California governor details cuts in revised budget plan

Reuters News
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Posted: May 14, 2012 3:46 PM
California governor details cuts in revised budget plan

SAN FRANCISCO (Reuters) - California Governor Jerry Brown on Monday unveiled a revised state budget plan that calls for new cuts to healthcare for the poor and elderly and reduced work hours for state employees as part of an effort to close a $15.7 billion budget gap.

Brown had said on Saturday that the projected deficit for the fiscal year beginning in July had increased from the $9.2 billion projected in January due to a weaker-than-expected economic recovery and other factors.

The new budget counts on approval of a November ballot initiative to raise sales taxes as well as income taxes on wealthy residents. The plan calls for $8.5 billion in new revenue from the tax hike, along with $8.3 billion in spending cuts.

Polls show support for the tax increase measure, but its passage is far from assured. If the tax increase is defeated, a series of "trigger" cuts totaling $6.1 billion, aimed mostly at school spending, would kick in.

"It's taken a decade to get into this mess," Brown said at a Sacramento news conference. "Before I leave here, we will be in solid fiscal balance."

Under Brown's new budget plan, spending cuts would hit the state's health-care program for low-income Californians and the elderly, reducing in-home support services and other medical programs. It would also slash the state's CalWORKS welfare program by nearly $1 billion.

Additionally, state employee compensation would be reduced by 5 percent by cutting work hours.

If the tax measure passes, the budget would increase spending on K-14 education by $6 billion, to $53.7 billion, with further increases in later years. Public education funding has been cut drastically in recent years, but minimum levels are mandated by an earlier voter initiative.

(Reporting by Jim Christie; Editing by Jonathan Weber and Gary Crosse)