Calif. governor: Raise taxes or cripple schools

Last Updated 2:13 p.m. ET

(CBS/AP) SACRAMENTO, Calif. - California Gov. Jerry Brown on Monday proposed more than $8 billion in cuts to close a widening California budget deficit but also said public schools will receive more money if voters approve his tax-hike initiative in November.

The governor wants public employees to take a 5 percent pay cut and also seeks cuts to health care and social services.

Brown released his revised spending plan Monday for the fiscal year starting July 1, saying the state faces a $15.7 billion deficit. That is roughly 17 percent of its $91 billion general fund, California's main checkbook for day-to-day operations.

It also is far higher than the $9.2 billion gap Brown anticipated in January.

The Democratic governor said the size of the deficit makes it virtually impossible to balance the budget with spending cuts alone, so his budget balances the cuts with the revenue he anticipates if voters approve his proposal to increase the statewide sales tax by a quarter cent and boost income taxes on those who make more than $250,000 a year. Both tax increases would be temporary.

Brown's budget proposes $8.3 billion in cuts, $5.9 billion from the tax increases and $2.5 billion in a variety of other solutions.

He said the tax increases are essential to maintain fiscal stability in the state and avoiding even deeper spending cuts — mostly to schools- if they fail.

"It's taken more than a decade to get into this mess; we're not going to get out of it in a year. But we're making real progress," he told reporters in releasing his revised budget.

If voters reject his tax initiative, Brown is proposing an automatic cut of $5.5 billion to K-12 schools and $250 million each to the California State University and University of California systems.

By comparison, public schools would see a 16 percent increase in funding if voters pass Brown's initiative.

On Saturday Brown released a YouTube video, taking his appeal to voters to back his call for temporary tax hikes on those earning more than $250,000 a year, as well as an increase in the state's sales tax.

His Saturday budget message and campaign pitch were the same: Raise taxes or endure crippling cuts to schools, colleges and public safety.

"Please join me in getting our state back on track and investing in our common future," said Brown, a Democrat.

To watch the video released by Gov. Brown click on the player below.

Brown said the shortfall grew from the $9.2 billion predicted in January, in part because tax collections have not come in as high as expected and lawsuits and federal requirements have blocked billions of dollars in state cuts.

Democratic lawmakers who control the Legislature have resisted additional cuts Brown wanted made this year to health and social service programs. The recession has eroded many state services that have resulted in teacher layoffs, college tuition hikes, fewer medical benefits for the poor and elderly, and reduced child support programs for low-income mothers.

"Everything is going to hinge on this compromise funding initiative," said Dean Vogel, president of the California Teachers Association. The state's largest teachers union has donated at least $1.5 million to Brown's tax initiative campaign.

Republican lawmakers say tax increases will only hurt California's economic recovery but the governor said he had to pursue a ballot initiative because GOP lawmakers would not provide the votes needed to reach the two-thirds legislative majority required to raise taxes.

"I've told the governor, I don't disagree that California might need some more revenue, but we have a basic philosophical difference about where you get that," said Assembly Minority Leader Connie Conway, R-Tulare, in a recent interview. "The governor wants to tax people that are already paying taxes. We prefer to create more taxpayers. If you have more taxpayers, then you raise the taxes and you raise the whole system."

Democrats, who control the Legislature, have been unwilling to enact deeper cuts so far this year.

"The size of the deficit and the dwindling of options after years of severe budget cuts also show that our state absolutely needs voters to pair cuts with revenues," said Assembly Speaker John Perez in a statement.

Under Brown's tax plan, California would temporarily raise the state's sales tax by a quarter-cent and increase the income tax on people who make $250,000 or more. Brown is projecting his tax initiative would raise as much as $9 billion, but a review by the nonpartisan analyst's office estimates revenue of $6.8 billion in fiscal year 2012-13.

The governor is expected to propose a contingency plan just as he did in his January budget. If voters reject the tax hikes, a list of unpopular cuts would automatically kick in. The results could mean three weeks less of school, higher college tuition fees and reduced funding for courts.

Advocates say those trigger cuts could get worse under Brown's revised budget.

"We've already hit some of the bare minimums of what can be cut out of core health programs and other key services," said Anthony Wright, executive director of Health Access California, a group that lobbies for health care for the poor.

About 20,000 pink slips were sent out to California public school teachers this year, although it's unclear how many will actually be laid off until districts adopt their final budgets.