Gov. Jerry Brown said Monday (Jan. 10) that he is proposing to close the state's $25.4 billion budget gap by cutting spending by $12.5 billion and extending temporary tax increases that were enacted under the Schwarzenegger administration.
There will be huge impacts from the cuts.
The governor's budget proposes total spending of $127.4 billion for the 2011-12 fiscal year, of which general fund spending accounts for $84.6 billion.
In a news release issued by his office, Brown said he is proposing a cut of 8 to 10 percent in take-home pay for most state employees and a "vast and historic" restructuring of government operations.
"These cuts will be painful, requiring sacrifice from every sector of the state, but we have no choice," he said.
"For 10 years, we've had budget gimmicks and tricks that pushed us deep into debt," he said. "We must now return California to fiscal responsibility and get our state on the road to economic recovery and job growth."
He said he is calling for an election in June to ask voters to continue for another five years the temporary tax hikes, which include a 1 cent increase in the state's sales tax, a 0.25 percentage point hike in its income tax and an increase in the vehicle license fee rate.
Brown said his realignment plan will return decisions and authority to cities, counties and schools and "allow government at all levels to focus on core functions and become more efficient and less expensive" by reducing duplication of services and administrative costs.
The governor said revenue from sales tax and the vehicle license fee will be transferred directly to local governments to finance the first phase of his realignment plan.
Proposed spending reductions include $1.7 billion to Medi-Cal, $1.5 billion to California's welfare-to-work program, $750 million to the Department of Developmental Services, $500 million to the University of California, $500 million to California State University, and $308 million for a reduction in take-home pay for state employees not currently covered under collective bargaining agreements.
Brown's spending plan proposes additional reductions throughout state government, including corrections, the judiciary and resources.
He said the one area of state spending spared from cuts is kindergarten through 12th grade education.
He defended his proposed spending cuts and tax extensions by saying, "Without decisive action, the state's severe budget problems will persist, threatening economic recovery, job growth, public education and the quality of life in California."
"The adoption of this budget will position the state to lead the country as it slowly recovers from the Great Recession," he said.