California continues courtroom push to cut costs

Gov. Jerry Brown still hopes to slash spending on healthcare and home care for the poor, and his revised budget proposal includes cuts that have already been blocked by federal courts.

The spending plan, unveiled May 14, expects to save $261.8 million by reducing Medi-Cal reimbursement rates and $22.4 million by cutting back on In-Home Supportive Services.

If judges continue to block the cuts, there's a contingency plan with money set aside to cover the costs, said H.D. Palmer, a spokesman for Brown’s Department of Finance. But it shows that Brown isn't giving up on his administration's courtroom budget battles.

Hundreds of millions of dollars in budget cuts have been blocked by the federal government or the courts, according to the Department of Finance.

The court case involving Medi-Cal stems from the state’s effort to cut by 10% payments to doctors who provide services to poor patients. In January, U.S. District Judge Christina Snyder blocked the cut, writing in her 30-page order that “the state’s fiscal crisis does not outweigh the serious irreparable injury plaintiffs would suffer.”

The California Medical Assn., which sued the state, hopes the administration backs down rather than  appeal.

"It’s time for the Department of Health Care Services to stop relying on sweeping policy changes like this one for budget solutions, but rather sit down and come up with a long-term fix," said Molly Weedn, a spokeswoman for the association.

Brown has proposed two separate cuts to In-Home Supportive Services, which allows the elderly and disabled stay in their homes by paying for aides. First, he wants a 7% cut in aides' hours. If his administration succeeds in court, there would also be a 20% cut in hours that has been blocked so far.

The 7% cut to home care would cause a ripple effect. Even though it's a $99-million reduction, the program would suffer a total loss of about $800 million because the state would sacrifice hundreds of millions more in county and federal funding.

RELATED:

Brown unveils revised budget plan

Brown gets no promise of federal help for Medi-Cal

California's legislative analyst says deficit may be even higher

-- Chris Megerian in Sacramento

twitter.com/@chrismegerian

Photo: Dr. Oliver Brooks, center, examines a Medi-Cal patient at an L.A. clinic in 2010. Credit: Brian van der Brug / Los Angeles Times

Governor, legislators could face pay cut like other state workers

A week after Gov. Jerry Brown proposed to effectively cut state worker pay by 5%, some members of a state panel that sets the salary for elected officials said Monday a reduction should also be extended to the governor and legislators.

Brown proposed to reduce the workweek for many state workers to 38 hours as part of an effort to eliminate a $16-billion budget deficit.  That caught the attention of members of the California Citizens Compensation Commission, which meets May 31 to take its annual vote on salaries for elected officials.

"The governor wants public employees to take a 5% pay cut, and legislators are public employees," said Commissioner Chuck Murray. "I would vote to bring legislators in line with what the governor is doing with other public employees."

Commissioner John Stites noted there is a precedent for such action. The commission slashed the pay of lawmakers and the governor 18% in 2009 after Gov. Arnold Schwarzenegger made a similar reduction for other state employees.

"I don’t see why it wouldn’t happen now," said Stites, a retired Los Angeles County sheriff’s sergeant. Commissioner Kathy Sands agreed it is "more likely" the panel will vote next week to reduce salaries for elected officials, now that the governor has proposed reductions for other state employees. But  it is unclear whether the other four commissioners would also vote for a pay cut.

California legislators are paid $95,291 annually, the highest base pay for lawmakers in the country. The governor is paid $173,987.

One thing the commission is guaranteed not to do is approve pay raises.

That is because California voters approved a ballot measure in 2009 that prohibited salary increases for legislators and the governor in years in which the finance director certifies that there is a negative balance of more than 1% in the state’s Special Fund for Economic Uncertainties. Finance Director Ana Matosantos has certified the negative balance, her office said Monday.

RELATED:

Jerry Brown unveils revised budget plan

No pay raise if deficit remains, elected officials warned

California's legislative analyst says deficit may be even higher

--Patrick McGreevy in Sacramento

Photo: California Gov. Jerry Brown speaks during a news conference May 14 in Los Angeles at which  he announced his newest budget proposal. Photo credit: Kevork Djansezian/Getty Images

California's legislative analyst says deficit may be even higher

This post has been updated. See the notes below for details.

California's budget deficit may be $1 billion larger than Gov. Jerry Brown's $15.7-billion estimate, the Legislative Analyst's Office said on Friday.

The bulk of the difference lies in questions over money from defunct local redevelopment agencies. Brown wants to use $1.4 billion in leftover assets to help plug the budget gap, and the state expects to collect property tax money that used to fund the agencies.

But the analyst predicts there will be much less money available, increasing the deficit by roughly $900 million.

[Updated 12:50 p.m. and 1:10 p.m. PDT, May 18: Earlier versions of this post said Gov. Brown's estimate may have been $900 million off. But in addition to the concern over redevelopment money, the legislative analyst's  report said Brown's revenue estimates may be "a few hundred million dollars" too high, which could further widen the budget gap to $1 billion or more.]

The analyst's report said there's "considerable uncertainty" surrounding the amount of redevelopment money, and lawsuits could further bog down the process.

Other than that, the report said, Brown's proposal appears reasonable. But an uncertain economy makes it difficult to predict how much tax revenue the state will pull in.

"This makes the adoption of realistic budgetary actions -- including realistic trigger cuts -- particularly important if the state is to continue making progress toward eliminating the stubborn structural deficit," the report said.

RELATED:

Jerry Brown unveils revised budget plan

Facebook stock stumbles in big public debut

Jerry Brown stymied by same budget dysfunction that plagued predecessors

-- Chris Megerian in Sacramento
twitter.com/chrismegerian

Photo: Gov. Jerry Brown releases details of his revised budget plan for the coming fiscal year. Credit: Nick Ut / Associated Press

Fitch on new California budget problems: Don't panic

 
A Wall Street rating agency on Tuesday called California's new, eye-catchingly large $16-billion deficit "unsurprising" and said it expected little progress until after primary elections next month.

Fitch Rating's note suggested little ground for either panic or optimism about the state's prospects after Gov. Jerry Brown announced the deficit had nearly doubled since he released his initial budget proposal in January. The note briefly reviewed Brown's May budget revision, released Monday.

"The increase in California's budget gap projection is unsurprising given the disappointing actual tax collections through the current fiscal year, adverse court and federal actions, and higher spending needs," Fitch said.

"We believe that the state of California has the ability to address the expanded budget gap," the note continues, "although rebalancing the state's finances and cash flows through fiscal 2013 will not end the state's fiscal uncertainty."

That's because the slow recovery hasn't refilled California's coffers yet, and the state is still paying off debts it incurred to weather the last two recessions, the analysis concludes. It advises to expect little action until after the primary election June 5.

The deadline for the Legislature to pass Brown's $91.4-billion revised budget is June 15. The plan assumes voters will help close the deficit by passing $8.5 billion in taxes in November; the remainder of the deficit is closed by cuts to services, converting state workers to a four-day work week and use of one-time money and surplus state funds.

 RELATED:

Jerry Brown unveils revised budget plan

California deficit balloons to $16 billion

Lawmakers hope to soften some of Brown's proposed cuts

 

--Nicholas Riccardi in Sacramento

Photo: Gov. Jerry Brown discusses his revised budget proposal in Los Angeles. Photo credit: Nick Ut/Associated Press

 

California court leaders decry budget cuts

California judicial leaders warned that more than $500 million in new cuts Gov. Jerry Brown proposed in his revised budget Monday could imperil public access to the judicial system.

Read about it on LA NOW.

RELATED:

California's deficit grows to $16 billion

Jerry Brown releases revised budget plan

Capitol on edge as Jerry Brown pushes taxes, spending cuts

-- Nicholas Riccardi in Sacramento

Photo: California Chief Justice Tani Cantil-Sakauye criticized Gov. Jerry Brown's new proposed court cuts on Monday. Photo credit: Kirk McKoy / Los Angeles Times

Jerry Brown releases revised budget to close $16-billion gap

Gov. Jerry Brown on Tuesday released a $91-billion budget proposal that sharply cuts health and welfare spending, reduces state payrolls by 5% and freezes construction of new courthouses.

Brown's revised budget reflects a steadily worsening fiscal picture for California. On Saturday, he announced via YouTube that the state's deficit had grown to $16 billion, nearly twice what he projected when he released his initial budget proposal in January.

The gap grew, the budget revision states, because Brown over-estimated tax revenue by $4.3 billion and the federal government and courts blocked $1.7 billion in cuts the state wanted to make. The remainder of the difference reflects an increase in the amount of money the state is mandated to spend on education under a complex voter-approved formula.

To close the wider gap, Brown has heightened the cuts he wants to make to Medi-Cal, to $1.2 billion, and maintained another $1.2 billion in welfare and child-care savings he proposed in January.

He also wants to slash payments to people who care for the disabled by 7% and reduce the state payroll through a shorter work week or wage concessions. He proposed $500 million in cuts to the state's struggling court system, including a one-year freeze on all new construction projects.

The service reductions are expected to be harsher if voters in November reject Brown's proposed combination of a sales tax hike and increased levies on high earners. The governor presumes that $8.5 billion of the state's $16-billion deficit will be filled by his tax measure. If it fails, he would levy an automatic $5.5-billion cut to public schools, along with ending popular programs such as lifeguards at state beaches.

The situation would be worse were it not for Facebook. The budget presumes the social media company's IPO will kick $1.5 billion in tax revenues into the state's coffers by the end of the fiscal year in June 2013.

The release of the detailed budget revision, a much-anticipated spring ritual in the capital, kicks off the budget season in earnest. The Legislature has little more than a month to pass a budget by the June 15 deadline.

RELATED:

California's deficit grows to $16 billion

Jerry Brown targets state workers for cuts

Capitol on edge as Jerry Brown seeks spending cuts, tax hike

-- Nicholas Riccardi in Sacramento

Photo: Gov. Jerry Brown addresses the California Medical Assn. in April. Credit: Rich Pedroncelli / Associated Press

Jerry Brown to unveil plan to close California's $16-billion deficit

Gov. Jerry Brown is scheduled to unveil his revised budget plan on Monday and detail how he will close California's $16-billion deficit.

The size of the gap nearly doubled over the last four months as Brown's optimistic projections from his January budget were repeatedly dashed. Tax revenues are coming in lower than the governor assumed, the state is spending more money than it was supposed to. Courts and the federal government have rejected several of Brown's cash-saving cuts.

The governor couldn't get his fellow Democrats in the Legislature to agree to cuts in social services he proposed in January, when the deficit was $9.2 billion. Now, budget negotiations will begin in earnest to try to meet the June 15 deadline for passage of a new fiscal plan, which Brown is scheduled to release at a 10 a.m. Sacramento news conference.

Brown's proposal has been a tightly guarded secret, but observers are expecting deep cuts in social services. The administration has warned state employee unions that payroll will be reduced. And the governor will assume that part of the deficit will be closed by tax hikes he is asking voters to approve in November.

His spending plan will include "trigger cuts" to some of the most politically popular programs -- including K-12 schools -- that will kick in if voters reject the initiative to increase the sales tax by a quarter of a cent and levies on those making more than $250,000 annually by 1 to 3 percentage points. The taxes could bring in as much as $9 billion in the upcoming fiscal year.

"We can't fill a hole of this magnitude with cuts alone without doing severe damage to our schools," Brown said in a YouTube address released Saturday. "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." 

Watch the address below:

 

RELATED:

California deficit swells to $16 billion

Gov. Jerry Brown targets state workers for cuts

Capitol on edge as Jerry Brown pushes taxes, spending cuts

-- Nicholas Riccardi

Photo: Gov. Jerry Brown speaks in San Jose this month. The governor is scheduled to release his May budget revision, detailing $16 billion in cuts, at 10 a.m. Monday. Credit: Paul Sakuma /Associated Press

Gov. Jerry Brown targets state workers for cuts

Gov. Jerry Brown is targeting a new part of the budget to close a widening deficit by seeking to reduce state worker costs in his revised spending plan, according to sources with knowledge of his plans.

Brown, who has been in discussions with labor unions, is expected to release an updated budget proposal on Monday. The sources were not authorized to speak publicly before the governor's announcement.

The possibility of cuts to state employees is a symptom of lagging tax revenue. California has collected $3.5 billion less taxes than expected in the current fiscal year, according to the controller, and the budget gap will be larger than the $9.2 billion estimated in January.

Brown spared state employees when he released his preliminary budget proposal earlier this year, but sources said he will now ask them to shoulder cuts as the red ink piles up.

It’s unclear how much Brown wants to reduce employee costs and how he’ll achieve the savings. Costs can be reduced through layoffs, cuts to pay and benefits, or furloughs. The Sacramento Bee first reported the possibility on Wednesday afternoon.

H.D. Palmer, a spokesman for Brown’s Department of Finance, wouldn’t talk about potential cuts before Brown releases his new budget proposal.

Many cuts would require reopening union contracts. But contracts with all 12 public employee unions, representing 182,000 workers in total, don’t expire until July 2013.

Photo: Gov. Jerry Brown discussing the state budget in January. Credit: Rich Pedroncelli / Associated Press

RELATED:

S&P sounds alarm over April tax revenue

Tax revenue $3 billion less than target, report says

Dreary April tax collections raise budget worries, controller says

-- Chris Megerian in Sacramento

Twitter: @chrismegerian

California politicians praise Obama's support for same-sex marriage

Top California politicians hailed President Obama's statement of support for same-sex marriage on Wednesday.

Assembly Speaker John Perez (D-Los Angeles), the first openly gay person to hold that position, said he was "very proud" of the president's statement, made in an interview with ABC News.

"As with many Americans, his views on this issue have evolved toward an embrace of dignity, respect and justice for every American," Perez said in a statement.

Los Angeles Mayor Antonio Villaraigosa, who has pushed the Democratic Party to include the issue in its national platform, said on Twitter that "love doesn't care if you're gay or straight. Love doesn't discriminate."

Senate President Pro Tem Darrell Steinberg (D-Sacramento) issued his own statement saying, "I have never been more proud of our President than I am today." He added, "Denying the right for any two people to marry is discrimination."

Lt. Gov. Gavin Newsom, another outspoken supporter of same-sex marriage, called Obama's comments a "historic moment" on Twitter. "So proud to see our President come out in support of marriage equality and full equal rights for ALL Americans," he wrote.

Same-sex marriage was briefly legal in California, thanks to a state Supreme Court decision in 2008, but voters passed Proposition 8 later that year, banning it with a constitutional amendment.

[Updated 5:10 p.m.: Gov. Jerry Brown refused to defend Proposition 8 in court when he was attorney general. He posted on Twitter that, "Equality before the law is a pillar of American democracy. I applaud President Obama's support for the right of same-sex couples to marry."]

RELATED:

Obama declares support for same-sex marriage

Romney declines opportunity to comment on gay marriage

Gay-marriage backers on Obama: "Big day for all Americans"

-- Chris Megerian in Sacramento

Corporate tax change headed to ballot over Jerry Brown's objections

Another tax measure appears headed to the November ballot over the objections of Gov. Jerry Brown.

Hedge fund manager and Democratic philanthropist Tom Steyer announced Friday that he has submitted more than 955,000 petition signatures to place a measure on the ballot that would change corporate tax rules and raise about $1 billion annually to be split between state-funded clean-energy projects and the general budget.

Steyer said he has discussed his measure with Brown, who has made it clear in recent weeks that he would rather Steyer abandon his proposal.

Steyer said that was a change from when he first told the governor about his initiative months ago. "He was enthusiastic and supportive," Steyer said of the governor then. "We talked to him about it several times."

But as the deadline to qualify measures for the fall ballot approached, Brown began to get concerned, Steyer said.

"At the end, he started to get nervous about the clutter on the ballot," he said. "I definitely got the impression that he would rather us not go forward."

The governor has also tried, and failed, to convince Pasadena attorney Molly Munger to drop a proposed income-tax increase that Brown views as competition to his tax package. Munger's campaign announced that it also has begun submitting signatures to election officials to begin the qualification process for the November ballot.

Brown initiative spokesman Steve Glazer did not immediately comment on Steyer's remarks. The governor is out of state, and his office refuses to say where he is.

Though refusing to defer to the governor, Steyer said he would abandon his initiative if Assembly Speaker John A. Perez can get a plan through the Legislature that would make similar tax changes but use the money for UC and CSU scholarships. That would require a two-thirds, bipartisan vote.

RELATED:

California's truly loopy tax loophole

Jerry Brown reaches out to rival tax proponent

Jerry Brown's tax can pass, but not with rivals on the ballot

-- Anthony York in Sacramento

Photo: Tom Steyer in 2010. Credit: Anne Cusack / Los Angeles Times