Gov. Jerry Brown’s proposed state budget features lots of pain to spread around to address a $25.4 billion deficit, or the state budget “problem,” as the Legislative Analyst’s office calls it. But the LAO admitted it’s a good start for serious deliberations that will hopefully restrict the legislature from coming up with lots more of its fantasy accounting, or, uh, budget balancing.

The LAO says Brown’s budget “includes reductions in nearly every area of the state budget and a package of revenue proposals that merit serious legislative consideration. We credit the governor’s efforts to craft a budget plan that focuses on multiyear and ongoing solutions, and his proposals to realign state and local program responsibilities and change local economic development efforts have much merit.”

One of Brown’s first acts was getting some state employees to cough up their cell phones. His other, more impactful, cut was $5.7 billion in redevelopment funds, which will adversely affect construction projects (especially affordable housing) in cities and counties (more on that later).

Still, the LAO says there are some significant risks in his plan and some optimistic savings assumptions. And, given his proposed accelerated timeline for budget deliberations and a June special election concerning extensions of tax increases, there’s a lot of work to do to fill in the gaps. (Read the LAO report here.)

Meanwhile, the budget for Caltrans tops out at $12,808,155, about 2.5% below the current year plan. William Davis of the Southern California Contractors Association says all of the reduction will come from staffing cuts – about 250 positions.

“That’s far less than the number the agency will lose to retirements and should not affect project funding,” Davis says.

Davis adds that the governor’s office has also come up with a “nifty plan” to pay debt service on the transportation bonds since Prop. 22 took away the state's ability to do so under the gas tax swap approved in the last legislative session. He says Caltrans will use a portion of weight fees from heavy trucks (big consumers of our highway system) to handle the interest and principle payments on the bonds approved by voters in 2006.

“This is legal in the Prop. 22 world as those fees are not dedicated in any way to local government as are the highway user fees (gas tax) and so are not subject to Prop. 22 restrictions,” Davis says.

“With any luck at all, the state will be able to sell additional bonds under this scheme, creating new jobs for our industry,” he says. “It’s certainly something that we will be urging our elected officials to move forward.”