Posted on 01/11/2003 7:58:14 AM PST by Ernest_at_the_Beach
SACRAMENTO - Gov. Gray Davis called for heavy program cuts and $8.3 billion in tax increases for shoppers, smokers and the wealthy Friday to erase a nearly $35 billion budget deficit and return California to ``sound financial footing.''
The $96.4 billion budget plan proposes more than $20 billion in spending and program cuts this year and next, hundreds of state layoffs, taking a cut of Indian gambling revenues and a massive shift of state health and welfare programs to local governments.
``All the tasks before me were hard, but they had to be made to balance our books,'' Davis said.
Davis said every penny from tax increases would reimburse cities and counties for taking over a raft of state programs, but his budget snuffs another key cash source for local governments: $4.2 billion over the next 17 months to repay them for lost income from previous cuts to car license fees.
That news was discouraging to cash-strapped cities such as Long Beach, which would stand to lose $6.5 million this fiscal year, and $14 million in the fiscal year that begins in October under the proposal. That is on top of a projected budget shortfall of $46 million this fiscal year, and $52 million next year.
City officials had unveiled a comprehensive plan earlier this week to narrow that gap. But based on Davis' announcement, they said the proposed cuts may now have to go deeper.
``This is pretty devastating if it happens,'' said Finance Director Bob Torrez.
O'Neill unhappy
Mayor Beverly O'Neill, past president of the League of California Cities, said she was disheartened by the decision, which came more than a year after Davis said he wouldn't touch the fees.
``You knew that he had some tough decisions to make, but we had hoped he'd remember those words,'' she said.
Lakewood Mayor Larry Van Nostran said that if the $3 million his city receives from the fee is cut, Lakewood would lose 12.4 percent of its discretionary general fund revenue.
``The governor's action to redirect from local governments the replacement vehicle license revenues promised by law from the state general fund should not be allowed to stand,'' he said.
Davis also pitched a 1-cent-on-the-dollar sales tax increase that would raise about $4.5 billion and would cost the typical family about $200 to $250 a year. He also called for increased income taxes for the state's top earners and a $1.10 per pack cigarette tax hike.
One smoker said the cigarettes tax unjustly places a burden on one segment of the population.
``Why should a small percentage of the population pay for a deficit created by everybody?'' said Beth Reinstein Atkins, 43, a facilities coordinator for a malpractice insurance company.
Davis' long-awaited announcement sets the stage for a political battle over raising taxes to help erase red ink. The tax proposals have support from Democrats, who want more money to protect programs, while Republicans call higher taxes damaging to the economy and vow to block any budget that includes them.
Apparently trying to dissuade some of the GOP criticism, Davis repeatedly said he used a template set by Republican Gov. Pete Wilson, who transferred a series of state programs to counties, along with raising taxes and cutting programs during the deficit of the early 1990s.
GOP criticism
Still, Republicans lined up outside the noontime announcement to blast the plan, which Assembly budget vice chairman John Campbell, R-Irvine, called a ``job-killing, irresponsible budget.''
GOP lawmakers also question the magnitude of the shortfall, saying Davis inflated the deficit figure to justify tax increases. In November, nonpartisan Legislative Analyst Elizabeth Hill predicted the two-year deficit would reach about $21 billion and has yet to alter her estimates.
All the revenues from Davis' proposed tax increases will be funneled to local jurisdictions to take on state health and welfare services.
Officials said the shift would prevent many mental health, child care and court programs from being cut altogether … but would force local governments to administer them. The programs include state drug courts, homeless programs, long-term care and community health and others.
``I want to stress, we're not shortchanging the counties,'' Davis said. ``We're sending them sufficient money to maintain the programs at their current levels.''
Davis said he tried to spare education, children's health insurance and public safety from hefty cuts. But his plan calls for about $4.5 billion in education cuts, fee increases at the state's universities and more than doubling community college fees, from $11 to $24 per unit.
The state program cuts would include layoffs … cutting 1,900 jobs, 1,500 of which are currently filled, said Tim Gage, the state finance director. Davis also called for a variety of new fees, including tariffs on libraries, a small surcharge on intrastate phone calls and new Department of Motor Vehicles fees.
The cuts Davis outlined Friday include $10.2 billion in cuts he proposed in December to the current budget and in the coming budget year that begins July 1.
Health care cuts
Davis is proposing reducing rates to health care providers by 15 percent and scrapping optional benefits for Medi-Cal recipients, including dental care, optometry, physical therapy and hospice.
But Davis said his budget would pay for 500,000 new children to receive health care under Medi-Cal and the Healthy Families program, declaring ``that's basically the good news in this budget.''
If the two-year shortfall reaches Davis' new predictions, it will be by far the largest ever experienced in California and marks a drastic change from the multibillion-dollar surpluses Davis enjoyed during his first two years in office.
The budget plan offers several suggestions for overhauling the state's tax structure so California will rely less on the volatile stock market and wealthy residents' capital gains.
Among the suggestions, Davis is asking for the Legislature to restore the governor's power to make budget changes midyear without lawmakers' approval, a power that California's governor had until 1983.
The budget also relies on Davis' plan to create 500,000 new jobs in four years, including the acceleration of the availability of $21 billion in voter-approved bond money for schools, housing, parks and water systems. The program, called ``Build California,'' would speed up construction and create new jobs, Davis said.
Staff writers Jason Gewirtz and Neda Raouf contributed to this report.
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This is sooo F*KED!
California will be ripe in four years for the terminator.
And some feel the "hard left" Lib's want to ban smoking! Ha! Fat chance they do.
Huh? California creates well over 100,000 new jobs each year anyway. BFD
Now, now don't be so negative...Just think of ALL you will gain by your donations! /sarcasm
It's already been shown to be the case from past attempts in other states that it doesn't work. Not to worry though, we still have fastfood,alcohol,property,vehicles,air,water,existance,entertainment,freedom(used loosely), time, and just being here. Not to worry, the revenue will be generated somehow.
For some reason it reminds me of the 'ol saying..when Lutifisk(sp?)is outlawed lutifisk eaters will be outlaws...or something like that!
All hail the governer for opening up new opportunities for people to make money!
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