Gov. Arnold Schwarzenegger proposed a $125.6 billion spending
plan Tuesday that increases spending on education, health services,
and roads and highways.
The budget proposal includes a 7 percent increase in
expenditures but does not increase taxes.
“California is now on the road to both economic recovery
and fiscal stability,” Schwarzenegger said in a
statement.
The 2006-2007 budget proposal gives $11.2 billion to higher
education and sets aside $75 million to cancel out the 8 percent
student fee increase voted on by the UC Board of Regents in
November.
“We are grateful to the governor for once again
recognizing the vital contribution higher education makes to the
well-being of the state,” the University of California
President Robert Dynes said in a statement. “This budget will
help us keep our doors open to the next entering class of students,
continue rebuilding … and provide access to the university for
students from families of all financial means.”
The current year’s increase in revenue comes mostly from
personal and business income taxes, said Brad Williams, director of
Fiscal Forecasting at the Legislative Analysts Office.
A secondary reason for some unexpected revenue comes from the
amnesty tax program, Williams said. The program allows taxpayers to
pay taxes from previous years without certain fines but face
greater fines later on.
Many paid to avoid paying fines and were expected to continue
their disputes regarding the amount owed last year, but did not,
Williams said.
“The main idea behind the budget is to put back the state
on its feet and back to a competitive state … and to attract the
most advanced companies to invest in the state and help the
citizens,” said Sebastian Edwards, a member of
Schwarzenegger’s economic council and professor of
International Management at the UCLA Anderson School of Management.
“In order for that to happen we need first-rate education,
first-rate infrastructure and very lean business
procedures.”
But some see the increases in education and health funding as an
effort by the governor to appease the Democratic Senate and
Assembly in the face of an upcoming election, and not as a
long-term answer to structural problems.
“The question is can California provide the kinds of
services that it needs with its current revenue base,” said
former presidential candidate and professor in the School of Public
Affairs Michael Dukakis. “And painful though it may sound, I
don’t think so.”
Dukakis emphasized the increase in expenditures as a part of an
ongoing cycle of cuts and increases in expenditures.
“It’s time the state does things differently,”
he said. “If you’re going to have the kind of
transportation infrastructure and education that you need and must
have, then you’re going to have to provide substantially more
revenue than the state is providing.”
The budget proposal still operates on a deficit, though
Schwarzenegger proposed $2.7 billion to repay bonds. But the
Legislature will most likely not approve this amount, said Dan
Mitchell, Anderson School and School of Public Affairs
professor.
The increase in medical services includes $72 million for
Medi-Cal and Healthy Families Programs. The money is intended to
increase enrollment for children.
“There are a number of people that don’t have
benefits, and the governor pointed out that one half of eligible
children of the healthy children do not participate,” Edwards
said.
But Schwarzenegger opposed a bill last year that would force
companies to provide such services, thereby choosing to put the
burden on the taxpayers, Dukakis said.
The budget will now be debated in the Legislature where change
will most certainly be proposed.
“I think what is likely to be the case is there is going
to be pressure to increase items in the budget, not
decrease,” Mitchell said.
The governor’s proposal needs two-thirds of both houses to
pass, meaning he must convince both Democrats and his Republican
base, who Mitchell said will not approve just any plan.
“Fiscally, even conservatives are worried,” Dukakis
said.
With reports from Bruin wire services