California Budget Deal Calls For Deep Cuts

California Governor Jerry Brown has reached the outline of a budget deal with state Democratic leaders. The two sides have been wrangling over deep cuts to social programs. The agreement is just the latest development in the story of California's budget crisis — with negotiations over pension cuts still looming and a November ballot initiative that will ask Californians to raise their own taxes to prevent steeper cuts to the state' schools. Melissa Block talks with Ben Adler of Capital Public Radio in Sacramento.

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MELISSA BLOCK, HOST:

From the national scene now to the budget crisis here in California that could have national implications. Today, Democratic Governor Jerry Brown and state Democratic leaders announced the outline of a deal on controversial cuts in the state's latest budget. And yesterday, an initiative put forth by the governor asking Californians to help schools by raising their own taxes officially qualified for the November ballot.

All of this comes as the state continues to struggle with mounting debt and the fallout from deep cuts to education and popular social programs. I'm joined by Ben Adler from Capital Public Radio in Sacramento to talk about the deal. And Ben, what exactly have the Democrats agreed on here?

BEN ADLER: Well, it's a $92 billion spending plan that attempts to close a $16 billion deficit. And so you've got Democratic Governor Jerry Brown negotiating with Democratic legislative leaders who control the legislature, both houses of it. And what they've come up with are cuts to just about every area of state government.

For example, in welfare, a two-year limit for some Californians on welfare, with some exceptions, a reduction to childcare grants and health care for the poor and in-home care, in-home supportive services, college financial aid, a reduction of grants at private and for-profit universities starting about a year from now, and state employee compensation. Several unions have already agreed to one furlough day each month and the administration is negotiating with the rest of the unions.

BLOCK: Now, we mentioned that Governor Brown has also gotten a proposed tax hike onto the November ballot. Explain how that would work and what happens if California voters say no.

ADLER: Sure. So the tax itself that the governor has proposed - and it did just qualify last night - would raise the income tax on the richest Californians, specifically individuals who make more than $250,000 a year, families making more than $500,000 a year, and even higher rates for folks who make more than that. And that would go for seven years. Meantime, a four-year increase on the sales tax by a quarter cent and that measure would be up for a vote this fall on the November ballot.

And if the voters reject it, then there would be about $6 billion more in cuts and that is actually built into the budget deal announced today. And those cuts include up to three weeks off the school year for K through 12 and also big cuts, deeper cuts, to higher education, the University of California, California State University and community college systems.

BLOCK: Pension reform has been such a hot issue here in California and Republicans seem to like the plan from Governor Brown, not so much Democrats.

ADLER: Yeah, Governor Brown announced a plan last year, 12 points of it including a higher retirement age at a hybrid model and the Democrats have slow walked it a bit. They vow, and in fact they vowed once again today, that they will do pension reform this year. Now, what exactly it looks like, those details aren't really out there yet. There, you know, there's some details, but not much and it's not exactly what the governor wants.

And, in fact, Republicans took to the floor of the state Senate today to say, hey, look, why aren't you doing pension reform? And they pointed to last week's primary election, or actually earlier this month's, where voters in San Diego and San Jose strongly approved big changes to their city's pension systems. And those are cities, San Jose in particular, that tend to vote Democratic.

BLOCK: Yeah, it's interesting because Jerry Brown, the Democrat, seems to have state Republicans on his side on a number of these issues. It's members of his own party, the Democrats, that he's having trouble with. How does that spectrum fall into place?

ADLER: Well, the governor is, I guess you could say, maybe trying to triangulate a little bit. He is trying, of course, to show that he can be fiscally prudent and austere ahead of the vote this fall on his tax measure asking Californians to give the state government more money, a government that has run deficits, that has had chronically late budgets and a lot of squabbling and has an approval rating in the teens.

So that's, I think, a big part of it. Another influential factor is the public employee unions are very powerful at the capitol. They support Democrats and, of course, Governor Brown's relying on their support as well to finance his tax measures. So there's a lot of moving parts. The Republicans, let's be clear, they don't like the Democratic budget.

They don't like the governor's budget at all and, you know, they feel that the tricker(ph) cuts if the tax measure fails, which would go disproportionately to schools, they just don't like it.

BLOCK: Okay. Ben Adler is bureau chief in Sacramento for Capital Public Radio. Ben, thanks so much.

ADLER: You're welcome.

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