I think the sand has come out of the eyes of most everyone in Sacramento, and seeing their May 19 solutions sinking, the legislative leadership has returned to the drawing board, where a deficit somewhere between $14-$16 billion dollars for FY 2010 must be wrestled with. Unsurprisingly, conservative lawmakers and the media have foregrounded cuts as the first among all other options.
So where might they look?
For starters, the state would spend down its $2 billion reserve, Steinberg said.
State leaders are eyeing a possible $5 billion reduction in school spending allowable under the state’s constitutional education guarantee when revenue drops. Education groups say that could threaten valuable programs and prevent schools from rescinding layoff notices they issued this spring.
“Schools would have to look at extracurricular programs, library hours, transportation,” said Scott Plotkin, executive director of the California School Boards Association. “An awful lot of things not required by the law that are desirable are going to start falling by the wayside.” […]
Schwarzenegger aides have warned public safety groups he may propose an early release of up to 38,000 prisoners, split between 19,000 undocumented immigrants and 19,000 low-level offenders. The governor may also seek to house those who commit “wobbler” crimes in county jails rather than in state prisons.
The plan would save an estimated $335 million in 2009-10 and $849 million in 2010-11.
It proposes to hand over undocumented immigrant prisoners to United States Immigration and Customs Enforcement, though public safety officials questioned whether the federal government would agree to such a plan. The plan also would release 19,000 “nonserious, nonviolent, non-sex offense” inmates in the final six months of their sentences.
I don’t see ICE terribly happy with the state plopping 19,000 undocumented immigrants in their laps.
On the flip side of this, I think it’s important to recognize the solutions out there that involve no cuts, ones that must become part of the conversation immediately. For example, federal guarantees for municipal bonds would save the state billions of dollars that could be diverted to closing the budget gap. While it appeared that Congress was unmoved by this proposal, the Treasury Department could step in.
The Treasury, for instance, is working on a plan to help cities, school systems, hospitals and other agencies borrow money at cheaper rates. The credit crisis made it more expensive to get money for buildings, ballparks and other projects. The problem has been particularly acute for those with lower credit ratings, which require them to pay more for their bonds.
Officials are considering options including the creation of a federal agency that could back the bonds, aiding bond insurers that backstop municipal bonds or simply providing subsidies that could lower the rate for municipalities.
This is not a direct pass-through to the budget, but the savings would be felt in future scorings of overall revenue and spending.
More important, the Senate leader has started to talk about the majority vote fee increase once again.
But making deeper cuts into social services begins to run against logic, Steinberg said. With CalWorks, for instance, the federal match is “so significant,” that to cut $1 is to turn away $4 or $5 in federal dollars.
“At some point, it makes little sense to cut even deeper,” he said. “But, let’s assume we make significant and broader cuts. Then, you’re looking at corrections and public safety. … I wouldn’t take it as a complete given that the other side is really willing to vote for a cuts-only strategy.”
If Republicans don’t go along with new revenues, Steinberg said Democrats may have to resort to a simple majority vote on fees, the same tack he took last winter before Schwarzenegger vetoed the effort to force negotiations. “But we’re not going to lead with that,” Steinberg said.
They ought to go ahead and lead with it. The problems we face in Sacramento are governance problems, which favor solutions that kick the can down the road instead of facing up to current challenges. In such an environment, bold solutions that finally remove the structural revenue gap and end budget dysfunction are really the only step forward. The majority-vote fee increase is a bold, albeit short-term, step, certainly preferable to counter-cyclical and counter-productive spending cuts, and the pressure on the Governor to accept it will increase as the summer marches on. The long-term solution, of course, comes in building the rationale for restoring democracy to the legislature by ending the conservative veto over the process and returning to a simple majority to run government.
We need to remind (constantly) our legislators that they did not come to Sacramento to cut funding for health, education and welfare. Any legal strategy is within bounds
and should be tried. Really, what do they have to lose? If it is thrown out by the courts (and I don’t think it will be) then we are just back to where we were before–giving into a small minority’s demands for all cuts. Also, we can help the chances of the courts upholding it by letting them know that judges salaries will be slashed if it is thrown out.
That being said, we need to think about how to get back to a majority vote. There was a posting on the California Progress Report which had a scheme that might, with tweaking, work. I didn’t follow it very closely but here is the underlying idea:
1. Majority rule, budget and taxes
2. Tax increases above a certain small amount go to a vote of the people at the next scheduled statewide election.
This would give the people a veto power. Democrats could then levy taxes on the rich and corporations, which, if combined with campaigns about how cuts from failure to approve would come from, would almost always be upheld.
I may not have summerized things quite correctly but the essence of this approach is that it reserves to the people the right to approve tax increases, and then gives flexibility to the legislature through majority vote to craft legislation. Not ideal, but a far better system than what we have now.
A tax increase passed by a simple majority would simply not work, and in fact could backfire. I say this for two reasons:
The first is that it is clearly unconstitutional, and would almost certainly be overturned by the courts. This would only delay the issue further, possibly to the point where the cash flow problem causes a disaster. This of course assumes that Arnold signed it, which is debatable.
The second is that it would be extremely unpopular. According to the latest Field Poll, 70% of likely voters favor the 2/3 majority. This includes a majority of Democrats.
I can’t imagine that people would be happy if the Legislature passed a tax increase, knowing that it is illegal. It might even cause a Prop 73-type uprising, leading to a real spending cap, as opposed to the Prop 1A sham.
that show that the 2/3 rule elimination has majority support/