, but it's going to take a long time. We've been operating on borrowed money for 4 1/2 years."
About 300 people attended the conference at Doubletree Hotel.
Sonoma and other North Bay counties are gradually recovering from the recession, said Robert Eyler, director of SSU's Center for Regional Economic Analysis.
"Sonoma, Marin and Napa are starting to generate some momentum," he said. "This will be a year of recovery, a little bit better than 2011."
But growth will be hampered by lingering trouble in the real estate market, Eyler said.
"Housing and construction will continue to act as a drag this year," he said.
Technology, agriculture, tourism and food manufacturing are some of Sonoma County's economic bright spots, he said.
Amy's Kitchen, one of the county's largest food manufacturers, is growing fast because it offers a unique natural product, CEO Andy Berliner told the conference Thursday.
"The country is changing its eating habits, and we're there with a great product," he said.
Amy's Kitchen generates $350 million in annual sales and has more than 900 employees in Sonoma County. Global expansion and new products should help drive Amy's dollar growth to a new high in 2012, Berliner said.
SSU is partnering with business to improve the region's economy, said Bill Silver, dean of the university's business school. On Thursday, SSU announced a $180,000 gift from the Codding Foundation to fund a "Hugh Codding Entrepreneur-in-Residence" at SSU, named for the late Santa Rosa businessman.
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