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Published in Print: May 22, 2002, as As Deficit Mounts, Davis Tries To Spare Schools

As Deficit Mounts, Davis Tries To Spare Schools

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Gov. Gray Davis proposed new taxes and cuts in a revised budget plan for California last week that attempts to protect schools while managing a deficit that has surpassed $23 billion.

He alleviated educators' concerns by refusing to suspend Proposition 98, the state's ballot measure that changed the constitution to guarantee minimum funding for schools. The governor, a first-term Democrat facing re-election this fall, instead wants to see a 2 percent cost-of-living increase for K-12 schools, but he also said cuts to some specific education programs would be needed.

Mr. Davis proposed several new revenue sources in a bid to find enough money to try to patch the growing budget hole, which affects both the current fiscal 2002 and upcoming fiscal 2003 budgets. Among the proposals, the governor wants to raise taxes significantly on motor-vehicle licenses and cigarettes, borrow from the state's future tobacco-settlement funds, use such accounting maneuvers as delayed payments to schools, and reduce state spending by $7.6 billion in fiscal 2003. The total state budget approved for fiscal 2002 was $78.8 billion, with about $31.3 billion allotted to K-12 education.

"Education remains my top priority, and I'm pleased we were able to provide the Proposition 98 requirements," Gov. Davis said in announcing his proposal on May 14. "Even in the hardest times, we can't turn our backs on the progress our children have made."

The state has already made deep cuts in its fiscal 2002 budget plan to alleviate shortfalls.

The governor is allowed to suspend Proposition 98 in times of state economic crisis, but chose instead to make deep cuts in other programs, a spokeswoman for the governor said.

Gov. Davis received praise from education groups for what they perceived as his willingness to fight for precollegiate education under tough conditions.

"It is extraordinary that the governor is making the kind of effort he is to protect the investments in public education," said Kevin Gordon, the executive director of the California Association of School Business Officials. "It takes a lot of guts to put forward a tax increase when you are nearly six months away from Election Day, for the sake of public schools."

The two main teachers' unions backed the plan. "We've been saying all along that you can't make this deficit up in cuts," said Steve Hopcraft, a spokesman for the California Federation of Teachers.

The budget proposal, however, would not be pain-free for the state's 6.7 million students and its nearly 1,000 school districts.

It would defer payment on new teacher-training programs and awards to schools that performed well on state assessments; payments for last year's winners would be postponed, and awards for this year would be suspended.

It also would scale back funding for instructional materials, from $625 million to $480 million; school library funding, from $100 million to $80 million; and aid for reading textbooks, from $200 million to $150 million. Moreover, the plan would eliminate a $75 million proposal to purchase new science equipment in fiscal 2003.

The governor's plan gives community colleges a 2 percent funding increase.

But out-of-state tuition at the state's universities would increase by 15 percent, and the University of California system would see $162 million in cuts, mainly to research programs.

The state's revenue shortfall has been growing since January, when it was estimated at $12.5 billion for the coming 18 months.

California's problems started last year with the collapse of the industry, and the state saw drops in capital-gains tax proceeds from its wealthiest residents and businesses. As the national economy went into recession, California's problems intensified. ("Revenue Shortfall Prompts Big School Cuts in California," Feb. 6, 2002.)

Plan Questioned

Steve Smith, a policy analyst with the National Conference of State Legislatures in Denver, said other states that are feeling the effects of the ailing economy have been exploring increased taxes, such as the cigarette tax.

"The magnitude is always going to seem enormous because it's California," he added.

Gov. Davis said in his announcement that he felt confident that the state's economy would improve later this year, although not dramatically, and that the state would be able to repay the funds it would borrow under his plan.

Republicans in the legislature are more skeptical. Sen. James L. Brulte, the Senate's GOP leader, said that in January, the governor had predicted the economy would improve by this month.

Sen. Brulte criticized the plan last week because he believes that the tax proposals are unnecessary and that the state "does not have a revenue issue, but a restraint issue," an aide said in reference to the state's reluctance to put the brakes on spending.

Mr. Gordon meanwhile, predicted other state politicians would have to follow Gov. Davis' lead or risk being seen as not caring about education. "Once the governor stakes out his turf on Proposition 98, the politician who has the temerity to disagree becomes the perceived enemy of public education statewide," he said.

Staff Writer Michelle Galley contributed to this report.

Vol. 21, Issue 37, Pages 20,23

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