Two Connected Items by David Atkins

Sluggish state revenue is likely to trigger a new round of spending cuts that could mean a shorter school year and millions of dollars slashed from public universities, child care programs and services for the disabled, the Legislative Analyst's Office says.

California's coffers will be $3.7 billion below what lawmakers and the governor assumed in the budget they crafted last summer, said Mac Taylor, the analyst whom legislators look to for nonpartisan financial advice. The new reductions were built into the spending plan, to kick in if state income fell short.

A final decision will be made next month, when Gov. Jerry Brown's Department of Finance releases its own forecast for the rest of the fiscal year, which ends June 30. Taylor said the projections could still change enough to ward off some of the deepest cuts. But his announcement Wednesday was the first official confirmation that reductions are likely.

The grim news prompted outrage from education officials who have already sharply pared their budgets. But it was no surprise to economists who had criticized Brown for balancing the budget by anticipating an extra $4 billion in revenue after he failed to secure Republican support for a ballot measure to raise taxes.

Verizon Communications was singled out as one of the nation's biggest tax dodgers by two citizen action groups and the Communication Workers of America (CWA) union on Tuesday.

CWA Chief of Staff Ron Collins joined representatives from Citizens for Tax Justice (CTJ) and Good Jobs First in a telecast to detail how Verizon has used the Reverse Morris Trust tax loophole to avoid $1.5 billion in taxes on the sale of landlines and other assets.

A Verizon spokesman later called the criticism "inaccurate and politically motivated" and said Verizon "fully complies with all the tax laws and pays its fair share of taxes."

Verizon has paid more than $7.5 billion over the past five years in state and federal income taxes alone, not including property taxes, payroll taxes and fees for rights-of-way, the spokesman added.

CTJ and the Institute on Taxation and Economic Policy released a report earlier this month noting that 78 of 280 U.S. corporations paid no federal taxes in at least one of the three years from 2008-2010.

Today, the groups said in a statement: "Verizon has proven itself to be one of the worst offenders, manipulating state revenue rules, seeking economic development subsidies and structuring its business and tax affairs to produce a negative income tax rate. Verizon has received state and local tax subsidies in at least 13 states."

The groups said that Verizon effectively paid a negative tax rate between 2008 and 2010, and was given a tax rebate of $1 billion from the U.S. Treasury. They put the negative tax rate at -2.9%.