Policy Brief

California Windfall Clouds K-12 Debate

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An improving economy has brought a surge of tax revenue into the state coffers in cash-strapped California, which could mean that schools stand a better chance of avoiding deep budget cuts.

Gov. Jerry Brown’s revised budget proposal released last week includes more optimistic revenue projections than previously stated. (Others states, such as Michigan and New Jersey, also have seen their cash flow increase recently.) California, which has a total budget of about $85 billion, is expected to have $6.6 billion more to work with than anticipated.

The Democratic governor has been locked in a standoff with Republicans over how to close the state’s budget shortfall, which earlier this year was estimated at $26 billion. ("K-12 Uncertainty as California Gropes for Budget Fix," May 4, 2011.)

Both sides agreed to cuts that would have shaved about $11 billion from that shortfall, leaving $15 billion. But the governor has proposed allowing Californians to vote on a series of tax increases and extensions to close the remaining gap—essentially, giving them the ability to decide whether they want to pay more in taxes or see the state make other, deeper cuts, which he says would fall heavily on K-12 education, given its share of the budget.

As of last week, however, Republicans still were refusing to give the support needed to get the governor’s plan on the ballot. They want tougher steps on state government spending and cost savings.

Gov. Brown says the projected new revenues would let him channel $3 billion more to schools. But the new money would still leave the state with an estimated $10 billion budget gap, he says. He wants the tax measures to go before voters to erase what he calls the state’s “structural deficit and wall of debt,” though he is modifying his tax plan in a way that would cost taxpayers $2 billion less.

In his budget document, the governor argues in favor of “reducing [California’s] government, protecting education and public safety through tax extensions, paying down the state’s debt, and adopting powerful economic incentives.”

And while the higher revenue projections in California and others states are seen as good news, they're also likely to complicate the ongoing debate about how deep cuts should go, in K-12 and in other areas.

Vol. 30, Issue 32, Page 15

Published in Print: May 25, 2011, as California Windfall Clouds K-12 Debate
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