In honor of Marvin Gaye’s birthday month, the Public Policy Institute (PPI) of Santa Monica College held a “What’s Going On” panel discussion on the California’s budget crisis on April 28.
The panel featured Assemblywoman Julia Brownley, whose district includes Santa Monica and Lenny Goldberg, the Executive Director of the California Tax Reform Association. Former State Senator Sheila Kuehl, who is also the founding director of PPI moderated the discussion.
Brownley began her remarks by stating California started this year with a $26 billion deficit. She then noted, “most Californians think we’ve been spending a whole lot and that’s why we’re in a $26 billion hole, but actually we’ve been spending quite a bit less. The last couple of years (since the 2007-2008 budget year) we’ve been spending $15 billion less.”
The Assembywoman then explained that Gov. Jerry Brown proposed a budget deficit solution earlier this year that was a mix of cuts and revenues, an is part of a three-fold strategy. The the strategy starts with informing the public how deeply the state has already slashed services, then calls for discussions on how much more devastating the next round of cuts will be, and lastly would give voters the choice of extending certain taxes that began in 2009.
On March 16 “the democrats voted on a full array of budget cuts,” continued Brownley. Some of the deepest cuts were made in the area of Health and Human Services. Higher education was particularly hard hit. A $500 million cut was made to both the University of California (UC) and California State University (CSU) budgets. For UC this will mean turning away 20,000 or 30,000 qualified students and increasing tuition $1,000 per year. For the CSUs the cut meant turning away 15,000 qualified students on top of the 30,000 students previously turned away and a tuition increase. For the community colleges, a $400 million cut was made which translated into an increase of fees and the turning away of thousands of students at a time of high demand. Whenever the economy takes a downturn demand for community college classes goes up.
This year, according to Brownley, Sacramento has “pretty much stayed away from further cuts to K-12 education but in the last three years they have taken the largest proportion of cuts, roughly $7 billion, which equates to about $1,000 per student. She also mentioned that 110 school districts throughout the state are in fiscal distress. Brownley focused on the cuts to education because she is the chair of the State Assembly’s Education Committee. Cuts were also made to Medical, mental health services, vision benefits, childcare, and other services.
Brownley then explained, “At the end of March the Republicans came up with 57 reforms that they wanted the Democrats to agree upon in order to get the extended taxes on a June ballot. The clock ran out [for the June ballot] and the negotiations literally broke down.”
There’s now talk about asking the voters to approve implementing the same taxes as those included in tax extensions in the fall. They can no longer be called tax extensions because these 2009 taxes expire in June.
Brownley also painted a grim picture of what an all cuts budget would look like, if the voters don’t approve the new taxes in the fall. For higher education this might mean cutting out all research at UC except at Berkeley and UCLA. For the CSU system it could mean the closing of a campus. It would also cause students to take more time to graduate and there would have to be furloughs for faculty and staff. Additionally, “for the first time students [at these schools] would have to pay more for their tuition than the state does.”
At the community colleges fees would have to jump from $36 per unit to $66 and at least 400,000 students would be turned away. There would be catastrophic course reductions, no winter or summer sessions or athletics. Cuts would also have to be made to the court system, the department of aging, more parks would be closed, and another $5 – $6 billion cut would have to be made to K-12 education in addition to other cuts.
Brownley concluded on a positive note by stating, “in this moment revenues seem to be exceeding projections. It’s looking better this year than last year at this time.”
Goldberg then noted, “there are so many structural problems in California in the way our government is structured, in the way our tax system is structured, and the way our revenues flow that when people consider what they are paying and what they get it is terribly disconnected.” He then suggested some solutions to increase revenues. One idea was to have an oil severance tax, another was to have a single formula for determining corporate taxes, and another was to increase taxes on the wealthy. Goldberg also suggested placing a constitutional amendment on the 2012 ballot so that if the legislature can’t pass a tax increase with a two-thirds majority a legislative majority could place it on the ballot and a majority of the voters could approve it.
Also discussed at length by Goldberg was reforming California’s commercial property taxes. He noted that in every county in California commercial property owners are paying a far smaller share of property tax since Proposition 13 passed in 1978. In addition, all commercial property owners are exploiting high tax loopholes in Prop 13 to avoid reassessment when there is a change in ownership.
Goldberg pointed out that since 1975 in Los Angeles County revenue from commercial property taxes has dropped 30 percent. If commercial properties in the Los Angeles County were reassessed to their market value the county would receive more than $500 million more in revenue and the Los Angeles Unified School District would receive $400 million more.