On Wednesday, Gov. Jerry Brown (D) delivered his State of the State address in which he outlined his plan to revamp the public pension system and argued that tax hikes are needed to avoid more budget cuts to health and human services programs, the AP/ABC News reports (Lin/Williams, AP/ABC News, 1/19).
Background on Governor's Tax, Pension Plans
The governor's tax proposal is a key component of his $92.6 billion spending proposal for fiscal year 2012-2013.
The tax proposal, which Brown intends to place before voters in November, aims to increase income taxes by:
- 1% for residents who earn more than $250,000 annually;
- 1.5% for residents who earn between $300,000 and $500,000; and
- 2% for residents who earn more than $500,000.
The proposal also would increase the state sales tax by half a cent.
The tax hikes would expire at the end of 2016 (California Healthline, 1/10).
On Wednesday, state Attorney General Kamala Harris (D) issued petition language for Brown's tax plan. The governor now can start collecting voters' signatures to put the measure on the November ballot (Yamamura, "Capitol Alert," Sacramento Bee, 1/18).
Meanwhile, Brown unveiled details of his 12-point pension reform plan for public employee pensions in October 2011. Among other changes, the plan would:
- Increase how much workers pay toward their retirement and health care costs;
- Establish a "hybrid" pension system that combines a traditional pension with a 401(k)-style account; and
- Make other adjustments pertaining to health care coverage (California Healthline, 11/9/11).
Details of Brown's Address
In his State of the State address, Brown reiterated that California must scale back its public worker pension system in an effort to control costs.
He said increasing sales and income taxes are the best options to end California's cycle of budget deficits and spending cuts to health and human service programs.
Brown has said his tax plan would raise $7 billion annually through 2017 (AP/ABC News, 1/19). However, the Legislative Analyst's Office has estimated that the tax plan would raise $4.8 billion in FY 2012-2013 and about $5.5 billion in subsequent years (California Healthline, 1/10).
Brown added that he is prepared to make deeper spending cuts if needed to balance the budget (AP/ABC News, 1/19).
Democratic lawmakers have expressed concern about the possibility of deeper spending cuts.
Sen. Mark Leno (D-San Francisco) -- chair of the Senate Budget Committee -- said, "Given that we have made such significant cuts to what were already limited-size programs, it's going to be tough for us to do much more."
Republican lawmakers said Brown was asking voters to approve higher taxes even as the improving economy helps boost state revenue.
Sen. Robert Huff (R-Diamond Bar) said, "The governor's vision is: Tax people more. Our vision is: Enable business, make government lean and more responsive, and you will get what you want" (Mishak/York, Los Angeles Times, 1/19).
Meanwhile, hours after the governor's speech, a few dozen advocates for the elderly, poor and residents with disabilities rallied outside the state Capitol to protest proposed budget cuts to health and human services programs. Brown has proposed more than $2 billion in cuts to health and social services spending (Bartolone, "KXJZ News," Capital Public Radio, 1/18).
Headlines and links to additional coverage of Brown's address are provided below.
- "Governor Jerry Brown Pushes Tax Increase, Greater Infrastructure Investment in State of the State" (Small, "KPCC News," KPCC, 1/18).
- "Brown Asks California To Cheer Rail Project" (Nagourney, New York Times, 1/18).
- "Jerry Brown Says Public Pension 'Arithmetic Doesn't Add Up'" (Ortiz, "The State Worker," Sacramento Bee, 1/18).
- "Jerry Brown Pitches Higher Taxes, Budget Cuts and More Public Works Spending" (Siders, Sacramento Bee, 1/19).
- "GOP Pushes Back on Brown's Tax Plan" (Nisperos, San Bernardino Sun, 1/18).
- "Jerry Brown Defends High-Speed Rail" (Buchanan/Lagos, San Francisco Chronicle, 1/19).
- "Brown Lashes Out at High-Speed Rail Foes in State of the State Address" (Harmon, San Jose Mercury News, 1/19).
- "Brown Touches on Issues Affecting All Californians" (Gardner, U-T San Diego, 1/18).
- "Brown Tells Lawmakers California Is 'On the Mend'" (Herdt, Ventura County Star, 1/18).
Headlines and links to editorials on the governor's address are provided below.
On Thursday, Capital Public Radio's "KXJZ News" reported on Brown's State of the State address (O'Mara/Adler, "KXJZ News," Capital Public Radio, 1/18).