In a move telegraphed in their previous meeting, Treasurer Bill Lockyer and Director of Finance Mike Genest decided that the $10 billion federal stimulus “trigger” was not met – that will cause billions in additional cuts and new taxes as part of the February budget deal. Here’s the logic used by Genest in not pulling the trigger:

After a legal and fiscal review of recently enacted federal legislation, and in coordination with the State Treasurer and his staff, the Director has determined that the amount of additional federal funds available to offset General Fund expenditures through June of 2010 is $8.17 billion,” said Ana Matosantos, Department of Finance chief deputy director. “This amount is below the $10 billion established in (budget language) as the amount required to eliminate a portion of the personal income tax surcharge and specific spending reductions previously enacted by the Legislature.

But is this the right move? Speaker Karen Bass doesn’t think so:

I am disappointed with the narrow reading of the trigger and the decision made today by the Director and the Treasurer. But it was the last minute changes to the budget demanded by Republican Senators that put the trigger level out of reach and all but guaranteed the higher taxes and cuts to critical programs. We agree with the Treasurer that a portion of the cuts should be restored, and we will work through the budget process to find alternative solutions to a portion of these cuts.

This is better framing than we’ve seen from the Sacramento Dems in some time – blaming Republican budget demands for making it difficult to clearly reach the trigger level, and arguing that the cuts should be restored.

Along with Speaker Bass, the California Budget Project argued that Genest and Lockyer were using too narrow a definition of the trigger language:

However, the DOF’s methodology excludes ARRA funds that will support programs and services that suffered deep reductions in the 2008-09 and/or 2009-10 budgets. In many instances, these same programs and services have experienced significant cuts repeatedly in recent years. The CBP believes that the calculation of federal funds that may be counted toward the $10 billion threshold should include ARRA funds that will support programs and services that received funding reductions in the 2008-09 or 2009-10 budgets and/or that are experiencing higher costs due to the economic downturn – costs that would, in the absence of federal funds, fall on the state’s General Fund.

The result is devastating. 3 million California parents, seniors, and people with disabilities will lose dental, podiatry, psychology and other Medi-Cal benefits the federal government does not mandate but that are nevertheless necessary to economic recovery and a decent human standard of living. Marty Omoto lays out the full impact, which includes further cuts to education and the courts.

It didn’t have to be this way. Even putting aside the “narrow reading” issue, this is a failure of both the state and the federal government. Democrats agreed to a bad deal, and the Yacht Party did their best to make the Great Recession worse by destroying the very governmental services that we need to stop the downward spiral and start a recovery. And the US Senate has blame to share, for stripping out $40 billion of the state stabilization funds and generally not being aggressive enough in dealing with the crisis facing all levels government.

California keeps cutting spending, and the recession keeps getting worse. We at Calitics understand that’s no coincidence. When will Sacramento?