Lagging tax revenues are making California officials nervous about "trigger" budget cuts to schools and services that appear likely unless more money flows into state coffers or the economic outlook improves.
A newly amended Democratic bill would require the Department of Finance to give at least 10 days notice if it determines the state must install various cuts in December. The proposal, Assembly Bill X1 20, also would require Finance to "consult" with lawmakers on alternatives to cuts already prescribed in the existing budget act.
Under existing law, Gov. Jerry Brown's finance officials must determine in December whether California is on track to receive $4 billion more in revenues over the 2011-12 fiscal year. If not, the budget requires the state to impose as much as $2.5 billion in cuts to K-12 schools, higher education, public safety and social services.
The state fell $541 million short of July expectations, and there are already signs the state may also miss its August projections.
AB X1 20 gives lawmakers a window of time to replace cuts if it appears the state will fall short of the budget's optimistic projections. Among items on the chopping block are $1.5 billion in funding to K-12 districts and $100 million each to the University of California and California State University systems. State leaders said K-12 schools could lop off an additional seven days' worth of instruction to save money, but education advocates say state restrictions make it difficult to carry that out.
The bill also makes one concrete change to the trigger cuts: it eliminates the automatic spring $10 per unit fee hike for community college students. Community college advocate Scott Lay said last month that increase posed a logistical challenge for schools, and colleges would rather absorb the $30 million loss than impose a fee hike mid-year.
Lawmakers have authority to replace those cuts at any time, but AB X1 20 marks the first official statement that lawmakers may seek to reverse the cuts that Brown demanded they make in the budget act. Since signing the budget in June, the Democratic governor has defended the $4 billion assumption by saying that his plan is responsible because it imposes automatic cuts should that money never materialize.
"The fact that (the trigger cuts) were solid earned us a removal of our negative watch," Brown said last month of the state's improved Standard & Poor's credit rating. "It's not perfect. Nothing we do around here is perfect. But I think it was fair, it was an honest budget. It was a hopeful budget. To the extent it turns out differently as it has for most of the last decade, we'll make adjustments."
Update (2:30 p.m.): Brown's Department of Finance opposes AB X1 20, according to spokesman H.D. Palmer. Finance believes nothing has materially changed since Brown signed the budget that makes the bill necessary. Palmer also said, "The trigger is an integral part to our budget plan and our cash plan."