After California tax revenues took a plunge last month, lawmakers may be forced to consider new reductions in funding for the U. California system.
State tax revenues were profitable for the state for four months until April, when Californians submitted their personal income taxes. The total revenue from those taxes was 30 percent, or $3 billion, below what experts projected.
Although that statistic only accounts for income taxes, the situation could become worse if corporate and sales taxes, which will be reported later this year, also plummet.
According to Stephen Levy, director and senior economist of the Center for Continuing Study of the California Economy, public programs such as health care and education will suffer as a result of the revenue shortfall. Such a circumstance may result in a tug-of-war between health care activists and education advocates.
“There has to be a common solution,” he said. “Most economists I know say it can’t be done in a year, and has to be done by some measure of tax or fee increases.”
Levy’s organization was established in 1969 and makes projections about California’s economic trends based on the state’s budget situation. Levy said the April tax shortfall will have a direct impact on funding for universities such as UCLA.
“Half the budget goes to education,” he said. “One-tenth of the budget goes to higher education, and with 3 billion less in revenue, half that is going to get taken out of education. That’s just the math.”
Levy said the UC system’s current strategy for handling budget cuts is implementing a means-tested program for fees, which is based on a student’s ability to pay, but has generally pushed the price of public education upward.
The UC Office of the President is currently working on both short-term and long-term solutions to the state’s condensed education budget, according to UCOP spokesman Steve Montiel.
He cited pay cuts, student fee increases and debt restructuring as some of the activities the UC has undertaken to tackle the problem. In addition, the university’s salary reduction furlough program, which will expire in August, was a vital part of UC President Mark Yudof’s plan to reduce costs.
According to Montiel, the University’s finances are under speculation for next year.
“It’s too early to know what’s going to happen over the long run,” he said. “All I can say really is that we’re on it. We’re doing our best to get every dollar we can for the UC system.”
On May 14, Gov. Arnold Schwarzenegger will submit his May Revise, which will forecast the future of public programs such as the UC system and make new budget balancing proposals.
The recently established UC Commission on the Future will be accepting recommendations from its working groups in June concerning the financial stability and affordability of UC schools. Recommendations will be considered over summer and finalized in the fall, when they will be presented to the UC Board of Regents.
Meanwhile, advocacy efforts for the UC system are taking place throughout the state.
According to Montiel, 300,000 people have signed up on the Office of the President’s website to advocate for the UC and higher education.