California Budget in Crisis: Lawmakers Pass Spending Cuts, No Agreement on Tax Extensions

Lawmakers have started tackling California's $26 billion budget gap. Governor Jerry Brown has proposed a budget that addresses half of the shortfall with reductions in spending and half with a temporary extension of tax increases. He says that the era of balancing the budget with gimmicks and rosy revenue predictions is over -- there are no easy ways to close a budget shortfall that massive. Spending cuts for some of the neediest Californians is inevitable.

What lawmakers have embarked on will likely prove to be a multi-day vote on portions of the budget, approving eight of twenty bills making up Brown's proposed budget. On Wednesday, they approved more than $7 billion in spending reductions, which will reduce spending on health and welfare services for the poor, elderly, and physically and mentally disabled.

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Most Democrats and some Senate Republicans voted for the spending reductions. It is proving more difficult to get Assembly Republicans on board.

Lawmakers continued to wrangle over the controversial question of whether to cut an additional $2 billion by eliminating local redevelopment agencies. Many Assembly Republicans are strongly opposed to the proposal, and Brown fell one vote short in the Assembly for approval for that proposal. Redevelopment agencies are charged with attracting new businesses and jobs, in part by cleaning up blighted neighborhoods and creating low-income housing.

Lawmakers will continue to debate and vote on various budget proposals today. One question on the agenda is whether to charge local governments with paying for more public safety and welfare services.

The most contentious question will be whether to agree to ask the voters to extend temporary sales, income and vehicle tax extensions. It remains to be seen whether Brown can get the necessary support from Republicans; he needs to convince two Republicans in the Assembly and two in the Senate. In exchange for their vote on the tax extensions, Republicans want Brown and Democratic lawmakers to agree to, among other things, a spending cap in the State Constitution, and reform of public employee pensions.

While California lawmakers typically begin debating the budget later in the year -- budgets are generally due in June for the fiscal year beginning July 1 -- there is added time pressure this year. The temporary tax increases that Brown has proposed extending expire by July, and he wants to hold a special election on whether to extend those extensions in June. Once the cuts expire, voters will be asked to vote on tax "increases" rather than "extensions." It is largely a semantic difference that could make easily change the electorate's vote on this issue.

Jessica Levinson writes about the intersection of law and government every Monday at noon. She is an Adjunct Professor at Loyola Law School and the Director of Political Reform at a non-profit, non-partisan think tank.

The photo used on this post is by Flickr user LWY. It was used under a Creative Commons License.

About the Author

Jessica Levinson is an Associate Clinical Professor at Loyola Law School. She focuses on the intersection of law and government.
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