Sunday, December 18, 2011

San Francisco Chronicle: State leaders saying it's time to end budget cuts

California leaders say time for cuts may be ending

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"We're somewhere near the bottom of that hole and only history will tell us whether we're on the upswing or if we have a little bit further to go. Some of the history is going to be written by the decisions we make," said Assemblyman Bob Blumenfield, D-Woodland Hills (Los Angeles County), the chairman of the Assembly Budget Committee.

Blumenfield said his top objective is California's fiscal solvency and he will not say "no" to more cutting, but he said he doesn't think he can take much more.

"The cuts we've made are unconscionable and going further ... what's the word for 'beyond unconscionable?' It turns my stomach to think about it," he said.

GOP opposition

Capitol Republicans, who can block tax increases in the Legislature because of the two-thirds mandate to raise taxes, maintain that the state is spending beyond its means and have opposed efforts since February 2009 to increase revenue. They also opposed the budget that was passed earlier in the year and criticized Brown for making the automatic midyear cuts last week.

California's tax revenue is growing, by about $5.3 billion since January, but that growth is not enough to pull the state out of its deficit because it is at a lower level than post-recession growth that the state experienced in previous downturns in the 1980s and 1990s, said Fred Silva, senior fiscal policy adviser for the group California Forward.

Silva has decades of experience with the state's budget and said spending cuts alone will not be enough for the state to eliminate its ongoing deficit.

"That is not going away until you deal with the revenue side," he said, adding that Brown's tax plan puts California "within shouting distance" of ending the shortfall.

Compounding effects

The administration is not declaring an end to the tough times. H.D. Palmer, spokesman for the Department of Finance, referred to the legislative analyst's projections, with a shortfall of just under $6 billion in 2016, when asked about future deficits. That could mean the governor will not try to eliminate the entire problem this year.

Palmer noted that state aid to the poor was lower than levels seen in the 1980s, and cutting deeper has compounding effects.

"To do additional cuts on top of those is somewhat like a Richter scale," Palmer said.

Senate Budget Committee Chairman Mark Leno, D-San Francisco, said his constituents are upset about the years of cuts but have actually thanked him for working to stave off deeper reductions. He characterized the potential to eliminate the deficit as "stabilizing," because while it may mean no more cuts it doesn't mean pouring money back into services that have been slashed.

He noted that in 2007, before the economy crashed, the legislative analyst projected that revenue for the current year would be $125 billion, nearly $40 billion more than what it actually is.

Leno said this will be another tough year, but he sees a potential end in sight.

"That's certainly the hope and the goal, and that's only with the assumption that voters approve revenue on the next ballot," he said. "Short of that it will mean further destruction of public infrastructure."

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