Gov. Arnold Schwarzenegger called Tuesday for fiscal restraint in the face of a potential $14 billion state budget deficit, leading experts to predict that fees for California public universities may increase in the next year.
In his annual State of the State address, Schwarzenegger called on the state government to face its “budget demons” and plans this week to push spending cuts ““ a move that raises the doubts of its effects from democratic legislators.
“As governor, I see firsthand that the consequence of cuts are not just dollars, but people. … Yet fiscal responsibility, like compassion, is a virtue, because it allows the necessary programs in the first place,” said Schwarzenegger, addressing a joint-session of the state legislature.
He also proposed the introduction of a constitutional amendment that would give the governor more authority to control the budget.
This amendment would introduce a more stable revenue system not based on the fluctuating financial success of California’s top income bracket, but one that would allow the government to evenly spend as much as it receives in income tax and to also reserve excess revenue for more critical years.
“Even a booming economy can’t meet that kind of increase. So, the system itself is the problem,” Schwarzenegger said.
Currently the budget is based on a system of automatic formulas that are not correlated to the annual state revenue. The formula calls for an increase in spending in the upcoming year and could widen the deficit in light of California’s stagnant revenue.
In previous years, the state was able to pull money from sources such as pension funds, local governments, bonds and taxes for transportation. But since Proposition 1A, Proposition 42 and Proposition 58 passed in the 2006 state elections, Schwarzenegger said California has “tightened the noose by taking away these options.”
“We now have no way out, except to face our budget demons,” Schwarzenegger said.
But Assembly Speaker Fabian Nunez, D-Los Angeles, contends that Schwarzenegger’s cut proposals would not resolve the budget crisis alone.
“For too long the discussion has been dominated by those who only want to cut the services Californians depend on. As a result, we’ve been forced to cut and borrow our way out of deficit after deficit,” Nunez said in a statement in response to the governor’s address.
“And as the governor just noted, we’re facing even more cuts to our schools, to law enforcement and to our most vulnerable citizens. That’s not what the people of California want.”
Though Schwarzenegger said he believes the budget deficit is a result of the current budget formula, public policy professor Daniel Mitchell said it can also be attributed to the state’s economic slowdown.
And historically whenever there’s a crisis in the economy, public university fees also tend to increase, Mitchell said.
“Proposition 98 creates formulas of how much money goes through K-14. That leaves out the (University of California) and (California State University),” he said. “The UC and CSU has the most flexibility ““ if (the state takes) the dollar away, those institutions can try and get it back through tuition.”
Last year, in the face of the state budget cuts, the UC Board of Regents approved to increase undergraduate fees by 7 percent for undergraduates and up to 10 percent for professional schools.
“It’s ridiculous that students have to take on the burden of financing their own education. It’s in the state’s best interest in shaping young minds to be economically productive,” said Justin Hotter, the external vice president of the undergraduate student government.
In hopes of avoiding future cuts, specific details are currently in the works for the constitutional amendment, which will require the approval of California residents. But previous attempts to do so have been unsuccessful due to what Mitchell said is a public skepticism of giving a large amount of budgetary flexibility to the state.
“The difficulty with giving authority to the governor is he might just cut my pet program if I give him a blank check,” Mitchell said.
In 2005 the governor attempted to convince voters to approve a constitutional amendment to control the budget. Earlier in his first year in office he also tried to push the legislature to pass a constitutional amendment to limit spending.In what seems like a budgetary cul-de-sac, the governor said he hopes voters will understand the benefits of an amendment and that California can move forward with mending the deficit.
“Like right now, we’re spending $400 to 600 million more a month than we’re taking in. This amendment would do something. It would trigger lower funding levels if a deficit opens up during the year,” Schwarzenegger said.