HECTOR AMEZCUA / Bee file, 2010

Yvonne Walker, president of Local 1000 of the Service Employees International Union, addresses a 2010 rally at the state Capitol. Walker also stood beside Gov. Jerry Brown last week as he celebrated the passage of his Proposition 30 tax measure.

Questions and answers about the new California budget landscape

Published: Monday, Nov. 12, 2012 - 12:00 am | Page 1A
Last Modified: Wednesday, Jun. 5, 2013 - 12:06 pm

Gov. Jerry Brown and state lawmakers are looking at a new budget landscape after California voters last week approved a $6 billion annual tax infusion and apparently gave legislative Democrats supermajority power.

State leaders and the Capitol lobbying corps are still sorting out the implications. But the changes will undoubtedly embolden groups who felt victimized by recessionary budget cuts.

From state workers to social service recipients to schoolteachers, almost everyone who relies on public dollars has faced rollbacks in some form.

The governor, for his part, suggests he will focus first on paying down debt and bring the state's expenses in line with its revenues. But pressure will be significant to bring back programs rather than simply retire debt.

We answer some budget questions:

>Wasn't Proposition 30 just supposed to help schools?

That was the sales pitch, but as The Bee and others pointed out during the campaign, the money would benefit the entire state budget – of which education is one substantial part.

In the current school year, Brown and lawmakers focused the impact of Proposition 30 almost entirely on K-12 districts and higher education, threatening to cut them if voters rejected the initiative.

But in future years, Brown and state lawmakers will have to balance education demands against a host of needs elsewhere in the nearly $100 billion general fund budget. Education may stand to gain the lion's share of new money, but labor unions and social service advocates will also fight for relief from past cuts.

>What does that mean for state workers?

They face 12 days of furloughs this year, equal to a 4.62 percent cut in hours and pay. That expires in June.

Given that Proposition 30 passed, it is unlikely that Brown will find sufficient reason to extend furloughs after using the state's massive budget deficit as justification this year. It did not go unnoticed that Service Employees International Union Local 1000 President Yvonne Walker, who leads 93,000 state workers, stood beside the governor as he celebrated his tax initiative victory on election night.

The governor will negotiate new contracts with all but two labor unions, which may feel empowered not only by Proposition 30 but also by Democrats' legislative gains.

The legislative leaders are union advocates. Assembly Speaker John A. Pérez made his mark as a labor organizer, and Senate President Pro Tem Darrell Steinberg walked a picket line last week at the Raley's supermarket in South Land Park.

>How does this affect the local economy?

Jeffrey Michael, who runs the Business Forecasting Center at the University of the Pacific, says Proposition 30 is a "net positive" for the region, although not an overwhelming factor.

"Any time you're taxing millionaires, which are not found frequently in Sacramento County, and sending money to state government, it's a positive," Michael said.

He agreed that new tax dollars and Democratic gains make government pay cuts less likely in years to come, and state employees remain the biggest source of wages in the region.

Education is also a significant job driver locally, at both K-12 and colleges, so avoiding cuts there is another boost.

>When does the sales tax hike start?

The statewide sales tax increase – a quarter-cent on the dollar – kicks in Jan. 1. That will hike the sales tax in most of Sacramento County from 7.75 percent to 8 percent. However, city of Sacramento voters approved an additional half-cent tax hike that starts April 1, increasing their rate to 8.5 percent. Galt also will be at 8.5 percent.

Elsewhere, Placer, El Dorado and Yolo counties go from 7.25 percent to 7.5 percent, though several cities will have higher rates.

>When does the income tax hike start?

It already has, retroactive to Jan. 1 of this year. The Department of Finance expects most of the new 2012 revenue from top earners to come in April.

The three-tiered increase starts hiking taxes by 1 percentage point on income above $250,000 for individuals and $500,000 for joint filers. Their underpayment penalties are waived this year because of the late enactment.

>What happens at our local public school?

Impacts will differ district by district, but the school year will remain as scheduled.

Any future improvement is likely to be gradual as school officials wait to see how much more money they will receive as the economy recovers and new taxes flow.

For years, the state has delayed payments to K-12 districts and community colleges, forcing them to borrow against their own reserves or from outside lenders to pay their bills.

Brown wants to reverse that borrowing, which helps districts shore up their financing. But just like a consumer who focuses on paying off credit card debt, it means less money will be available for spending.

Education groups and parents are sure to clamor for more money for teachers, potentially adding school days back to the calendar, reinstating courses that had been eliminated or shrinking class sizes.

Also look for the governor to push hard for a new K-12 funding formula that gives extra money to urban districts serving low-income students and English learners.

The extent to which Brown and lawmakers allow school program growth remains to be seen, as it will be a balancing act against other state needs.

>What are those needs?

Advocates for low-income residents are already talking about providing dental coverage for adult Medi-Cal recipients, as well as podiatry services and incontinence creams, among other services. The state cut those benefits in 2009 in the face of a massive deficit.

"One of the things we've been pushing for is restorations to some of the most egregious cuts to Medi-Cal benefits," said Marty Omoto, an advocate for residents with disabilities.

Labor unions want to restore In-Home Supportive Services hours and pay – a 3.6 percent cut ends in June and Brown will find that difficult to extend. Democrats may also try to soften rules that cut benefits for welfare-to-work recipients after two years.

Universities are likely to seek more money, though tuition hikes are still expected at the University of California and California State University. Pérez has said he wants to revive his idea of providing scholarships for middle-class families.

Finally, counties were grateful that Proposition 30 locked in several billion dollars annually to pay for housing inmates and watching parolees previously overseen by the state, as well as a host of social service responsibilities.

© Copyright The Sacramento Bee. All rights reserved.

Read more articles by Kevin Yamamura



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