The 17-month budget agreement signed by Gov. Arnold Schwarzenegger Feb. 20 includes $14.1 billion in spending reductions, $11.1 billion in new taxes and $11.5 billion in new borrowing. While details of the package will emerge over the next few weeks, Californians will face additional taxes as well as reduced state services.

---In addition to temporarily increasing the sales tax by 1 percent, the budget package established a temporary 0.25 percent increase in income tax; temporarily allocated a $210 reduction in the value of the dependent child credit; and temporarily hiked vehicle licensing fees. California Catholic Conference officials note that the tax hikes illustrate the state's over-reliance on personal income tax, as the increases fall entirely on families since there are no new corporate taxes in the budget deal. The budget also includes between $1 and $2 billion in tax cuts for out-of-state corporations, a $10,000 credit for new home buyers and provisions to ease environmental and labor laws.

---The state budget's 10 percent spending reductions in education will affect education services across the board. One estimate shows that per pupil spending will be reduced by $800 per year. While school districts will have more flexibility in how funds are distributed, the overall decreased funding may result in a reduction or elimination of services for children in low income areas, say CCC officials. The University of California system, which received $115 million in new permanent funding cuts in the budget plan, announced Feb. 20 it will not have information on how the budget will affect student fees for fall 2009 until after a Regents' meeting later this spring. Cal State University Chancellor Charles B. Reed said the 23-campus Cal State system is going ahead with its plan to reduce enrollment by 10,000 students, according to a Feb. 21 L.A. Times' article.

---California voters will be asked to vote May 19 on several elements of the budget deal, including authorizing more debt and a redesigned spending cap. Among the budget balancing proposals requiring voter approval are temporarily redirecting $226 million intended for mental health programs and temporarily redirecting $608 million from programs aimed at children five and under.

Additional budget information and analysis will be updated on the CCC website's public policy insights page: www.cacatholic.org.

---Paula Doyle