Brown Says California Expects $6.6 Billion Revenue Gain

Monday, 16 May 2011 05:14 PM


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(Updates with total debt in seventh paragraph.)

May 16 (Bloomberg) -- California’s revenue will grow $6.6 billion more than forecast through fiscal 2012, reducing the most populous U.S. state’s budget deficit and trimming the proposed extension of higher taxes and fees, Governor Jerry Brown said in announcing a revised budget.

The deficit estimate shrank to $9.6 billion from about $15.4 billion, Brown said in revising his budget proposal for the fiscal year that begins July 1.

“It is estimated that only a limited amount of new bonds will need to be issued in the fall for new and existing projects,” the 73-year-old Democrat said in a press conference in Sacramento today.

California won’t need to seek a 0.25 percentage-point increase in personal income-tax rates until next year because of the better-than-expected revenue, Brown said. He also rescinded his proposal to scrap blight-fighting enterprise zones that he had said in January was needed to balance the state’s books.

Brown, who took office in January pledging to fix California’s fiscal malfunctions, had sought a five-year extension of $11 billion of expiring income, sales and vehicle- registration tax increases to prevent more cuts to schools and public safety. Republicans opposed that plan and blocked a June statewide vote on the higher levies.

“This is not the time to delay or evade, but to put our finances in order,” Brown said. “That’s what this May revision intends to do.”

State Budget ‘Gimmickry’

Brown said budget “gimmickry” -- such as deferring required payments to schools by a year -- created a total debt of $34.7 billion over the past decade. He said his budget would pay down that debt over time.

Brown’s revised budget relies on keeping in place a 1 percentage-point boost in the retail-sales levy, to 8.25 percent, and a 0.5 percentage point increase in auto- registration fees to 1.15 percent of a vehicle’s value. It also seeks to extend a reduction of the state’s annual child tax credit to $99 from $309. All were put in place temporarily in 2009 and are set to expire June 30.

His initial budget plan in January asked lawmakers to put those tax extensions directly to the voters. His revised plan calls for lawmakers to pass the taxes directly and then ask voters in November to validate the move. Spending would then be based on the higher revenue with a provision that triggers cuts if voters don’t go along.

California’s constitution requires lawmakers to approve a budget by June 15 and for the governor to sign it into law by July 1. A new law approved by voters in November allows the budget to be passed by a simple majority vote and strips lawmakers of their pay whenever a budget is late.

The tax measures Brown proposed would still need approval by two-thirds of the Legislature, where Democrats are four votes short of such a supermajority.

--With assistance from Alison Vekshin in San Francisco. Editors: Pete Young, Jerry Hart

To contact the reporters on this story: Michael Marois in Sacramento at; James Nash in Sacramento at

To contact the editor responsible for this story: Mark Tannenbaum at

© Copyright 2014 Bloomberg News. All rights reserved.

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