Tag Archives: California Budget

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California flunks Budget 101

WHAT’S THE BEST REASON to not cut our state education funding? In the future we’ll need sharp minds to get us out of these budget messes.

I’ve been hunkered down for the past few days looking over documents and trying to make some sense of the budget package the governor just signed and how it will affect the bottom line of our schools. It’s a precarious hodgepodge of $8.4 billion in cuts offset by reforms and accounting tricks. And all of this hinges on a package of ballot measures up in May, some designed to reshuffle prior ballot measures.

This labyrinthine budget reduces Prop. 98 guaranteed school funding from now through 2010 and then adds in another ballot measure to help to help restore the lost funds in 2011. Yet another tinkers with Prop. 98 formulas because the state now needs to borrow from future lottery earnings that would’ve gone to our schools.

Several of the seven ballot measures coming up on May 19 are so complicated that one could safely predict most voters probably won’t do anything but vote no in protest, if they bother to cast a ballot at all.

AND THERE’S MORE: Categorical funding for many important programs is being slashed 20 percent between now and 2010. Included in this are programs for gifted students, college preparation, middle and high school counseling, deferred maintenance, technology, English language acquisition, summer school, ROP programs, and, of course, arts and music. In return, school districts are being given the “flexibility” to move these pots of funding around, but it’s sort of like figuring out which child doesn’t get dinner that night.

Upcoming federal money, which would help reduce state taxes, would have no effect on K-12 classroom funding this budget year, according to the California Department of Education. In the longer term, “these resources will have a minimal impact on reducing the size and magnitude of the state reductions in education funding,” according to the California Association of School Business Officials.

AS YOU CAN SURMISE, budgeting for the next school year is like playing pin the tail on the weasel. It’s a moving target which the dedicated folks who can actually figure this stuff out HAVE to wrestle with because the deadline for letting teachers know whether or not they will have jobs next year is March 13. Yet, they won’t have any answers until June. Maybe.

Here in the City of Ventura, school officials are looking at a mighty big gap. “… It will not look like business as usual here,” said Superintendent Trudy Arriaga. “We should not be celebrating a state budget that is cutting $10 million out of a little budget like the Ventura Unified School District has.

“We should be outraged.”

Most people just pay attention to all this by how it affects them personally. If you have a child in the public schools in California, expect bigger class sizes, no new textbooks, fewer supplies and technology, less remedial help, reduced maintenance and less emphasis on programs such as arts, music and physical education. Some familiar faces in teaching, staff and administration will be gone.

“About the only thing schools won’t have less of is testing,” said Ventura Unified Educators Association President Steve Blum.  “The more-and-more testing crowd made sure state testing will be untouched.

“All this together is not good. This generation’s shortsighted approach to preparing the next generation for the future is sad.”

Marie Lakin is a community activist and and writes the Making Waves blog for the Ventura County Star

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Rohrabacher, Royce, Campbell, Calvert ALL Voted for Higher California Taxes

Lost in the drama of the California budget is one huge part of the story that is ignored by our hapless local press.

The Obama stimulus package will prevent the cuts to education, the tax increases and the unsustainable borrowing from being much, much worse.

According to the budget documents, if the state receives what it predicts from the federal stimulus package – more than $9 billion – there would be other benefits to the budget: borrowing would be reduced by roughly half, $950 million in cuts would be restored and the tax increases would be reduced.

And every Orange County Republican in Congress voted against the stimulus package, then self-righteously gloated over their unity. So they not only voted against the largest middle-class tax cut in the nation’s history, they also voted to fire teachers, increase California taxes, and borrow more against future revenues.

Against the backdrop of the steepest employment drop since the last depression, declining revenues, and and sharply falling demand that reinforces the downward spiral, these ideologues refused to act.

The other interesting fact about the California budget deal is that the federal stimulus package included “maintenance of effort” standards, so that if California had not worked to fix its structural deficit problem, our share of the stimulus package would have been denied, reduced, or waited for the processing of a waiver.

So we have one group of Republican asshats in our Congressional delegation who voted against the package that helped California craft a package to avert fiscal collapse, and state Republican asshats who refuse to admit that we needed to clean up the mess that Scwarzenegger created by restoring a little balance to our budget.

(Cross-posted from Orange County Progressive. )

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Wither the budget when Cal Ag dries up?

I am rapidly coming to the conclusion that the entire State Legislature is in need a new cerbral cortex.  They are not thinking straight.  We are in a budget crisis and can come to no agreement between Democrats who are afraid that the unions will recall them and Republicans who are afraid that they will be booted out of the party if they vote for a new tax.

Personally, I would rather listen to a scientist like Dr. Chu.  At least when he speaks you have more of a chance to hear a fact rather than some BS designed to make you think that the legislature is on your side.  

This comment from Dr. Chu, as reported in the LA Times, is the only one that I have seen telling the truth about the future of California.

‘We’re looking at a scenario where there’s no more agriculture in California,’ Steven Chu says.

 

Start considering that in terms of budget impact.  Loss of value of farmland hitting real estate taxes, again.  Loss of the biggest industry in California and it’s sale tax revenues.  Loss of a major workforce and the implication on income taxes.

One indicator of what California may expect is to watch what is happening in Australia and Argentina.  Argentina’s wheat crop is off by over 30% from last year.  The story in Australia is worse.

Drought in Australia’s main food growing region of the Murray-Darling river system continues, with water stores near record lows despite recent rains, the head of the government’s oversight body for the system said on Wednesday.

The impact on irrigated crops is particularly bad.

The drought has already wiped more than A$20 billion from the $1 trillion economy since 2002. It is the worst in 117 years of record-keeping, with 80 percent of eucalyptus trees already dead or stressed in the Murray-Darling region

 If this is California’s future, we don’t have the right people sitting in Sacramento.

Let’s face the facts.  These will seem to be the good old days before I die and I am already drawing social security.  We have a governor who wants to build more dams… for what?  We have a State Senate Natural Resources and Water committee holding a hearing in Santa Monica on Friday where they will discuss “Improving Water Conservation and Management in Southern California: Successes and Opportunities”.  Actually, it reads more like Fran Pavley wanting to show the local folks that she is on the job.  

This year will be particularly challenging. Consecutive record-dry winters have seriously diminished available water supply throughout the state. Locally, we may soon be facing severe restrictions on water use. But it is hard to explain to our citizens the necessity for mandatory water rationing, when there are less disruptive means to meet our water needs.

What the good Senator seems not to realize is that there is not going to be enough years with enough rain to ease our way through.

All of this gamesmanship in Sacramento is rather like the Clippers playing the GS Warriors.  Two losers trying not to lose.  So, how do we build a budget for this scenario?  I don’t think it is possible.  

Arnold Schwarzenegger

Eartha Takes It To The Streets

With the SF Chronicle publishing a long front page feature yesterday about the cessation of Medi-Cal payments scheduled to start next week and the resulting hardships to the chronically ill and disabled, I wanted to share a story with you about one activist and how she’s standing up to Gov. Schwarzenegger.

Eartha Newsong is a Democrat and former nun/retired nurse who lives in the upscale Bay Area suburb of Orinda.  Three weeks ago she read an article in her local paper which discussed the fight over state budget cuts and the effect that the Republicans’ ideological intransigence would have on group homes in her community.

Few people are following the state budget impasse in Sacramento with as much anxiety as Steve Zolno, co-owner of 11 homes for disabled children and adults in Contra Costa County.

Hundreds of such homes across the state will be among the earliest casualties of the budget stalemate. Their funding will evaporate within the next week or two as a state contingency fund runs out of money.

Zolno and his business partner, Lupe Henry, are worried how they will continue caring for their fragile clients.

“It’s not like we can cut corners,” Henry said. “I can’t tell my staff to come back in two weeks or reduce the amount of food we buy.  […]

Zolno and Henry operate homes in Concord, Antioch, Pittsburg and Oakley. Each houses about six developmentally disabled children or adults in family-type settings. Many are quadriplegic and are fed through tubes in their stomachs. Some have cerebral palsy. Others have frequent seizures.

“They’re beyond what their families can take care of,” Zolno said.

PhotobucketWhen Eartha read that article she was horrified. How could the severely disabled in her own community be threatened with such cruel indifference?  Where was the outrage?  Well, Eartha found out that there is plenty of outrage because instead of sitting back helplessly, she decided to get involved and do her best to fight against group home closures.  Armed with a copy of the newspaper article and a petition that she wrote herself, Eartha went to her local farmers’ market the next day (July 13).  

Something amazing happened there.

Eartha talked with people who live and shop in Orinda and discovered that they were just as upset as she was.  In one afternoon, she collected more than 150 signatures on her petition.

Think of that.  In just a few hours, Eartha talked to AT LEAST 150 people who share her concern that Gov. Arnold Schwarzenegger and the Republican members of the legislature need to “…recognize the devastating effects of your proposed budget cuts, and immediately negotiate with Democratic members in the State legislature to find a way to raise revenues imminently needed to assure that the weakest and most vulnerable members of our society such as the disabled, will not face the end of services to them.”

It turns out that California residents everywhere are increasingly angry with the state’s Republican politicians and their willingness to gut the programs that have served us so well and made so many of us proud to be Californians.

Instead of just complaining, wouldn’t it be wonderful if more of us took the initiative as citizens and as Democrats to talk to the people in our community, organize like Eartha did, and send a loud message to the Republicans in Sacramento that they need to stop their obstructionism and get busy finding solutions that work for ALL Californians?  

If you’d like to take it to the streets like Eartha did, you can organize your own budget action(s) by downloading the following materials that have been provided by the California State Assembly Democratic Caucus at their website:

And here’s who you should contact:

  • Governor Arnold Schwarzenegger

    State Capitol Building

    Sacramento, CA 95814

    Phone: 916-445-2841

    Fax: 916-558-3160

    Web: http://gov.ca.gov
  • Assemblyman Michael Villines

    Assembly Republican Leader

    State Capitol Room 3104

    Sacramento, CA 94249-0029

    Ph: (916) 319-2029

    Fax: (916) 319-2129

    Email: [email protected]
  • Senator Dave Cogdill

    Senate Republican Leader

    State Capitol, Room 305

    Sacramento, CA 95814

    Phone: (916) 651-4014

    Fax: (916) 327-3523

    Email: [email protected]

Or if you would prefer to take online action, you can visit the California Demomcratic Party’s website and send a letter to the editor of your local paper and/or sign our online petition. Whatever your choice is, take action — get involved! Don’t just sit by passively and allow the Republicans to put the screws to the weakest and most vulnerable Californians.

“Never doubt that a small group of thoughtful, committed citizens can change the world; indeed, it’s the only thing that ever has.”  — Margaret Mead

Penny

Online Organizing Director

California Democratic Party

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California’s budget burn

Last Thursday Capitol Weekly wrote a story about now approved budget prosed by Gov. Schwarzenegger and passed by the state legislator. The plan has received negative reviews across the board but especially from educations, unions, and advocates of health care who do not agree with the 10% across the board cuts. Of particular concern though are the expectations for how the Medi-Cal program will have to run its business in the next fiscal year.

The total cuts on Medi-Cal reimbursement account for $602.4 million out of the entire $15.2 billion deficit; however, pharmacy bears more than a third of these cuts at $232 million, factoring in rebates…Pharmacies will be losing money on nearly every Medi-Cal prescription they fill. This certainly isn’t a viable business model.

Some pharmacies may be forced to reduce staffing and business hours, or even to close their doors altogether. Such outcomes would create further access issues for patients in need.

And when it comes down to it, this move won't even be saving the state money;

With more than 6.5 million Medi-Cal beneficiaries in California, it would seem enacting cuts to all providers would equate to a significant savings to the state. However, these cuts will have the opposite effect. If patients lose access to prescription drugs, they will become sicker, and will need more expensive forms of medical treatment. Many patients may end up in emergency rooms that are already stretched beyond capacity. These emergency room visits will cost the state and California taxpayers significant money by further inflating the budget deficit.

Unfortunately for California cutting the budget is one of the only options for stabilizing the budget when economic times get hard, leaving program like Medi-Cal susceptible to deep cuts. This is because unlike other states, California does not have a statewide rainy day fund. Cities oftentimes do, which is what helped save the jobs of 500 public school teachers in San Francisco. However even for states who do have access to money put aside for poor economic times, inaction from the federal government is making the choice of when to tap into these funds increasingly difficult.

An Associated Press article from last Monday highlights a perilous choice for states feeling the effects of the nations economic downturn. At stake are state employee jobs, healthcare and school budgets, and essential services, all of which are at risk if the federal government does not take action to help the states.

The article entitled States debate whether to dip into their rainy day funds discusses the two sides of the debate on how to deal with growing budget shortfalls; to raid the rainy day fund, or cut services and spending.

The calculation involves deciding if it is better to raid the fund for fiscal emergencies now or to wait, in case the economic slowdown worsens and the need for revenue becomes more desperate.

States from Virginia to Arizona and everywhere in between are beginning to reach a crisis point in their budget problems where they must choose between tapping their rainy day funds or cutting critical portions of their budget. The rainy day funds are obviously meant for this kind of economic climate, however dreary forecasts from the National Conference of State Legislatures are making the decision of when to use the funds much more difficult.

In April, the NCSL said the finances of many states have deteriorated so badly that they appear to be in a recession, regardless of whether that is true for the nation as a whole.

Such dire news is one reason some states are holding off on raiding their reserves.

"They're worried that, as bad as it might be, it might get worse," said Scott Pattison, executive director of the National Association of State Budget Officers.

The document mentioned in the article is the NCSL's State Budget Update for April 2008. The press release on the update describes the health of state budgets as very uneven and getting worse.

In November, seven states and Puerto Rico reported shortfalls. That number rose to 16 states and Puerto Rico by mid-April. Collectively, these gaps totaled at least $11.7 billion.

The situation is worse for FY 2009: Budget gaps have emerged in 23 states and Puerto Rico, and collectively they exceed $26 billion

What is most disheartening about this story is that the states are choosing between two flawed solutions. Simply raiding the rainy day fund is not the answer when no one is able to determine what "rock bottom" for this economic downturn will be. It does not take very long for rainy day funds to dry out, and the AP article shows that the funds are quickly depleting after hitting a high in 2006.

(in 2006) states reported $69 billion in their reserves, including rainy day funds, or 12 percent of total revenue. That figure will drop to about $46 billion, or 7 percent, by June 30, the end of the business year for most states, according to the NASBO.

…Arizona lawmakers dealt with a $1.2 billion shortfall for this fiscal year, which ends in most states on June 30, by spending more than two-thirds of the state's rainy day reserve.

The rainy day funds will not be full forever and must be preserved if more difficult times are on the horizon. This leaves states with the painful option of cutting services, jobs, and other essential parts of their budgets. In Ohio, where the government is facing a $700 million shortfall they were forced to cut 2,700 state government jobs and close two mental health hospitals. In Tennessee the $468 million in budget cuts are coming from cutting 2,000 state government jobs, reducing the higher education budget by $55 million, and slashing $80 million from the TennCare program that pays medical expenses for people who have fallen into poverty because of massive medical bills. These cuts are having a real effect on the people in these states. According to the Columbus Dispatch story, Cambridge Mayor Tom Orr stated;

It's going to be painful … you can't even begin to measure the ripple effect.

And in the Tennessean Story;

Gordon Bonnyman, head of the Tennessee Justice Center and a longtime TennCare critic, said the cuts will be "tragic" for the population of catastrophically ill Tennesseans who rely on it.

The states are being forced into these painful decision due to a failure by the federal government to provide the proper aid in this time of economic hardship, and the ones who lose in this case are people like you and me.

So what is the federal government doing? As I posted previously, it has taken the position that bailing out corporations in trouble is more important than helping the states and localities who face similar financial crunches, which does not bode well for California which isfacing an estimated $22 billion shortfall for FY 2009. This figure represents 21.3% of the FY2008 General Fund, the highest in the nation. The federal government has also steamrolled the states by enacting a stimulus package that, according to another CBPP study will only make matters worse by further cutting the revenue that the AP, Columbus Dispatch, and Tennessean stories all say is one of the main reasons that states are feeling such a financial crunch.

The federal economic stimulus package enacted on February 13 not only cuts federal taxes, but also threatens to reduce many states corporate and personal income tax revenue this year and next year.

The potential revenue loss comes at a particularly problematic time for states, because about half the states are already facing budget shortfalls for the current year, the upcoming year, or both; more states will be in trouble if the economic downturn worsens.

And what will the federal government do in the future? It certainly doesn’t seem like it will relieve the pressure states are feeling from soaring retiree healthcare costs and the burdens of the housing crisis. An effort to drive down the cost of medicare prescriptions drugs failed to make its way through Congress when the Medicare Fair Prescription Drug Price Act of 2007 failed to get off Capital Hill – that bill would have allowed the federal government to negotiate with drug companies for lower prescription drug prices.

And this statement made by Secretary Paulson before the National Association of Business Economists shows that help for homeowners is also not on the way.

We know that speculation increased in recent years; a resulting increase in foreclosures is to be expected and does not warrant any relief. People who speculated and bought investment properties in hot markets should take their losses just like day traders who speculated and bought soaring tech stocks in 2000.

As more and more people are effected by these state budget shortfalls I am left with one question. How disastrous does the crisis need to get before the Federal Government steps in with meaningful help?

Economy, education

The Governator visiting South County Tomorrow, Privately…

Yes, you read that right. The Governator is going to be making a public appearance at a private school in South Orange County and to add insult to injury, thousands of parents of children in public school plan on protesting this appearance. Do you blame them?

SAN JUAN CAPISTRANO – Hundreds of parents, students and teachers from across South County are expected to surround a private school where the governor is rumored to be making an appearance Thursday to protest his proposed $4 billion cut to K-12 education.Gov. Arnold Schwarzenegger is widely believed to be making an unannounced stop at St. Margaret’s Episcopal School in San Juan Capistrano for an afternoon pep rally.

   St. Margaret’s spokeswoman Anne Mack referred all questions about the appearance to the governor’s office, which would not confirm his attendance.

   “We respect the right of people to express their concerns through peaceful demonstration … and we want the very best for all students in Orange County and California,” Mack said in a prepared statement.

   OC Register

The OC Register fails to point out the irony regarding the planned visit to a private school while the Governor puts forth that the best way to deal with the budget shortfall is to cut public education. South County schools are expected to lose a total of 46 million in funding to Capistrano and Saddleback School Districts which educate 85,000 children. What would this private school need a “pep rally” for? Are they laying off teachers and scaling back on their educational standards because of the Governor’s badly managed fiscal plan? Probably not.

So why bother Arnold? Why do you need to be shoring up support with private schools when the bulk of your constituents have children in public schools? Maybe Arnold will be urging this and other schools to hire the laid off teachers since they will probably have a complete landslide of applicants for private education. Can’t have their classroom sizes affected, now can we?

As Robert in Monterey has pointed out, Arnold could easily reinstate the Vehicle License Fee which would cost the average two car household an extra $300 a year and raise over an estimated six billion in revenue and short circuit these cuts (although the pink slips have already been handed out and the students have already been affected by the threat of cuts). For most families with multiple children, three hundred a year is much cheaper than having to send your child to a private school. I personally believe that public education is one of those things that warrants such action, but then you would probably just call me a liberal.  

Budget

Senator Kuehl on the 2007-2008 budget

(Thanks Sen. Kuehl! Keep on fighting! – promoted by Brian Leubitz)

The Budget Process Through July 21st

This is my third essay for 2007 and the first one I have done on the 2007-2008 budget, which has now passed, after a series of cuts and more cuts.  In this first of several essays on the budget, I will set out some of the provisions of the budget originally agreed to by the budget conference committee, the changes that were made to that budget in the Assembly in order to get 6 Republican votes and the reasons for the two-month stalemate in the Senate. Visit my website at www.sen.ca.gov/kuehl to read my previous essays. If you wish to subscribe to receive these essays on a continuing basis, (no charge), please send an e-mail to [email protected], titled “subscribe”.

Edits by Brian For form and space only. See the flip…

Budget Process, January to June

The Governor sends his proposed budget to the two houses of the Legislature in January, shortly after his “State of the State” speech.  It is immediately divided into four or five sections and given to the budget sub-committees in each house to analyze, critique, change and adopt, piece by piece.  Each administrative Agency and unit appears before a budget sub-committee to defend their budget.  In May, the Governor submits a revised budget, called the “May Revise”, based on adjusted (tax) income and expense figures for the current year and expected savings or increases. 

Hundreds, perhaps thousands, of individual line items are adopted in exactly the same language by the budget sub-committees in both houses of the legislature.  These provisions become a part of the budget without going to the budget Conference Committee for resolution, as none is needed.  Those items that are different in the Senate and Assembly versions of their budget sections are sent to the budget Conference Committee where the differences are ironed out and one budget is presented for adoption by both houses.

The Big Four or The Big Five

At the close of the Conference Committee, the closed door dealing among the leaders of both houses and the Governor begins.  This is often referred to as a meeting of the Big Five. Unlike previous governors, however, during the Schwarzenegger administration, the Governor is often absent from these deliberations and the four house leaders are left to try to iron out the differences and horse trade on their own.  This was the case with discussions on the bond package from last year and the prison “reform” package this year.  And it was the case with negotiations related to the Conference budget and cuts taken, as shown below, to get Republican votes on the budget in the Assembly on July 19th.

Why Do We Need Republican Votes on the Budget?

In California, Rhode Island and Arkansas, a 2/3 vote by each house of the state Legislature is required to adopt a budget.  In the other 47 states, only a majority is required, which means that the majority party is held to account for their budget and their priorities, and the voters judge them on those priorities.  In California, the budget is generally held hostage by the minority party (I was in the minority in my first two years in the Assembly), because the budget vote is the only issue the minority can truly affect.

The Conference Budget Before Changes by the Big Four

The Budget put forward by the Conference Committee was already a lean and mean budget in many ways.  It was leaner than the Governor’s May Revision proposal, but managed to reject the Governor’s proposed cuts to CalWorks kids only grants, retained a cost of living increase for the poorest CalWorks working recipients, (however, putting that increase off for six months), and retained funding for the homeless mentally ill the Governor had wanted to cut.  In addition, the Conference budget moved $500,000,000 worth of transit money to the general fund, in order to fill some of the “structural deficit”: the difference between revenues and expenditures.  The reserve was a healthy one: about two billion, approximately what the Governor had in his budget.  The revenue assumption included a $4.8 billion fund balance brought over from last year’s budget, $102.3 billion in revenues and $103 billion in expenditures. The final General Fund reserve in the Conference Budget was projected at $3.4 billion. 

Additional cuts and tax credits added by Assembly

The Budget, as originally passed by the Assembly, reflected even deeper cuts, including deleting all funding for CalWORKs cost-of-living adjustments; providing no General Fund help to cover student fee increases at UC and CSU; delaying, from January to June, the state portion of the SSI/SSP cost-of-living adjustment; reducing funding for Proposition 36; and increasing the monies shifted from public transit to the General Fund to a total of $1.2 billion. 

The budget, as passed by the Assembly and sent over to the Senate on July 19, provided full funding for growth and a cost of living adjustment for K-12 education but did not create new programs, rejected the Governor’s bid to cut $314 million in CalWORKs that would have penalized children and families seeking to become self-sufficient, invested in a 5 percent rate increase for foster family homes, restored $26 million in academic preparation programs at UC and CSU, and included $1.6 billion to fully fund Proposition 42 (transportation). (This is different from the projects that would have been funded by the gas tax revenues shifted into the general fund and referred to, above.)

The Assembly Vote on the Budget

This year, the Assembly voted on the Budget before the Senate, in one marathon session on Thursday night, July 19th.  The Republicans in the Assembly held out for a number of changes until 4:30 in the morning, when they negotiated a $500,000,000 tax credit package in a separate bill, sent the budget to the Senate and left town.

The Senate’s Deliberations on the Budget

Perhaps “deliberations is not quite the right word.  The budget and all the trailer bills (except the amazing tax credit package, which had come out of nowhere) were put up for a vote the next day, Friday, July 20th.  Each budget vote garnered 25 Democrats for, 14 Republicans against and one abstaining.  27 votes are required to adopt the budget and the trailer bills.  The bills were put “on Call” while President pro Temps Perata attempted to get two Republicans to vote.  Throughout the next 23 hours, as all Senators remained on the Floor of the Senate (trying to sleep, if at all, in their chairs or taking turns on the couches), the Republican caucus made their demands clear: they would not vote for a budget unless another $700,000,000 was cut from the budget in order that revenues and expenses would zero out.  Even though there is a very healthy reserve, that was not sufficient.  At 10am Saturday morning, July 21, we were adjourned, with no budget and no budging by the Republicans.

Next…..

Senator Perata told minority leader Senator Ackerman that morning that if his Republican caucus were simply continuing to say “no”, they needed to come up with their own budget, one that clearly showed the cuts they wanted to make.  On Wednesday, July 25th, with the Senate again in session, the Republicans failed to present a budget, but had given the press a list of cuts they would like to make to “balance” the budget, including eliminating the subsistence CalWorks payment made to children whose parents have been unable to find work and have “timed out” of CalWorks, or for children of undocumented parents. The demands also included transferring the 200 million left in the gas tax transportation account that had not already been swept into the budget, into the General Fund, leaving several current transportation projects without funding; exempting certain construction projects from the California Environmental Quality Act relating to greenhouse gas emissions; and attempting to add parental consent for reproductive services for minors in the budget, which the electorate of California has turned down twice.

The next day, Senator Ackerman indicated he did not want the Republican budget to be heard on the floor because even his caucus was divided on it.  The Governor was unable to secure the two Republican votes needed to pass the budget in the Senate.  Republican Senators refused to meet with the Governor and, as the days passed, instead of working on a compromise, the Republican caucus simply increased their demands, cheerfully indicating that they were dedicated to holding out until the Assembly returns into session so they could reopen the entire budget.

No Budget…No Money

For state services, for hospitals, for K-12 education, for community colleges.

See the next essay for the resolution, such as it is, to the budget stalemate.

Arnold Schwarzenegger

The Six Percent Solution: Schwarzenegger’s Debt Cap

1 Comment

I’ve been avoiding writing about the Schwarzenegger vs. Perata fight over the big bond package.  At the moment, I just don’t feel sufficiently informed about the details, and I reckon things will heat up in March, after the June 6 ballot deadline.  But one item in particular kept sticking out in most of the articles about Schwarzenegger’s bond proposal:

[Democrats] Murray, Laird and Chu also criticized Schwarzenegger’s call for a constitutional amendment that would limit annual bond payments to 6 percent of the state’s main budget account, the general fund.

Imposing a cap, administration officials say, would keep California from going too deeply into the red.

“We wanted to have some sort of limit on debt services, although I admit 6 percent is not a magic number,” [State Finance Director Mike] Genest told the [state legislature conference] committee.

If six percent isn’t a magic number, I thought, then why pick that number in particular?  Surely the number wasn’t just pulled out of the air.  I mean, it’s a Constitutional Amendment, after all.  Daniel Weintraub (of all people) rides to the rescue:

Gov. Schwarzenegger’s numbers crunchers have been circulating some figures to legislative leaders and others that compare the debt service cost of his $68 billion infrastructure borrowing plan to the outline floated by Assembly Speaker Fabian Nunez for a $30 billion package.

According to the figures from the Department of Finance, if the state authorizes no more borrowing, the debt service on general obligation and revenue bonds will peak at about 5 percent of general fund revenues in 2010, then decline over time to 1.89 percent 20 years from now. With the governor’s plan to sell $68 billion in bonds, that debt service would eventually reach about 6 percent of the general fund, compared to about 4.73 percent today.

Well, look at that.  Six percent is a magic number.  It’s the number at which nobody after Governor Schwarzenegger can ever borrow money until Schwarzenegger’s debt is paid down.  It’s a low-rent starve-the-beast Norquist-style strategy for the state government.  (Weintraub conveniently forgot to mention this astonishing coincidence in his entry on the topic, though he does manage to find time to craft a paragraph to snipe at the Democrats in the state legislature — priorities are important.)