The unkindest cut: automatic triggers

Background on the looming California budget cuts this spring…

Every government bases an adopted budget on revenue projections (and engages in a variety of tactics for keeping money flowing out while it waits for that revenue to flow in). Of course, those projections meet reality at some point during the year, and budgets may need to be amended. In California, the current budget incorporates “trigger cuts” in the event that actual revenues fell a certain percentage below projected revenues. In November, the state’s Controller reported that the trigger cuts were likely to happen.

 The trigger cuts happen automatically Jan. 1 if revenue is projected to fall short by $1 billion for the entire fiscal year, according to the budget legislation signed by Gov. Jerry Brown in June. The University of California and California State University systems would each lose $100 million in state aid. The department overseeing people with developmental disabilities and the In-Home Supportive Services program, which overlap with clients, would also lose $100 million each. Those cuts would come on top of reductions made earlier this year.

A second round of trigger cuts, affecting K-12 public schools and community colleges, would occur if that projected shortfall increases to $2 billion.

Read: Calif. revenue falling short – automatic cuts loom.

And update from late January:

State receipts were $2.6 billion lower than forecast through Dec. 31, while expenditures were an equal amount higher, Chiang said. In a previous report, Chiang said the collections shortfall for the fiscal year that began in July was led by corporate and personal-income taxes. [SF Chron 2/1/12]

The controller now projects a cash flow crisis in March, and has urged legislators to approve “external and internal borrowing” and delayed payments to cover a $3.3 billion shortfall for March and April.

Two pieces from the San Francisco Chronicle on February 1.

All of this has put the legislature’s unwillingness / inability to raise taxes in harsh lighting. The governor is proposing tax increases for FY12-13 (and predicting dire consequences if they’re not adopted), and an editorial by the Chronicle staff in November  states the obvious:

A growing, diverse state is living in a budgetary world in which cuts are the only tool of government. The trigger cuts are just the latest example.

Voters last week across the state approved 40 of 53 ballot measures to boost or extend local taxes, as noted in a Chronicle story. After years of suspicion and doubt about the government costs, there’s a realization that basic services are necessary and worth support.

The cuts-only mantra, forced on Sacramento by an obstructionist Republican minority, is killing the state’s future. Voters might be getting the message that it’s time for a new approach that includes taxes as part of the mix.