Jim Negri Talks Taxes, Voting and Budget Cuts

To vote, or not to vote: that is the question

With apologies to William Shakespeare, the key question in the current budget debate is, “Will the citizens of California have an opportunity to vote to extend the current taxes as part of Governor Brown’s proposed budget solution?”  The extension of the current taxes, not new taxes, is a central piece of the Governor’s $25 billion budget solution — $12.5 billion in budget cuts plus $12.5 billion in tax extensions.  Without the tax extensions, the Legislature faces finding other sources of revenue or making $25 billion in cuts.

A two-thirds vote in both the Assembly and the Senate is required to place the question before the voters. While the Democrats hold a majority in both houses, they do not have the needed 2/3 majority.  The Republicans have stated that they will not support the Governor’s proposal on taxes under the current scenario. The Legislature must act by mid-March to schedule a June election.

One argument against extending the current taxes is that voters rejected the tax extension in 2009, but things are different in 2011. In 2009, the ballot question included much more than just extending the taxes (e.g., increasing the governor’s authority related to the budget and taxes). In 2011, the taxes will be focused on specific programs, including K-12 education, which has absorbed 60 percent of the state budget cuts in recent years. In 2009, the budget had not been adopted and specific cuts were not identified when the voters went to the polls. In 2011, Governor Brown is urging the Legislature to identify cuts and adopt the budget in March. 

One budget, two budgets or three budgets

If the Governor’s budget proposal passes, the district is projected to face a $19 per student budget cut. If the taxes are not extended, the projected budget cut is expected to be $349 per student. In response to a question from the Legislature, the Legislative Analyst Office (LAO) has projected a budget cut of $800 per student if the taxes are not extended.  A valid question given these three scenarios is, “How is the district approaching the development of the 2011-2012 budget?”

On February 1, staff presented the Board of Education with the rationale for the $19/student and $349/student cuts, and proposed that the board develop the 2011-2012 budget on the $349/student scenario, which is the recommendation of most fiscal experts. The LAO’s list of projected budget cuts was in response to specific questions from the Legislature; was not based on any proposal from the Governor or Legislature; and, therefore, must be considered with great caution since it does not include current budget assumptions. 

It is important to understand that the Governor’s proposal to maintain K-12 funding at the current level does not return the funding to even the 2007-2008 level when the district received $5,806 per student. If the current taxes are extended, the district is projected to receive $4,878 per student, or $928 per student less than it received four years ago.

Where is the district headed?

If the current taxes are not extended, available one-time funds will soften the actual budget cuts for one year to approximately $79 per student. The district received the federal Educational Jobs funding and the funding in the October state budget months after the board adopted the 2010-2011 budget in June. Looking ahead to 2011-2012, the board opted not to spend these funds in 2010-2011, but to use the them to minimize further cuts and layoffs in 2011-2012. 

By using one-time funds, the district should make it through 2011-2012, but that will not be the case in future years.  The district legally must adopt a budget for the current year and the subsequent two years with at least a 3 percent reserve even though state funding is unknown. Without the tax extension, the district will need to make $1 million in budget cuts in 2012-2013, $5.2 million in 2013-2014, and $5.6 million in 2014-2015. Therefore, the tax extension is critical to the district’s long-term ability to provide quality educational programs for all students.

Next Steps

The next critical benchmark will be the Legislature’s decision to place the tax extensions before the voters.  That decision will drive the next steps in the budget process.

To help parents and the greater Castro Valley community stay up to date on the latest district news, the Castro Valley Unified School District publishes three online newsletters: Superintendent's Newsletter, Budget Update and Board Meeting Agendas and Highlights.  Subscribe to the newsletters at the Castro Valley Unified School District web page, or read them in the archives.

This column is part of a  probing the economy's effect on local schools.