Gov. Jerry Brown proposed a budget today that relies on $12.5 billion in spending cuts over the next 18 months and higher taxes over the next five years to solve the state budget deficit.
"What I propose will be painful," Brown said.
However, he told reporters at the Capitol, "It's better to take our medicine now and get the state on balanced footing."
Brown's budget will include an 8 percent to 10 percent cut in state worker pay. According to his press release, Brown wants to save "$308 million for a 10 percent reduction in take-home pay for state employees not currently covered under collective bargaining agreements."
The Democratic governor will ask voters in a June special election to approve higher tax rates on sales, vehicles and income for five years. In a written statement today, Brown referred to it as "a five-year extension of several current taxes so that we can restructure in an orderly manner." But critics are sure to call them tax hikes since taxes would be lower without any further action by the Legislature or voters.
Jon Coupal, president of the Howard Jarvis Taxpayers Association, said in a written statement that voters have previously rejected tax increases and that the organization would campaign "to protect them from five more years of massive tax increases perpetuated by Sacramento politicians."
Brown said he believes he has support from some Republican to put his tax-extension measure on the ballot.
"I think we'll get some Republican votes," he said.
Neither the governor nor Senate President Pro Tem Darrell Steinberg ruled out placing taxes on the ballot with a majority vote, but they said they are committed to seeking a two-thirds vote at this time, which requires Republican support. Senate Republican Leader Bob Dutton said nobody in his caucus would agree to put the taxes on the ballot as of now.
Brown wants two measures on a June special election ballot - the tax package, as well as a proposal to use $1 billion in cigarette-tax money to fund Medi-Cal for young children. The cigarette-tax funds currently pay for First 5 early childhood development programs.
Assembly Speaker John A. Pérez, D-Los Angeles, said in a written statement that the budget is a "starting point of a responsible fiscal plan for California."
Brown's budget will include $12 billion in "revenue extensions and modifications," a category that also includes a stricter corporate tax benefit for out-of-state firms and the elimination of tax credits in "enterprise zones."
Brown also plans to keep schools funded at the same dollar level they received from the state this year, though that proposal is contingent on whether voters approve higher income taxes on the ballot.
His plan seeks to shift greater functions to local governments, providing them funding through higher sales and vehicle taxes voters would pass. He wants to phase out funding for redevelopment agencies.
Brown's budget will include the following program cuts: $1.7 billion to Medi-Cal; $1.5 billion in welfare-to-work; $750 million in developmental services; $500 million each to the University of California and California State University systems; and $200 million through various "reorganizations, consolidations and other efficiencies."
Among those efficiencies: eliminating at least half of the 96,000 state-issued cell phones used by public employees.
The deficit size is a moving target, according to Brown. He says the gap alone is $25.4 billion, but that state leaders need to solve for $26.4 billion to allow for a $1 billion reserve. He also says leaders will need to solve for $27.6 billion if the state does not sell 11 prominent office properties before leasing them back, an issue that is tied up in court.
The governor would not say Monday how he would treat the building sale, noting that his administration has another month to consider whether to push ahead.
Brown proposes $84.6 billion in general fund spending in 2011-12.
The governor will hold a Capitol press conference this morning at 11 a.m., which will be streamed live at Cal Channel.
UPDATED 12:41 p.m. and 1:40 p.m. with quotes and more detail