Monday, May 16, 2011

GSL Budget Review: Jerry Brown's Revised Plan Gets Many Thumbs Down

The centerpiece of Jerry Brown's revised budget proposal is the welcome (to bureaucrats) news that California's tax revenues have soared to $6.6 billion higher than projected. Using Sacramento's version of accounting practices, this now means that the state's budget deficit is down to $9.6 billion.

Another piece of good news is that unionized public school teachers might have reason to get back to the classroom and off of our televisions, as the boost to revenues will likely mean more money for schools per Prop 98. Also on the positive side, Brown's new budget cuts 5,500 state jobs and 43 boards and commissions. But that's where the good news ends. The biggest piece of bad news? While Brown wants to put off extending higher income tax rates for one year, he now wants the Legislature to to implement all his other tax hikes and seek voter approval later. So yeah, there goes that campaign promise, as well as Brown's credibility as an independent thinker.

Looking back, most of our predictions this morning were right on the money. The new budget assumes that the state has already saved $11 billion, which is almost certainly not true. We were mostly right on redevelopment agencies; Brown wants to eliminate them, but backed off in allowing enterprise-zone tax credits to remain. In our view, wiping out the RDAs but allowing the crooked dealings between local developers and politicians to remain is basically ignoring the problem. The proposal to cut welfare grants and services for the elderly and disabled from January is gone now. The recommendations for improving California's business climate are pitiful. And, again, we were right about Brown's broken campaign promise and his political courage.

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