California is bankrupt with $16 billion debt
May 14, 2012 No Comments
May 14, 2012 | MariaNews.com
California is bankrupt with $16 billion debt
Severe cuts to California schools and public safety face the state if voters fail to approve tax increases in November, California Governor Jerry Brown says. The state’s budget deficit has swelled to a projected $16 billion, much larger than what was previously predicted.
LOS ANGELES, CA (Catholic Online) – Brown said the shortfall grew from $9.2 billion last January in part because tax collections have not come in as high as expected. In addition, the economy remains sluggish. The deficit has also risen due to lawsuits and federal requirements have blocked billions of dollars in state cuts.
“This means we will have to go much farther and make cuts far greater than I asked for at the beginning of the year,” Brown said in an online video.
“But we can’t fill this hole with cuts alone without doing severe damage to our schools. That’s why I’m bypassing the gridlock and asking you, the people of California, to approve a plan that avoids cuts to schools and public safety.”
Brown is expected to explain a revised spending plan later today. The new plan for the fiscal year that starts July 1 hinges in large part on voters approving higher taxes.
Tax increases are needed, Brown argues, to help pull the state out of a crippling decade shaped by the collapse of the housing market and recession.
“What I’m proposing is not a panacea, but it goes a long way toward cleaning up the state’s budget mess,” Brown says.
Democrats have resisted Brown’s proposed cuts so far this year. Republican lawmakers criticized the majority party for building in overly optimistic tax revenues.
“Today’s news underscores how we must rein in spending and let our economy grow by leaving overburdened taxpayers alone,” Assembly Republican leader Connie Conway said in a statement.
The governor pursued a ballot initiative because Republican lawmakers would not provide the votes needed to reach the two-thirds legislative majority required to raise taxes.
Assembly Speaker John Perez, D-Los Angeles, acknowledged that lawmakers have “limited and difficult choices left to solve the deficit.”
Senate President Pro Tem Darrell Steinberg, D-Sacramento, says he’s not surprised by the deficit given that state tax revenue have fallen $3.5 billion below projections in the current year.
“We will deal with it,” Steinberg said. “And we know that more cuts are inevitable but we will do our very, very best to save more than we lose, especially for those in need.”
Under the proposal, California would temporarily raise the state’s sales tax by a quarter-cent and increase the income tax on people who make $250,000 or more.
Brown says his tax initiative would raise as much as $9 billion, but a review by the nonpartisan analyst’s office estimates revenue of $6.8 billion in fiscal year 2012-13.
Supporters of the “Schools and Local Public Safety Protection Act of 2012″ say the additional revenue would help maintain current funding levels for public schools and colleges and pay for programs that benefit seniors and low-income families. It also would provide local governments with a constitutional guarantee of funding to comply with a new state law that shifts lower-level offenders from state prisons to county jails.
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