COMMENTARY | The month of July brought a new state budget to Californians, and with it comes great pain for education and the state's poor. As a California resident, this budget impacts me directly through changes to sales tax and DMV fees, and indirectly though its effect on families, businesses, schools and the greater California economy.
No extension of existing tax increases
Much of the budgetary pain results from Republican opposition to Gov. Jerry Brown's planned five-year extension of temporary tax increases. The extension, favored by 61 percent of respondents in a UC Berkeley and Field Poll survey, would have covered nearly half of the budget's $26 billion deficit, reducing or eliminating the most draconian cuts, according to the San Francisco Chronicle.
With public sentiment clearly favoring the extension, the Republican blockage makes little sense. In a Christian Science Monitor interview, Jessica Levinson, political reform director for the Center for Governmental Studies in Los Angeles, described the gap between voter desire and Republican action as "a disconnect between lawmakers and the electorate."
This disconnect will only increase as the full impact of the budget's deep cuts plays out across the state.
California's budget delivers $650 million in cuts to the state's public universities. Trigger language will slash an additional $200 million from UC and Cal State funding if tax revenues do not meet projections. To compensate for the massive cuts, both systems are requesting fall tuition increases of 10 to 15 percent on top of a previously approved eight percent increase.
Tuition at California's public universities has tripled within the last decade, putting a college education out of reach for many students. Gutting the higher education budget became a necessity when Republicans blocked Gov. Brown's tax extensions, but it's a long-term negative for California. Lower educational achievement translates to lower wages, poor work-readiness and a workforce ill-suited for improving California's struggling economy through innovation and entrepreneurship.
A California public education used to be one of the best in the nation, producing economy-driving powerhouses such as Silicon Valley and the Hollywood film industry. According to a 2009 California Faculty Association study, California ranked 49th out of 50 states for adults with a high school education and dropped from 8th to 14th place for adults over the age of 25 with a college degree. Given the cuts in the current budget, these numbers will continue to deteriorate.
CalWORKs and Cal Learn
The 2011 California budget requires sharp cuts to CalWORKs, a welfare-to-work program, and completely eliminates Cal Learn, a program aimed at helping pregnant teens complete their high school education. With California's unemployment rate hovering near 11 percent, there simply aren't jobs available for many affected by these measures. Cuts to CalWORKs and Cal Learn mean more homelessness, more hunger, less education and fewer opportunities for California's most vulnerable populations, reports The Sacramento Bee.
On top of the pain already inflicted by the California budget as written, billions more in cuts will be triggered automatically if tax revenues do not meet optimistic projections. Even more troubling, several provisions in the budget appear to reduce the state's chances for meeting revenue goals.
A plan to collect sales tax revenue from Amazon looks to be a non-starter since Amazon responded by immediately closing the accounts of some 25,000 online sales affiliates. The existence of affiliates, who receive a small commission when buyers use links on the affiliates' websites, would have allowed California to claim that Amazon has a physical presence in the state and is therefore subject to sales tax. The absence of affiliates puts an anticipated 200 million in tax revenue in question.
Additionally, state monies paid out in welfare programs such as CalWORKs stimulate the economy because those dollars are immediately spent on food, gasoline and other consumer goods. Cuts to the CalWORKs program mean reduced spending and fewer tax dollars.
The year ahead
The year ahead will make for interesting politics. Republicans are already crowing about standing firm against tax increases. As more and more news articles juxtapose wealthy consumers gushing about sales tax savings on a $5,000 jewelry purchase with the plight of students forced to leave college and the working poor who cannot feed their families, the voting public may well realize that a balanced budget and a healthy economy require a tax base that is well above the current untenable level of the California budget.
- sales tax
- The Sacramento Bee
- the Republican
- the San Francisco Chronicle
- Silicon Valley
- Hollywood film industry