More California budget cuts seem inevitable

California plans for more budget cuts

California budget cuts already worth billions over the last few years are not quite ending yet as the state plans to curb more spending for the coming year, new governor Jerry Brown announced on Monday.

A total of $12.5 billion will be cut from the state budget by June 30 in an effort to trim down a $25 billion shortfall. Brown said state employees will have to accept an 8 to 10 percent cut in their salaries as part of a "vast and historic" restructuring program.

Brown, who was also state governor during the 1970s and 1980s, confirmed that his own office will have its budget cut by 25 percent to save about $4.5 million. The Office of the First Lady and an advisory office for educational matters will also be abolished as part of the move.

The state also faces a deficit of $19 billion for the 2011-2012 fiscal year and officials are being forced to make sweeping budget cuts in order to close the huge gap in the budget.

California's budget crisis has been exacerbated by the loss of personal income taxes because of the economic downturn and high unemployment situation. The dot-com bubble burst nearly a decade ago is also still impacting the state's fiscal health today.

The state's education sector is one of the worst hit by the deep budget cuts. Many school districts had to let go of teachers and had to combine classes. Colleges and universities increased tuition despite protests from students and families. Medicaid dental coverage was also withdrawn from low-income Americans because of the California budget cuts.

Posted by James Fried on Tuesday January 11 2011, 1:14 AM EDT. Ref: CNN. All trademarks acknowledged. Filed under Featured News, Finance. Comments and Trackbacks closed. Follow responses: RSS 2.0