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Calif. AG, SC chief justice react to revised state budget

By Jessica M. Karmasek | May 15, 2012




SACRAMENTO, Calif. (Legal Newsline) - California Attorney General Kamala Harris and Supreme Court Chief Justice Tani G. Cantil-Sakauye are among those speaking out against Gov. Jerry Brown's revised state budget.

On Monday, Brown said his May revision protects funding for education and public safety, while slashing $8.3 billion from state government to close a $15.7 billion deficit.

The moves will get California "back on track," the governor said in a statement.

"This budget reflects the fact that the nation's economic recovery is proceeding more slowly than anticipated," he said. "Lower tax revenues, coupled with federal government obstructions that blocked billions in necessary cuts, have created a deeper budget hole.

"More painful reductions will be necessary as a result, but education and public safety must be protected."

The revised budget slashes spending in almost every part of state government, but proposes a 16 percent increase in funding for K-12 education, subject to voter approval.

It also continues funding to local governments that are implementing public safety realignment, and proposes legislation to create a permanent funding structure so that local governments will have a reliable funding source heading into the future.

However, cuts alone won't solve the problem long-term, Brown said.

To help, the governor has placed an initiative on the November ballot, which will increase money for schools and provide constitutional protection for public safety funding.

The measure will enact temporary income tax increases on high-income earners. In particular, it will raise income taxes by up to three percent on the wealthiest Californians for seven years.

It also will increase the state sales tax by one quarter of 1 percent for four years.

If the initiative doesn't pass in the fall, $6 billion in additional cuts will go into effect Jan. 1, 2013, Brown said.

"I don't like making additional cuts, and I recognize the impact they have on Californians. They are difficult -- but necessary -- in order to get us back on firm fiscal footing until California fully recovers from the global economic recession," the governor said.

Brown's newest version cuts even deeper than his January budget.

It increases cuts by $4.1 billion, bringing total cuts to state employee compensation, welfare, health care, higher education and other critical government programs to $8.3 billion.

In particular, Brown's revision calls for using proceeds from the nationwide mortgage settlement to fund "existing" assistance programs for homeowners and those affected by the mortgage crisis.

In his news release Monday, the governor said the move would result in $292 million in General Fund savings.

But Harris, who helped negotiate the nationwide settlement, said late Monday that her predecessor needs to look elsewhere for funds.

"The state Department of Justice stood firm for over a year against the nation's largest banks on behalf of California homeowners harmed by the foreclosure crisis. This effort resulted in an agreement that will provide billions in relief to California homeowners who are experiencing hardship. The agreement also required the banks to pay an additional $410 million to get homeowners the expert help they need to keep their homes," the attorney general said in a statement.

"The governor's May revision, however, proposes to redirect this $410 million from the state's homeowners to other budget purposes.

"While the state is undeniably facing a difficult budget gap, these funds should be used to help Californians stay in their homes. I plan to work with the governor and Legislature toward a balanced budget that honors our obligations to California's homeowners."

In February, federal officials and 49 state attorneys general, including Harris, reached a $25 billion agreement with Wells Fargo and Co., JPMorgan Chase and Co., Citigroup Inc., Ally Financial Inc. and Bank of America Corp. over their alleged improper foreclosure practices.

Of the $25 billion, California claimed the largest portion of the pot -- $18 billion.

The attorney general isn't the only one balking at Brown's budget revisions. So are court officials.

Late Monday, Cantil-Sakauye and other judicial branch leaders railed against the governor's proposed reduction of another $544 million to the branch's budget for fiscal year 2012-13.

"The proposed cuts to the judicial branch are both devastating and disheartening. They will seriously compromise the public's access to their courts and our ability to provide equal access to justice throughout the state," the chief justice said.

In response, she said she is calling for an emergency meeting of California's Judicial Council, the policymaking body of the state's courts, on Thursday so they can analyze what the revisions mean for the branch and figure out how it can move "forward together in preventing the harm" the cuts will bring residents.

"It's my responsibility as chief justice to ensure that all Californians have a justice system that supports and protects their rights," Cantil-Sakauye said.

Jon Streeter, president of the California State Bar, called the situation "dire," and said it is only getting worse.

"While some courts have already laid off hundreds and closed courtrooms, most of the courts in the state are limping along," he said in a statement.

"The message I've been communicating in Sacramento is, 'Everything may seem OK on the surface, but the cumulative impact of these cuts is unsustainable over time.' Well, there appears to be a new round of cuts coming, and it's beyond unsustainable.

"The entire civil justice system as we know it is in peril. All courts are going to feel the pain, even those that have managed well so far."

According to Brown's release, court budgets will be funded from "alternative sources."

"This year's budget restructures trial court funding, reducing General Fund support by $300 million on a one-time basis and requiring each trial court to use their available reserve," it stated.

The governor's budget revision also calls for delaying court construction -- for a savings of $240 million -- and increasing retirement contributions for state court employees.

Doing so will result in $125 million in ongoing savings, Brown said.

Joseph Dunn, executive director of the Bar, isn't buying it.

"Our state judiciary is being economically starved to death. We're at a point where it's reasonable to ask whether recovery is even possible," he said in a statement.

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

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