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Calif. budget solution: Increase spending and taxes

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Michael Bastasch Contributor
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California Gov Jerry Brown revealed his revised plan Monday to close the state’s $16 billion budget deficit by slashing $8.3 billion in government spending and imposing temporary tax increases. His new proposal increases cuts $4.1 billion from the January proposal.

Brown also proposed a 16 percent increase in funding for education, subject to voter approval, and funding for local governments implementing public safety realignments. The proposal would also create a permanent funding structure to give those local governments a reliable funding source in the future.

Brown plans to put an initiative on the November ballot to increase money for schools and give constitutional protection for public safety funding. The initiative will increase income taxes for top earners by three percent for seven years and increase the sales tax by one quarter of one percent for four years.

“We can’t balance the budget with cuts alone; that would just further undermine our public or schools,” Brown said in a press release. “The budget I am proposing will boost funding for education, protect public safety and prevent an even deeper round of trigger cuts.”

If the measure is not approved by voters in November, an additional $6 billion in spending cuts will go into effect on January 1.

Some other savings include $125 million from freezing the construction of state courts and requiring increased retirement contributions from state court employees. Also, Brown’s new budget presumes the state will make $1.5 billion off of Facebook’s IPO by the end of fiscal year 2013.

The budget gap grew since January’s proposal because Brown overestimated tax revenues by $4.3 billion and $1.7 billion of cuts were blocked by the federal government and the courts.

Despite Brown’s willingness to cut government programs, state spending would still rise under his proposal to $91.4 billion in general fund spending, a $5 billion increase over 2011-12 spending, drawing the ire of Republicans in the state assembly.

“The bigger problem is that the imaginary money the majority party counted on in last year’s sham of a budget never materialized, and they have refused to cut big government. This year alone, they have rejected billions in reductions proposed by the Governor of their own party,” Assembly Republican Leader Connie Conway said in a press release.

State Republican leaders have even taken to touring the state to fight tax increases and out of control spending.

“Taxing more is not solving the problem.” Conway told KMJ Morning News. “To bill these taxes as protecting public safety and schools, nothing could be further from the truth.”

California Republican Party Chairman Tom Del Beccaro said, “California will continue to face chronic budget deficits because so many people remain out of work; the conversation about revenues should always begin with how to restore jobs. So many people are wondering when Brown will offer plans to make California competitive, so that business will return to this state and bring jobs with them.”

June 15 is the deadline for legislative approval of the budget, with tough choices still looming in the future.

“My proposal is modest, fair and temporary,” said Brown. “It won’t solve all of the state’s problems, but it will help dig us out of a deep hole and protect our schools until the recovery is complete.”

“Young families are leaving California.” said Conway. “They have to have a place to work, they want to take care of their family, and unfortunately for California, these are great productive people, they’ve decided their dream no longer is here in California, and that to me is really sad.”

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