As Deficit Mounts, Davis Tries To Spare Schools

By Joetta L. Sack

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...