By Kevin Yamamura
kyamamura@sacbee.com
Published: Saturday, Aug. 18, 2012 – 12:00 am | Page 1A

Democrats say voters need look no further than California’s $91 billion general fund budget to see how dramatically they have cut. That spending total is 11 percent below the state’s pre-recession peak.

But the number can be misleading.

While California has cut education and services for the poor, budget writers also have relied on creative revenue streams and accounting maneuvers to move programs off the general fund books rather than cut them.

That has made comparisons difficult and, experts say, contributed to state bookkeeping disparities that have emerged in recent weeks.

“We’ve been through a period of extreme financial difficulty where each year’s budget package has involved many complex changes,” said Jason Sisney, a deputy at the nonpartisan Legislative Analyst’s Office. “Frankly, it’s so complex that it defies easy description. Not to say it’s bad, but it’s complex, and we’ve done a lot of it just because of the scale of problems we’ve had.”

While the general fund has fallen 11 percent since 2007-08, California special fund spending grew more than 47 percent over the same period, from $26.7 billion to $39.4 billion this fiscal year.

If Brown’s tax initiative passes, the state expects to set a record high for total budget spending at $142.4 billion, surpassing the $138 billion amount in 2007-08. That includes spending from bond funds, special funds and the general fund.

“You’ve got Democrats saying they’ve made $60 billion to $70 billion in reductions, and that’s nonsense,” said Senate Republican Leader Bob Huff, R-Diamond Bar. “Have they cut back the level government would have grown on the natural? Yes. They’re to be applauded for that. But to set up this scenario where they’ve made massive reductions is not supported by the numbers.”

The best example of why the general fund total can be misleading is Brown’s “realignment” of nearly $6 billion in former state general fund programs to local governments. To shift those responsibilities, the state last year created new special fund accounts.

Brown pushed the plan because the state faced a federal court order to reduce its prison population, and the governor said it made more sense for local officials to handle responsibilities such as watching parolees and jailing lower-level offenders. But it also had the accounting effect of shrinking the state general fund.

Democrat faults tax cuts

Since 2010, Senate Republicans have asked the nonpartisan Legislative Analyst’s Office to track what general program spending would be if various maneuvers hadn’t taken place. Since the state’s $103 billion high in 2007-08, the LAO has estimated the general fund has ranged between $99.1 billion in 2009-10 and $95.8 billion in the current fiscal year, with the latter sum including spending like the transferred realignment funds. The current total would have been $4.5 billion more if the analyst counted loan repayments for past borrowing.

Democrats contend California relied on accounting shifts on top of cuts because Republicans refused to approve higher taxes. Brown says that if voters pass his initiative to raise income taxes on wealthy earners and the sales tax by a quarter-cent on the dollar, he would be able to put California on a more honest budgeting track.

They point to programs across the spectrum where real cuts have taken place, from a shorter school year to smaller welfare grants to a reduction in services covered by Medi-Cal.

To read entire story, click here.