Energy, stock crises lead to cutbacks

By Marcelle Richards
Daily Bruin Senior Staff

Due to falling stocks and the ongoing energy crisis, Gov. Gray
Davis downsized his 2001-2002 budget by $3.2 billion Monday.

The budget primarily slices away from various programs and tax
cuts.

General fund revenues for fiscal year 2000-2001exceeded
predictions by $1.1 billion. Revenues for the coming year, however,
are expected to fall $5.3 billion short of estimates made when the
budget debuted in January.

The May revisions take place every year and are a part of the
budgetary process.

“A declining NASDAQ, more than anything else, is
responsible for the drop in revenues this year,” Davis said
in a statement.

“We knew this day would come. In fact, we planned for
it,” he continued.

The budget will include a $567,000 reduction in funds toward UC
research in health education.

Sandy Harrison, assistant director of the California Department
of Finance, said the UC will not experience any immediate
setbacks.

In addition, three-day holidays as rewards for parents paying
sales tax is a proposal that has been ousted, and reserves for
transportation projects, city governments and beach clean-ups have
been minimized.

All non-public safety state entities will be forced to cut 2.5
percent of their budgets, though $5.5 million will be allocated to
power plant inspections.

While Davis said the energy crisis was not the primary reason
for cutbacks, previous actions show the governor foresaw the
turmoil created by the energy shortages.

On Jan. 17, an emergency proclamation was issued in response to
deal with the “financial insolvency” of investor owned
utilities and chronic blackouts.

“Governor Davis has been tight-lipped,” said Don
Erlenkotter, professor of decisions, operations, and technology
management. “It looks like things are pretty fluid with the
energy crisis.”

Legislation to transfer money from the general fund to the
Department of Water Resources was passed thereafter to purchase
energy.

The reimbursement of these funds will take the form of revenue
bonds, which the state will sell in August.

“We’re pretty confident the treasurer will sell
those bonds,” Harrison said. “The assumption is,
it’s going to happen.”

2001 – 2002 BUDGET CUTS PARALLEL DOWNHILL
INVESTMENTS Revenue from capital gains and stocks are
expected to decrease by 2002. SOURCE: California Department of
Finances Original graphic by MAGGIE WOO/Daily Bruin Web adaptation
by CHRISTINE TAN/Daily Bruin