In California, Revenues Rise Above Projections

California is looking at a windfall. State revenues are up well beyond projections ? $6.5 billion more than expected. Gov. Jerry Brown wants to use the money to stem proposed education cuts. But he also wants to move forward with his proposed tax increases.

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There are signs of recovery in the nation's largest economy, California. New projections show state revenues at $6.5 billion above expectations. Some politicians might declare victory but not Governor Jerry Brown.

As John Myers of member station KQED reports, Brown is urging caution and moving forward with a leaner California budget.

JOHN MYERS: When Jerry Brown rolled out his revised state budget, lawmakers could be forgiven if they felt they were being scolded by one of their elders. Brown, the 73-year-old Democrat who came back to the governor's office in January, was dismissive of state budgets crafted before he took office, ones that delayed the day of fiscal reckoning.

Governor JERRY BROWN (Democrat, California): There's something infantile about the idea: We spend and then we borrow. Well, in balance that's OK, but we've exceeded the limit. And what I'm saying is, the wall of debt has to be brought down. My plan does that.

MYERS: Jerry Brown's plan, say advisors, cuts in half the next three years of projected budget deficits. His first priority for the unexpected tax revenues is schools. Brown's budget, if approved by the state legislature, raises spending on K through 12 education by more than three billion dollars. It also begins to pay back some of the money schools are owed from previous years.

Mr. DEAN VOGEL (President, California Teachers Association): Really, what the governor had done with this, he has demonstrated his commitment to public education.

MYERS: Dean Vogel is the incoming president of the California Teachers Association. Just last week, the union and other education groups staged protests in Sacramento over the billions of dollars cut from school budgets in recent years.

Mr. VOGEL: Here we are, California, the eighth-largest economy in the world and we're funding our schools at about 43rd in the nation. It is really a deep hole that we've dug, and it's going to take a lot of hard work and determined effort to get us out of it.

MYERS: But while the unanticipated state tax revenues solve some problems, Governor Brown's budget continues to push for a longer-term fix, which he says requires additional taxes. And that's where the veteran politician has been stuck for the last four months. Brown's plan to extend the life of three soon-to-expire tax rates is opposed by Republicans.

Assemblyman JIM NIELSEN (Republican, 2nd District): There's still very fundamental differences.

MYERS: Republican Jim Nielsen is the vice chairman of the State Assembly's budget committee. He says the tax plan would stall the economic upturn. A handful of Republicans are required for the two-thirds legislative vote Brown needs. State Assembly member Nielsen is skeptical that will happen.

Assemblyman NIELSEN: I am not confident, as he is, that there are votes for tax increases. So in terms of compromising on tax increases, I don't see any place to go there.

MYERS: Jerry Brown has spent virtually all of his new term in office trying to woo Republicans. He calls them on weekends. He shows up at social events for a glass of wine. He even brings along his cute corgi dog. Meantime, the Democratic governor is struggling to keep his allies happy, too.

Brown wants the extension of tax rates ratified by a vote of the public. But some in organized labor are balking. The lateness of the election makes the budget mechanics complicated and polls have shown the taxes - income, sales and vehicle taxes - are unpopular. Still, Governor Brown remains steadfast.

Gov. BROWN: There are no taxes without a vote of the people, 'cause there will be a vote of the people.

MYERS: Brown also insists he will not lay out a plan B, a worst-case scenario if the taxes are rejected. But the state treasurer says that may not fly on Wall Street and California needs a short-term loan of cash this summer.

For NPR News, I'm John Myers in Sacramento.

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Source: http://www.npr.org/2011/05/17/136402319/california-shows-signs-of-recovery?ft=1&f=1017

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