Governor downplays bump in tax revenue
Published: Saturday, May. 7, 2011 - 12:00 am | Page 3A
© Copyright The Sacramento Bee. All rights reserved.
© Copyright The Sacramento Bee. All rights reserved.
Gov. Jerry Brown is growing concerned about the political consequences that California's income tax revenue spike may have on his tax proposal.
Brown's office issued a rare statement Friday from Finance Director Ana Matosantos that downplayed data showing California has received $2.5 billion more in general fund revenues than had been expected this fiscal year.
That amount is only a small share of the state's remaining $15.4 billion deficit. But it doesn't help the governor's call for more taxes if voters hear the state is receiving more cash than expected.
Brown is scheduled to deliver a revised budget on May 16, an annual proposal that takes into account changes in revenues and expenditures.
"While tax receipts are currently running higher than projections, this should in no way be taken to mean that we can ease up on our efforts to close the remaining budget gap," Matosantos said in her statement.
"Changes in our cash receipts aren't the only issue that drive the size of our budget gap," she added, referring to the possibility of higher expenditures and other spending rules that can minimize the impact of revenue growth.
But signs so far suggest that demand for services may actually be less than expected, not greater. Both In-Home Supportive Services and the Department of Developmental Services have lowered their caseload estimates in recent weeks, and the Department of Finance said last week that the prison population had dropped in 2010.
It's unclear exactly why revenues are trending higher, but the Legislative Analyst's Office has suggested economic growth may be outpacing expectations, despite California's unemployment woes. If that is indeed the case, Brown could reduce the deficit even further than $2.5 billion by assuming more revenues in the next fiscal year.
When Brown releases his budget revision, he will try to make the case that the state has a revenue problem that will cause significant cutbacks in education and public safety without more tax dollars.
Republicans have rushed this week to celebrate the revenue growth as a sign that additional taxes are unnecessary. Assembly Republican Leader Connie Conway, R-Tulare, said in a statement Friday the additional tax revenue should go toward K-12 schools and community colleges to keep their funding intact.
"By dedicating this new revenue to the classroom, there's no need for the draconian education cuts that Democrats have proposed to justify massive tax hikes," Conway said.
Assemblywoman Kristin Olsen, R-Modesto, said Thursday that her GOP caucus will not vote to suspend the Proposition 98 guarantee for schools, nor will it cut higher education or public safety, to solve the remainder of the deficit.
But neither Olsen nor Conway laid out what other cuts they would use to solve the problem. Olsen said her caucus may provide alternatives next week.
Brown's office issued a rare statement Friday from Finance Director Ana Matosantos that downplayed data showing California has received $2.5 billion more in general fund revenues than had been expected this fiscal year.
That amount is only a small share of the state's remaining $15.4 billion deficit. But it doesn't help the governor's call for more taxes if voters hear the state is receiving more cash than expected.
Brown is scheduled to deliver a revised budget on May 16, an annual proposal that takes into account changes in revenues and expenditures.
"While tax receipts are currently running higher than projections, this should in no way be taken to mean that we can ease up on our efforts to close the remaining budget gap," Matosantos said in her statement.
"Changes in our cash receipts aren't the only issue that drive the size of our budget gap," she added, referring to the possibility of higher expenditures and other spending rules that can minimize the impact of revenue growth.
But signs so far suggest that demand for services may actually be less than expected, not greater. Both In-Home Supportive Services and the Department of Developmental Services have lowered their caseload estimates in recent weeks, and the Department of Finance said last week that the prison population had dropped in 2010.
It's unclear exactly why revenues are trending higher, but the Legislative Analyst's Office has suggested economic growth may be outpacing expectations, despite California's unemployment woes. If that is indeed the case, Brown could reduce the deficit even further than $2.5 billion by assuming more revenues in the next fiscal year.
When Brown releases his budget revision, he will try to make the case that the state has a revenue problem that will cause significant cutbacks in education and public safety without more tax dollars.
Republicans have rushed this week to celebrate the revenue growth as a sign that additional taxes are unnecessary. Assembly Republican Leader Connie Conway, R-Tulare, said in a statement Friday the additional tax revenue should go toward K-12 schools and community colleges to keep their funding intact.
"By dedicating this new revenue to the classroom, there's no need for the draconian education cuts that Democrats have proposed to justify massive tax hikes," Conway said.
Assemblywoman Kristin Olsen, R-Modesto, said Thursday that her GOP caucus will not vote to suspend the Proposition 98 guarantee for schools, nor will it cut higher education or public safety, to solve the remainder of the deficit.
But neither Olsen nor Conway laid out what other cuts they would use to solve the problem. Olsen said her caucus may provide alternatives next week.
No comments:
Post a Comment