Gov. Jerry Brown and Democratic lawmakers have long warned of dire consequences if California voters reject a proposed tax hike on the November ballot. In adopting a $91.3 state billion budget, they made it clear it wasn't a hollow threat.
Lawmakers approved and the governor signed $6 billion in automatic cuts late Wednesday that will go into effect if the initiative fails. Distasteful provisions added in the final days of negotiations authorized shorter school years, less money for local police, and possible fee increases at the University of California and California State University systems.
"These trigger cuts are real," said Sen. Ted Lieu, D-Torrance. "They will be catastrophic if the governor's initiative does not pass in November."
To make sure voters are paying attention, lawmakers also passed a separate measure that will likely give Brown's initiative top billing on the crowded fall ballot.
The governor and lawmakers said the bulk of cuts will have to fall on public schools and universities because education accounts for more than half of state spending. The reduction could further harm the troubled education system that's responsible for more than 6 million students in nearly 10,000 schools.
Under the plan, school districts could reduce the public school year from 175 days to 160 for two years, tying California with Colorado for the shortest school year in the nation. California previously reduced the minimum from 180 days - the national average - in response to financial strains.
Brown said his tax proposal is fair and temporary.
"Our state budget problem was built up over a decade, and it won't be fixed overnight," " he said in a statement announcing he had signed the budget. "These temporary increases will ensure funding for our schools until the economy improves."
Brown, a Democrat, estimated the tax initiative will raise $8.5 billion in the new fiscal year starting July 1 by increasing the sales tax by a quarter cent to 7.5 percent for four years, and boosting the income tax on individuals who make more than $250,000 a year for seven years.
A recent Field Poll found California voters divided on Brown's initiative, with 52 percent in favor and 35 percent opposed.
Republicans blasted the way Democrats crafted the budget.
"It's a disgrace that Democrats are playing politics with the budget to sweeten the appeal for ill-fated taxes at the ballot box," Assembly Republican Leader Connie Conway of Tulare said after Democrats passed the budget package on a majority vote.
State Sen. Anthony Canella, R-Ceres, said it's curious that K-12 education stands to be cut about $5.4 billion when state revenue is up compared to last year. He questioned whether labor rules will force school districts to keep paying teachers' salaries even if students log less days.
"Maybe you'll let the kids out of school but the teachers will still be employed and in addition to that, they'll get their full retirement for the year," Canella said.
In approving the budget with a majority vote, Democrats decided to give public universities additional funding if tuition is not raised next year and voters approve Brown's tax initiative. UC administrators supported the plan and said they would back off a proposal to increase tuition 6 percent this fall.
"We do think that it's a positive step toward bringing stability to funding for the University of California," said UC spokeswoman Dianne Klein. But "it's going to take some extraordinary measures to balance our budget without a fee increase."
If voters reject the tax measure, the UC and CSU systems each face a $250 million cut, which would resurrect the possibility of a midyear tuition hike.
CSU's board of trustees has already approved raising tuition at the 23-campus system by 9 percent this fall, or $498, bringing the annual bill to $5,970 for in-state students. It remained unclear Thursday whether the university would rescind that increase.
Also included on the list of automatic cuts is a $20 million cut in grants to city police departments. In addition, the state Justice Department's law enforcement program would lose $1 million.
The Brown administration has defended state spending, saying general fund expenditures are down 11.3 percent since the peak of $103 billion in 2007-08. As a share of the state economy, general fund spending is at its lowest level since 1973, the budget states.
But add in bond spending, other sources of revenue and federal funding, and the state's total spending is the highest it has ever been. For the new budget, total state spending is at $225 billion.
Republicans noted that's an increase of 7 percent from last year.
Part of that growth is due to the federal stimulus act. The federal government handed states more money for education, infrastructure and other needs in an effort to counteract the recession, however the funding is expected to wind down.
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Erika Morphy Washington, DC reporter Erika Morphy goes deep inside the DC power scene to explore the link between Capitol Hill and your assets. Erika Morphy has been a financial journalist for 20 years. She?s been covering the capital markets for ALM since 2004. Contact Erika Morphy.