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July 1, 2011 > California budget plan at a glance

California budget plan at a glance

Submitted By AP Wire Service

SACRAMENTO, Calif. (AP), Jun 28 - The $86 billion budget package was a compromise between Gov. Jerry Brown and Democrats who control the state Legislature. It includes a combination of fee increases, spending cuts and revenue assumptions.

The state faced a $26.6 billion deficit over 18 months at the beginning of the year, but that has been reduced primarily through spending cuts, money swaps between government accounts, an unanticipated surge in tax revenue this spring and the Democrats' projection of higher-than-expected tax revenue in the coming fiscal year.

Here are some of the key provisions of the budget package:

Taxes and fees:

- Adding a $12 annual fee increase on vehicle registrations to raise $300 million for Department of Motor Vehicle services. The department's costs previously were covered by a voter-approved increase in the vehicle license fee increase that expires July 1.

- Imposing a $150 annual fee on homes in rural areas to raise $50 million in the coming fiscal year to pay for wildfire protection from the California Department of Forestry and Fire Protection.

- Requiring online retailers such as Amazon.com to collect California sales taxes, a change projected to net $200 million annually.

- Converts 1.06 percentage point of the 7.25 percent state sales tax to a local sales tax. This will raise $5 billion to cover a realignment that transfers tens of thousands of lower-level offenders from state prisons to county jails. Part of the realignment also will be funded by redirecting $453 million of the state's vehicle license fee from the Department of Motor Vehicles. The DMV budget will be partially restored through the additional $12 vehicle registration fee. Consumers still will pay 1 percentage point less in state sales tax beginning Friday because the temporary increases to the sales and vehicle taxes expire.

Additional spending cuts:

- $150 million to the University of California, on top of a $500 million cut in March.

- $150 million to the California State University, on top of a $500 million cut in March.

- $150 million to the state courts system, on top of a $200 million cut in March.

- $310 million in savings from delaying court construction projects.

Revenue assumptions:

- $4 billion in additional tax revenue projected from a recovering economy. That is on top of the $6.6 billion in higher revenue the governor projected in his May revision.

- $1.7 billion by restructuring about 400 community redevelopment agencies.

- About $3 billion in savings by delaying payments for one year to public schools and community colleges.

The cuts that will be triggered during the middle of the year if tax revenue falls short of assumptions:

- If revenue falls $1 billion to $2 billion short, there will be another $600 million in cuts. That will include $100 million to the University of California system; $100 million to the California State University system; $100 million to the Department of Developmental Services; and $100 million to the in-home services program. The remaining savings would come from library grants, corrections, community college fee increases and other programs. The remaining shortfall of at least $400 million would be deferred into the next fiscal year.

- If revenue falls $2 billion to $4 billion short, there will be another $1.9 billion in cuts. That will include a savings of $1.5 billion from public schools by giving local districts the option of cutting the school year short by seven days, a roughly $250 million cut from school bus transportation and $72 million from community colleges.

Potential challenges:

- Anti-tax groups are threatening to sue because the Legislature's Democratic majority is poised to approve fee increases without a two-thirds majority vote.

- Republicans question the revenue projections.

- Local governments and agencies are promising to sue over the restructuring of redevelopment agencies.

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Sources: Offices of the Assembly Speaker and Senate President Pro Tem.

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