2/3/11
A new survey by the Public Policy Institute of California shows strong public support for Governor Brown’s proposals for erasing the state's $25 million budget deficit, just days after he defended them in his State of the State address. Two-thirds of those surveyed say a special election on Brown's tax and fee proposal is a good idea, and a majority say they would vote in favor of it. A very strong majority (over 70%) favor
the Governor's proposal to shift tax dollars and fees to local governments to take on the responsibility of running certain programs. Two-thirds favor the Governor’s proposal to eliminate local redevelopment agencies.
Read more about the PPIC survey.
California currently faces a $25.4 billion budget shortfall (an $8.2 billion deficit for the current fiscal year plus an estimated $17.2 billion gap for 2011-12). Governor Brown proposes to bridge this shortfall by: (1) reducing state spending by $12.5 billion, (2) raising $14 billion by extending taxes, and (3) borrowing $1.9 billion from special funds and other resources. (The $3 billion dollar difference is due to a $2 billion increase in education spending due to Proposition 98 as a result of the increased revenues to the state, as well as a proposed $1 billion budget reserve for 2011-12.) Fortunately, none of the proposed tax increases directly impact real estate!
With regard to the tax extensions, the Governor proposes submitting to the voters in a June 2011 special election a ballot proposition which – if approved – would extend four temporary tax increases adopted by the Legislature in February 2009 for an additional five years. These tax increases are: (1) a 0.25% personal income tax surcharge, (2) a reduction in the dependent exemption credit to the same level as the personal exemption credit, (3) a 0.5% vehicle license fee increase, and (4) a 1% sales tax increase.
It should be noted that the Governor’s budget is just a proposal and may not be the one eventually approved. C.A.R. will continue to monitor the ongoing budget negotiations and keep you informed.
For more info, see the full text of Governor Brown's Budget Proposal and more news and updates from the Governor's office.
