California faces cuts to fill huge budget hole

By Agence France-Presse
Monday, May 14, 2012 22:25 EDT
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LOS ANGELES — California governor Jerry Brown proposed spending cuts Monday, including shutting down state offices one day a week, as well as tax rises to curb an estimated $16 billion budget deficit.

Brown warned that the budget hole could balloon further if California voters reject plans to increase sales tax and levies on high earners, in a November public vote in the huge western US state.

“I’m linking these serious budget reductions with a plea to the voters: please increase taxes temporarily,” Brown told reporters as he unveiled a revised plan for the budget year that begins July 1.

Brown said over the weekend that California’s deficit has swelled to nearly $16 billion, almost double the expected figure in the Democratic governor’s initial budget proposal in January.

The shortfall was due to lower-than-projected tax revenues and increased spending on schools, among other things.

Brown’s updated draft budget included proposed cuts in Medi-Cal, the state’s healthcare program for the poor, and saving $400 million by shifting government offices to a four-day week.

Brown warned that, if voters reject tax hikes in November, funding for state schools would be cut by $5.5 billion, and the University of California and California State University systems would be cut by $250 million each.

Other services like lifeguards at public beaches would also be cut, he said.

Last year California adopted its budget on time for the first time in years. Brown’s predecessor, Republican Arnold Schwarzenegger, introduced several tax measures with which he hoped to cut into the state’s colossal deficit, at one point valued at $25 billion.

In 2009, a budget crisis pushed California, which would have the world’s eighth largest economy if it were a country, to the brink of bankruptcy, sending its credit rating plunging and forcing it to pay bills with IOUs.

Agence France-Presse
Agence France-Presse
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