Capitol Alert: Democrats want to use new revenue to reverse cuts

In their first review of Gov. Jerry Brown's revised budget, Democratic lawmakers are opting to use new tax revenue to reverse child care and welfare-to-work cuts despite the governor's opposition.

Brown expects $6.6 billion in additional tax revenues through June 2012 and has proposed using that money to buy back deferrals, pay down debt and reduce an income-tax surcharge for one year.

Assembly Democrats said Wednesday they could still pay down debt while providing more money for child care and welfare-to-work.

In March, Democrats agreed to cut about $440 million from state-subsidized child care by lowering provider reimbursement rates by 10 percent, tightening eligibility and reducing programs for 11- and 12-year-olds. Child care advocates said those cuts, particularly the reimbursement reduction, would force numerous centers to close.

Under a proposal moving Wednesday through the Assembly Budget Subcommittee on Education, the state would continue borrowing from state special funds in order to reverse the $440 million child care cut. Assembly Democrats also want to combine $300 million in other special fund borrowing with about $250 million in unspecified savings to provide more money for community colleges and K-12 schools.

Brown instead wanted to eliminate $750 million in loans from special funds due for repayment in future years.

"We took the hard votes in March, we understand this is a very austere time for the state financially," said Assemblywoman Susan Bonilla, D-Concord. "I want to make it crystal clear that we're not out here just trying to spend more or do more. What we're saying is, there's an opportunity because of the increased revenues to repay debt. Where should we repay it? To special funds? It's not that that's bad, but we're simply making a value statement that it's going to be more effective repaying it into the education of our children."

The actions highlight the tension between Brown's desire to control the state spending base and legislative Democrats' hopes to soften spending cuts they approved in March.

Assembly Democrats say they would count their higher spending, about $1 billion total, as "settle-up" payments on debt owed to K-12 schools and community colleges. Brown included this "settle-up" payment in the $34.7 billion "wall of debt" concept he unveiled last week. But he saw it as a lower priority because it comes with no due date. It is such a low priority, in fact, that his budget plan proposes not to pay it back over the next four fiscal years.

The governor's Department of Finance opposes the Assembly's child care restoration, in part because it leaves the state with a higher spending base in future years.

On the Senate side, a budget subcommittee opted to reverse the 10 percent cut at a cost of $121 million, but did not go as far as the $440 million restored by the Assembly. The Senate has not specified where that money would come from.

In another action, an Assembly subcommittee voted Tuesday to maintain higher welfare payments to children after five years. Lawmakers in March agreed to cut payments to those children to save $86.3 million. The subcommittee left nearly $1 billion in other welfare-to-work reductions intact.

Corrected at 5 p.m. to reflect that the original child care cut was for 11- and 12-year-olds.