State Budget Update: Democrats' New Budget Plan Would Restore Child Care Programs

Assembly Speaker John Pérez (D- Los Angeles) and Senate President Darrell Steinberg (D- Sacramento) last week unveiled the proposal, which presents new solutions to the state's $19 billion deficit. The plan includes $8.4 billion in cuts, $4.1 billion in federal fund assumptions and $2.4 billion in net tax increases.

"This is not a budget to celebrate, it is a budget of necessity," said Steinberg, acknowledging the proposed cuts as "painful." He added that the cuts in the governor's May Revise would have been more devastating, eliminating critical programs as well as hundreds of thousands of jobs.

Relevant to child care advocates is the Democrats' proposed restoration of child care services. Last May, Governor Arnold Schwarzenegger had proposed eliminating $1.2 billion in state funding for need‑based, subsidized child care. The Democrats' new proposal would restore that funding, as well as another $286 million from one-time funds. According to Democratic legislative leaders, funding state child care services would help California's economy by allowing working parents to remain in the workforce and by keeping over 50,000 child care providers in business and their employees earning paychecks.

The new plan faces tough opposition due to its proposal to impose an income tax increase on all but the highest tax bracket; the plan also includes a tax hike on Vehicle License Fees. Coupled with these proposals is a mechanism that would decrease the state sales tax rate. According to Democrats, the overall net effect of these proposals, along with the federal deductibility of taxes on income and vehicles, would lower, not raise, tax burdens for Californians.

Governor Schwarzenegger's office has already given the Democrats' budget proposal the thumbs down, citing the tax increases as "dead on arrival."  Meanwhile the California Budget Project, a nonpartisan think tank, noted that the plan would have a disproportionate impact on low- and middle-income Californians.

Additional Reading:

• Democrats' Updated Budget Proposal
• Schwarzenegger's Office: Democrats' Latest Budget Plan Is D.O.A.
• California Budget Bites: Tax Plan Is Upside Down

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