LAO Raises Budget Doubts

California’s nonpartisan Legislative Analyst’s Office Monday pointed out concerns it had with Gov. Jerry Brown’s backup budget plan should his tax referendum fail this November.

The LAO expressed doubt about Brown’s plan to bring debt service payments for state-issued general obligation bonds for K-14 schools into the state’s education funding formula. They are now paid through the general fund.

“Because the debt service payments are volatile, the proposal would result in notably greater volatility for education programs,” the report said.

The state has approved $32 billion of K-14 general obligation bonding authority in the past 10 years for school construction.

In 2011, K-14 GO bond debt service costs were $2.5 billion. In January, the Democratic governor unveiled a $92.6 billion spending plan for fiscal 2013 that attempts to tackle a deficit of $9.2 billion with cuts and tax hikes.

The budget leans heavily on passing a tax initiative to temporarily raise income taxes and the state sales tax. The budget includes additional cuts that would be triggered if the ballot initiative doesn’t pass, including the K-14 debt service shift.

Brown’s tax initiative also still has competition from two other tax-hike measures on the ballot, which many experts say will likely confuse voters and make it more difficult for the governor’s initiative to pass.

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