June 3, 2005

Assembly Democrats Propose Budget to Fund Education

Balanced, On-Time, Honest Budget Keeps Promise the Governor Broke

SACRAMENTO—Speaker Fabian Núñez today outlined the Assembly Democrats’ alternative to the Governor’s budget that funds education, transportation, and tax relief for senior citizens.

The Speaker made the announcement at Sutter Middle School in Sacramento. The school is where Governor Schwarzenegger made his promise to the education community in early 2004 to fully fund education in the 2005-06 budget in exchange for budget concessions last year. 

“The Governor broke his promise. But we plan to help him keep it,” said Speaker Núñez. “We will not shortchange our schools of the resources they need to educate our children to compete in the world economy. That is the fundamental difference between our budget and the Governor’s.”

The Assembly Democratic budget protects Proposition 98. It includes $3.1 billion in school funding ($1.9 billion in the current year and approximately $1.2 billion next year).

It also includes $1.3 billion for transportation, which, following the Assembly’s lead, the Governor restored in his May revise. The Assembly budget also restores tax relief for California seniors, which the Governor also included in his May revise after proposing its elimination earlier in the year.

Other common ground with the Governor’s May budget includes a reduction in borrowing, difficult cuts to CalWORKS and SSI cost-of-living suspensions, and similar funding to higher education.

The additional revenues are gained by the restoration of the Reagan-Wilson tax bracket to California’s wealthiest citizens. The current top rate is 9.3 percent. Under the Assembly Democratic plan, the top rate would go to 10 percent for married couples with taxable incomes of $285,000 to $569,999 and 11 percent for married couples with incomes of $570,000 or more. For taxpayers with taxable incomes of $310,000, this means an increase of $124, which is equivalent to about $10 per month or about 30 cents a day.

  “We are being straight with the people of California,” said Speaker Núñez. “We trust them. I know that if you give them the facts, and tell them there’s no free lunch, they get that. The Governor created this problem by putting a box around the budget… a box that excluded revenues as an option. We need to blow up this box.

“Assembly Democrats are not afraid to take the hard votes to increase revenues when those revenues will be used to help fund public education. And if the Governor gets in our way, we will find other options to provide the resources our schools need,” he said.

The Assembly Democratic budget has several other differences from the Governor’s budget. It raises the estimate in federal funds based on the Governor’s pledge to provide more dollars from Washington, D.C. to the state. It also has increased revenues from property taxes based on the state’s hot housing sales record and LAO estimates, has additional budget cuts, and calls for the refinancing of the tobacco bond.

In addition, the Assembly Democratic budget is more honest than the Governor’s May revise. It does not include two major assumptions that Governor’s made that the LAO believed are not achievable: STRS cost shift ($469 million) and $408 million in pay cuts to public employees that would have to be negotiated.

  The Assembly Democratic budget also rejects the Governor’s cuts to home health care workers. The Governor had proposing slashing their salaries to minimum wage.

It also passes along the federal cost-of-living increase to low income seniors that the Governor would deny them.

The Assembly Democratic budget also has a higher reserve than the Governor’s: the reserve is $1.8 billion, which consists of a $400 million set-aside from the 2006-07 amnesty-related accounting and a $593 million set-aside for the 2006-07 VLF gap loan payment. This leaves a final reserve of $783 million.

“We hope the Governor will join us in embracing our plan. We owe it to the children of California to provide a budget that invests in their future.” The Speaker was joined by members of the Education Coalition at the press conference.

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