Cap Details Emerge

Slowly some details of the budget “framework” are beginning to emerge. The Los Angeles Times reports that the gap would be closed by $15 billion in spending reductions, $14.4 billion in new and increased taxes, and $12 billion in new borrowing and various accounting gimmicks. Approximately half of the proposed cuts could come from schools and community colleges. Human service and higher education programs could also be deeply cut.

Elements of, but no legislative language describing, the proposed spending cap have also begun to trickle out. A CBP analysis based on “best available rumors” concludes the cap, if approved by voters, could severely limit the state’s ability to restore budget cuts made in the September or current budget plans and could make it extremely difficult to expand programs to meet future policy, demographic, and economic challenges. Of course, that’s precisely what such a cap is designed to do – limit future spending.

Specifically, the CBP analysis estimates that state General Fund spending could be limited to approximately $21 billion below the Governor’s baseline spending level in 2012-13 – a level that assumes all of the cuts proposed by the Governor as part of his plan to balance the 2008-09 and 2009-10 budgets. In other words, some $21 billion in cuts above and beyond those currently under consideration could be required under the proposed cap. While some claim the cap could be less harsh, they have not provided the documentation required for an independent assessment. While we trust, we also firmly believe in the need to verify. Details to come as we learn them.

Late breaking news suggests that the cost of the tax cuts that appear to be part of the budget package could be much larger than initially reported – likely at the high end of the estimate reported in a prior blog post.

— Jean Ross