Gov. Jerry Brown calls for cuts as deficit jumps

More than a dozen boxes containing petitions with more than 1.5 million signatures for Gov. Jerry Brown's tax hike initiative are seen outside the Sacramento County Registrar of Voters in Sacramento, Calif., Thursday, May 10, 2012. Brown submitted the petitions for his initiative, one of two tax hike petitions that are expected to qualify for November ballot. Brown has warned that if voters do not pass the tax hikes there would be even deeper cuts to schools, higher education and social services.(AP Photo/Rich Pedroncelli) less More than a dozen boxes containing petitions with more than 1.5 million signatures for Gov. Jerry Brown's tax hike initiative are seen outside the Sacramento County Registrar of Voters in Sacramento, Calif., ... more Photo: Rich Pedroncelli, Associated Press Photo: Rich Pedroncelli, Associated Press Image 1 of / 3 Caption Close Gov. Jerry Brown calls for cuts as deficit jumps 1 / 3 Back to Gallery

Sacramento --

California's budget deficit has jumped to $16 billion, forcing Gov. Jerry Brown to call for even deeper cuts in state spending when he releases his revised budget plan on Monday.

Brown revealed the dramatically higher deficit in a Web video posted on YouTube on Saturday. Lower than projected tax receipts along with the loss of proposed spending cuts already rejected by the courts and the federal government have increased the gap, the governor said.

Brown's January budget had projected a $9.2 billion deficit for the fiscal year beginning July 1.

"This means that we will have to go much further and make cuts far greater than I asked for at the beginning of the year," Brown said in the video.

Administration officials declined to provide specific details on how they arrived at the new estimate or what would be included in the deeper cuts. The video was released by Brown's campaign team for his November ballot measure to increase the income tax on high earners and the sales tax on everyone.

Brown concluded his campaign statement with a call for Californians to join him in working to pass the measure, which the administration estimates would bring in $9 billion in additional tax revenue. He warned that if the measure fails, it would result in "severe damage" to public safety and schools.

Risky assumptions

The new deficit numbers are a stinging blow to the governor's oft-repeated promise to turn around California's troubled finances.

Since passing the budget last June, Brown and Democratic legislative leaders have touted their work, saying they had slashed the $26 billion deficit left by Republican Gov. Arnold Schwarzenegger by nearly two-thirds. However, that budget plan relied on a number of risky assumptions, including a projection that tax revenue would grow by an additional $4 billion.

Most of that money never materialized, and federal officials and the courts have blocked proposed cuts to the In-Home Supportive Services program for the elderly, blind and disabled, along with rejecting increases in co-pays for hospital and emergency room visits for people on Medi-Cal.

In addition, lawmakers have turned down about $1.5 billion in proposed cuts for welfare and child care services, along with reductions in the Cal Grants program that provides financial aid to college students.

June 15 deadline

Lawmakers must pass a balanced budget by the June 15 deadline, less than five weeks away. But they are focusing much of their attention on the June 5 primary election.

Senate Republican leader Bob Huff of Diamond Bar (Los Angeles County) said he does not expect Democrats to take action on the budget before the primary and, given that the spending plan can pass with a simple majority vote by Democrats, he said the plan will probably have more unrealistic assumptions.

'Phony budget'

"My guess is it's another phony budget," he said. Huff said lawmakers should consider potential sources of savings, like outsourcing nonclassroom school employees, before looking to tax increases, which Republicans have staunchly opposed. He also noted that had lawmakers made Brown's proposed cuts earlier in the year, the deficit problem would be smaller.

But state Senate President Pro Tem Darrell Steinberg, D-Sacramento, defended Democrats' decision to delay making cuts.

"We all hoped for better revenue numbers," he said. "But on that score, for people most in need, if they lose some of their bare subsistence, at least they will have been able to provide for themselves and their families for a few more months."

Although lawmakers will have to make more spending reductions, Steinberg said, they will not happen in areas that could lead to homelessness or threaten the lives of the sick. He specifically noted CalWORKS, the state's welfare to work program, as an area he would defend.

Steinberg said he thinks the governor released the deficit numbers early because "he probably wanted to give the public and Legislature and stakeholders a couple of days to internalize a number before laying out the details."

'Big, bad and brutal'

Advocates for Californians who rely on the state's health and human services said they expect to see deep cuts when the governor unveils his revised budget plan Monday.

Anthony Wright, executive director of Health Access California, believes Brown will again attempt to persuade the federal government and courts to allow reductions in state programs and suspects that was the topic of conversation during the governor's recent trips to Washington, D.C.

"The cuts are expected to be big, bad and brutal for California families," he said.

One of the biggest fights will be over the "trigger cuts," or automatic spending reductions if the governor's tax proposal is rejected by voters in November.

The proposal would increase the sales tax by a quarter of a cent for four years. It also would boost the income tax for seven years by either one, two or three percentage points for people making more than $250,000 per year. The highest rate increase would affect those making more than $500,000 per year.

Under the governor's January budget proposal, the automatic cuts would fall almost entirely on K-12 public schools and community colleges, with the UC and CSU systems also receiving significant midyear cuts. It is not clear if that would change under the governor's revised budget.

Hands tied

Sen. Mark Leno, D-San Francisco, chairman of the Senate Committee on Budget and Fiscal Review, said the new deficit "is as bad as our worst fears have been." But he added that voter mandates on spending, along with the federal and court limits on cutting, have tied lawmakers' hands.

"The options get fewer and fewer," Leno said.