Brown's tax extensions would prevent 32% tuition increase

Analysis

For students who are tired of balancing the high cost of tuition with a Top Ramen diet and massive debt, be prepared — things could get much, much worse. About half a million dollars worse.

Gov. Jerry Brown further highlighted the bleak future of higher education when he released the May revision of his budget proposal May 16, outlining a plan that potentially cuts $1 billion from the California State University system if a series of tax extensions fails to gain legislature and voter approval.

The revised proposal does not make any further cuts to CSUs, quelling the fears of many who anticipated additional reductions, and calls for a general fund allocation of about $2.3 billion. Brown’s January budget proposal already cuts an initial $500 million, but if the governor’s controversial tax extensions do not pass, the cuts will have to be doubled.

“We are prepared to live with the $500 million cut from January and we hope that is the extent of it,” said Leroy Morishita, vice president of finance and administration. “(We) hope that the tax extensions get approved. Without them, it’d be pretty devastating.”

Unfortunately for advocates of the extensions, before they can get placed on the ballot this fall Brown must convince two Republicans from both the assembly and the senate to side with Democrats.

In an attempt to appease conservatives in the legislature, Brown has tabled the income tax extension until next year — hoping that Republicans will allow the sales and vehicle registration taxes to get on the ballot.

“I want to get the tax extensions and I am willing to make certain accommodations,” Brown said, alluding to alternative plans to go around Republican opposition. “I am not going to give Republicans a roadmap to ruin. I want to see balanced, honest budgeting.”

However, in order for the tax extensions, which are set to expire July 1, to get on the ballot and stanch the reductions to the CSUs, Brown must get the legislature to enact them prior to voter ratification. According to Steve Boilard, the director of higher education for the Legislative Analyst’s Office, the extensions would go into effect for a set time — most likely a six-month period — and voters would then vote for a full extension.

If voters do not approve the taxes, though, the revenue from the temporary extension would still remain. This is seemingly a reneging of Brown’s campaign promise to not pass any taxes without voter approval.

The taxes, if approved, would maintain the current level of the Vehicle License Fee at 1.15 percent and the Sales and Use Tax at 6 percent. All of the taxes would remain intact for five years. Republicans, however, have noted that if the taxes are approved, there is no certainty that higher education will be protected beyond next year.

“Republicans are not going to support the idea of tax increases,” said Craig DeLuz, deputy chief of staff for Assemblyman Kevin Jeffries (R-Riverside) who is on the budget committee. “Especially if there is no guarantee for higher education.”

Education at a crossroad

Without the tax extensions, however, the CSUs would be cut another $500 million. The University’s share would be approximately $32 million, according to President Robert A. Corrigan.

SF State would likely face a 32 percent increase in fees as well, probably beginning in the spring, Morishita said. Including the 10 percent cut students will face in the fall, fees will increase a total 42 percent from spring 2011 to spring 2012 — equating to $3,678 per semester and $7,356 per year.

Beyond that, the University could possibly reduce or cancel spring enrollment, a move that would hinder those in community colleges from advancing toward their degrees. A cancellation of spring enrollment, which happened in spring 2010, is a deviation from the 1960 Master Plan; its objective was to facilitate the transition from two-year to four-year institutions and give community college students an accessible route to earn bachelor’s degrees.

“The budget continues to look grim for public higher education,” Corrigan said. “Additional cuts would have a devastating impact on our ability to serve students. … We cannot rebuild California without an educated workforce.”

The CSU system is already in an unprecedented situation. In yet another contradiction of the Master Plan, eight of the 23 CSUs will collect more revenue from tuition than from the general fund.

SF State will raise more than $133 million through tuition revenue, nearly $11 million more than the University is allotted to receive from the state. The University’s general fund revenue is at 1992 levels. For perspective, every dollar spent today would be the equivalent of 65 cents in 1992 — a 35 percent decrease in general fund revenue over nearly two decades.

And when classes resume in August, tuition will have increased 15 percent from fall 2010. Another fee hike would presumably cause the discrepancy between tuition and general fund revenues to grow.

Despite the continual raising of fees, the CSU still possesses the lowest tuition when set against an official list of 15 comparable institutions throughout the country, according to a survey released by the LAO April 14.

However, if the sales and vehicle license taxes are not passed, SF State’s costs will rise above those of the next five universities — placing the University in the middle.

“If you look at what students pay, it’s still low for the nation. But it’s been increasing rapidly,” Boilard said. “Our real concern is how volatile tuition is.”

With such inconsistency in fees, according to Boilard, it is difficult for middle class students and parents to plan for education.  While those in the lower income bracket qualify for Cal Grants, which go up in coordination with fee increases, and while wealthier Californians can pay for education out of pocket, those in the middle get squeezed, Boilard said. One reason is that student loans do not increase with fees.

“Once again, it’s a sad state of affairs when one of the best higher learning institutions in the country gets cut,” said junior history major Nick Coluzzi, the vice president of finance for Associated Students, Inc. “The issue is our legislature and its inability to make good choices for our own students.”

Budget moving forward

Over the next two months, the state legislature, the CSU chancellor’s office and the University budget office will work to finalize their budgets. But the uncertainty of the state budget leaves the CSU and SF State in a precarious position.

The California Constitution mandates that the legislature approves the budget by June 15, but with the polarizing tension in the assembly and senate, that deadline is typically unattainable. Last year, an agreement was not reached until October.

However, this is the first year in which a simple majority rather than a two-thirds majority is required for approval, because voters passed Proposition 25 in November.

While this eases the burden of Democrats, who control both houses, Brown’s adamancy about passing the tax extensions will provide a set back for the legislature.

A super majority is still required to approve taxes; Democrats need four Republicans, two assembly members and two senators, to agree to the extensions —something Brown believes he can attain.

“The Republicans I’m talking to know they have to approve extensions,” he said.

However, there is a question of how involved Republicans have been in a meaningful dialogue.

“As long as we are not included in that discussion, you’re not going to get Republicans to agree to increases,” DeLuz said.

The CSU and SF State, meanwhile, are planning their budgets based on only the first $500 million cut.

Since Brown’s proposal assumes the approval of the extensions, if they are approved, nothing changes. If they are not approved, their budgets will have to be revised.

“The CSU does not want a 32 percent cut,” said Erik Fallis, the spokesman for the chancellor’s office. “This whole thing gets a lot more complicated in the planning stage.”

The University Budget Office — which, along with Morishita, will unilaterally release the budget in July — will also not plan for another $32 million cut until it knows the fate of the extensions.

If the taxes do not pass, then the University will work to adjust its budget.

“Planning for ‘what ifs’ is a difficult thing,” said Budget Office Director Franz Lozano. “There are too many ‘what ifs’.”

Written by
Latest comment
  • Tax extensions on others sound nice when you’re a college student and not paying them. But once you graduate BAM these taxes are gonna hit you hard and without remorse and youll hate paying them