State Senate President Pro Tem Don Perata, D-Oakland, has just announced that he and Assembly Speaker Karen Bass, D-Los Angeles, will hold a news conference Wednesday morning to roll out their Conference Committee budget agreement.
Perata’s office said the plan rejects Gov. Arnold Schwarzenegger’s proposed deep cuts in education and health care and includes $9.7 billion in new revenue by raising taxes on the state’s wealthiest residents and closing corporate tax loopholes; that’s $1.8 billion lower than what the Senate recommended and $2.7 billion more in new revenue than what the Governor proposed.
On the spending side, this budget:
Provides $2.3 billion more for K-12 education than Schwarzenegger had recommended;
Restores $1.5 billion in health and human services the Governor cut, including nearly $200 million in health care services to some of the state’s most vulnerable residents, the reimbursement rate for Medi-Cal providers and federal pass-through funds for the aged, blind and disabled;
Cuts prison spending by $300 million with a reform package that helps lower the prison population; and
Restores $57 million in financial assistance for college students.
On the revenue side, this plan:
Reinstates the tax brackets on the wealthiest Californians by reinstating the 10 percent income tax rate for taxpayers filing joint returns with taxable income above $321,000 and the 11 percent rate for those with incomes above $642,000, generating about $5.6 billion;
Closes a corporate tax loophole for large corporations by suspending for three years companies’ permission to carry forward a portion of their losses incurred in one year for use as a deduction against earnings in later years, generating about $1.1 billion;
Suspends a tax adjustment for upper-income Californians, generating about $815 million;
Rolls back the nonrefundable dependent income tax credit (in 2007, $294) for taxpayers with adjusted gross income of more than $150,000 so that it’s equal to the personal exemption credit for all taxpayers (in 2007, $94 for single taxpayers and $188 for couples), generating about $215 million;
Rolls back the 1997 cut in the franchise tax, raising it from the current 8.84 percent rate to 9.3 percent, in order to raise about $470 million; and
Steps up tax enforcement — partly collecting money already owed to the state, partly accelerating revenues that would be paid in the future — to generate another $1.5 billion.
Perata’s release notes the state has cut $12.3 billion during the last three budgets, meaning “the fat is long gone, that a cuts-only approach would go deep into the bone of what the state provides. There is no free lunch: Quality education, health care, fire protection and law enforcement all require additional revenue.”