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Governor-Elect Brown Says Calif. Faces Painful Budget Choices

Gov.-elect Jerry Brown on Wednesday hosted the first of what he promised would be several town hall-style forums focused on California's budget crisis, opting to start acting on the state's crippling deficit even though he will not take office for three weeks.


Jerry Brown's Budget Summit

Jerry Brown's Budget Summit

Gov.-elect Jerry Brown hosted a gathering of state lawmakers on Dec. 8, 2010 to jump-start the discussion on the bad budget situation they will inherit when he takes office early next month.

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He began the forum at Sacramento's Memorial Auditorium on a dour note, saying the budget deficit over the next 18 months is likely worse than previously reported. He released figures showing California stands to lose another $2.7 billion from potential changes to the federal estate tax, swelling the shortfall through June 2012 to $28.1 billion.

The former two-term governor pledged to do everything he can to get the state's finances back in order when he takes over from Gov. Arnold Schwarzenegger next month but warned that the solutions will be painful.

"Today, we're not going to argue about solutions or do anything, but we're going to get on the same page," Brown said in his opening remarks before a crowd of nearly 300 that included lawmakers, local government officials, fiscal experts and legislative staff. "It's very hard to get any agreement if there's no consensus on what the underlying facts are."

Wednesday's dialogue is the opening act of fulfilling a promise he made during the gubernatorial campaign to educate Californians about the scope of the budget dilemma. The state is not taking in enough tax revenue to cover its spending commitments to schools, colleges, parks, and health care and social service programs.

At the same time, voters have rejected tax increases and approved ballot initiatives that have limited the tools available to lawmakers, including prohibiting them from borrowing money from local governments.

Brown's series of public forums marks a different approach from Gov. Arnold Schwarzenegger after he was elected during the 2003 recall election. Shortly after, Schwarzenegger asked voters to allow the state to borrow billions of dollars to close a shortfall then estimated at roughly $16 billion and reduced the vehicle license fee, costing the state billions of dollars a year in revenue.

Budget analysts speaking during Brown's forum said California will be even more strapped for cash next year. Temporary increases in the sales and income taxes and the vehicle license fee will end this year, leaving a hole of $8.3 billion. Federal stimulus money that the state had relied on to shore up education and other programs also will run out.

Panelists tried to impress on the audience the magnitude of the problem. In comparing the latest recession to three earlier downturns, Legislative Analyst Mac Taylor noted that job loss was much more dramatic than before.

California's unemployment rate is 12.4 percent and has been at or near that level since August 2009.

As a result, Taylor projected it will take eight years for employment to recover to the same level it was when the recession began three years ago.

"In the three previous recessions, although they were different, it never got as bad, it never took as long and that puts us in a very unique situation," Brown said.

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