Governor Jerry Brown ended budget negotiations today. Photo: Thomas Hawk

Already tough budgets for the city and the school district became significantly tougher with the collapse today of negotiations between Governor Jerry Brown and the Republicans in Sacramento.

Since Brown took office in January, his highest priority has been a plan to close the state’s $26.6 billion deficit. Lawmakers have agreed $11.2 billion in spending cuts and funding shifts, but Brown’s plan required a June vote to extend various tax measures. That would have required at least four Republicans — two in the Assembly and two in the Senate — to reach the required two-thirds majority. With today’s end of negotiations, there will be no June vote and the taxes will expire at the end of June.

The likely consequence will be even further cuts in state funding. When a draft city budget was presented to the Berkeley City Council last week, it presented a best-scenario picture that required $12.5 million in cuts. Those cuts included eliminating 60 positions in fiscal year 2012 and a further 36 in fiscal year 2013. The school district as well faces uncertainty on its budget.

While next steps in Sacramento are unclear, the two major choices for the governor are to enact an “all-cuts” budget or to cobble together a mixture of borrowing and IOUs to eke out the state’s finances until a possible voter initiative in November to create new revenues.

“From my standpoint an all-cuts budget is going to be very difficult for California and disastrous for many schools,” said Superintendent Bill Huyett from Berkeley Unified School District. “We seem to be better off than our neighboring districts because of the support and generosity of Berkeley taxpayers, but it would be very difficult.”

Huyett pointed out that federal funds for schools that were issued as part of the economic stimulus package are also vanishing, so that stopgap will no longer be available.

City Manager Phil Kamlarz said it was too early to tell where likely cuts might fall for the city. “It will have some impact on local government, but it’s hard to know where it’s going,” he said. “Over the next week we’ll get more intelligence. It does make clear that our strategy of building up the reserves and planning for the long term becomes more important.”

Kamlarz also said that it was likely that further state cuts would hit non-profit organizations. Some of those organizations will look to the city for support, which adds to demands on the budget.

Lance Knobel

Lance Knobel (co-founder) has been a journalist for nearly 40 years. Much of his career was in business journalism. He was editor-in-chief of both Management Today, the leading business magazine in Britain,...

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  1. Lance, yes, of course …. but cutting them back is part of the budget negotiations going on in Washington. Less money for LBL means less money spent in Berkeley means lower-still City revenue. It’s not *just* the projected loss of direct money from the state – sales tax, real property tax including transfer taxes — all going to take a big hit this year. At the same time, the general pain level in the economy would, I’d guess, increase demand for City services. I don’t think the sense of urgency or appreciation of the structural depth of the problems we’re facing is even close to realistic, yet, in the popular culture.

  2. Simultaneously: There will likely be still more layoffs or, at the very least considerably reduced spending at Cal. LBL’s budget is likely to take a huge hit. There are conflicting religious schools on real estate prices but there are few who don’t expect further housing deflation with which Berkeley may at last catch up — in any event sales are rocky. Food inflation is looking pretty promising and inflation in general, which won’t much help with Berkeley’s sales tax revenues.