Capitol Alert
The latest on California politics and government
January 11, 2011

The backdrop of a special election has raised the stakes for how Gov. Jerry Brown’s budget is described and categorized.

Republicans are already questioning Brown’s characterization that his plan relies on half cuts and half taxes, roughly $12 billion of both, to solve a $26.4 billion deficit. The remainder of Brown’s plan relies on nearly $2 billion in internal borrowing, transfers and non-tax revenues.

In particular, they call into question four items that Brown has dubbed spending cuts but involve taking outside money to reduce the state’s general fund burden. These include taking $861 million in Proposition 63 mental health funds, $1 billion in First 5 early childhood development reserves, $1.7 billion in redevelopment funds and $1 billion in a fuel-tax swap that involves local transit money.

From a strict general fund accounting standpoint, the maneuvers allow for “cuts” from the general fund. And they may force outside programs to cut spending on their own; for instance, the fuel-tax swap may result in less money for local transit. The nonpartisan Legislative Analyst’s Office treated fuel-tax money and redevelopment funds as cuts in a July 2009 analysis of the budget.

But the moves may also be considered fund shifts, since the state isn’t actually cutting general fund programs to save this money, but rather is using different money to pay for existing programs. The Analyst’s Office last year called transfers from First 5 and Proposition 63 funds “Other Solutions” rather than cuts.

Look for opponents of Brown’s plan to attack the half-cuts/half-taxes argument by saying $4.5 billion of his cuts are really fund shifts — and thereby only result in $8 billion in cuts rather than $12.5 billion in cuts.

To read entire story, click here.