It’s Now A $26 Billion Dollar Problem

According to Mike Genest, the Governor’s Director of Finance, the $24.3 billion dollar problem expanded by $2 billion dollars last night.  He’s not taking into account the interest on IOUs, of course, or the expanded borrowing costs.  But he’s factoring in the education spending that now cannot be cut below a certain level because of “maintenance of effort laws.”  Genest said that higher education has agreed to keep their books open an extra month, until July 31, meaning that the $1 billion in higher education cuts to the 2008-09 budget year could still be enacted.  This is basically fuzzy math, since the additional expenditures due to the Governor’s stubbornness do not get addressed.  

What the Governor wants to do now, to recoup those cuts under Prop. 98, is to suspend the law.  Once again, the reckless lawlessness of the Governor and his allies, out of an unwillingness to deal with budget reality, exposes itself.  In addition, the Governor has backed off on the outsized budget reserve as well as eliminating vital programs like welfare, state park closures, children’s health care and student grants.  Of course, this has been replaced by unrelated items like cutting public employee pensions and social services fraud inspections, both of which would do nothing to the deficit in the near term.

The Governor has declared a state of emergency, under Prop. 58 rules.  This means that the legislature has 45 days to come up with a solution on the budget, and if they fail to do so, they cannot adjourn or act on other bills.  This is a moot point, since the Governor has vowed already to veto any non budget-related bill until a solution is reached.  This just brings the legislature into special session (the fourth since December, I believe).

In addition, the Governor announced three furlough days a month for state employees to save cash, which amounts to a 15% pay cut.  And IOUs will get issued tomorrow.  They will have an interest rate for the banks which accept them of between 2-5%.

Here was my favorite part of his press conference:

Guv gets booed by some who watch him leave press conf and walk back to his office.

By the way, there’s a new hashtag to find all budget news on Twitter: #cabudget.

UPDATE: John Myers has a story up about this, and he includes the Governor’s latest revise, the centerpiece of which is the suspension of Prop. 98.

7 thoughts on “It’s Now A $26 Billion Dollar Problem”

  1. Lockyear suggested the following:

    State Treasurer Bill Lockyer sure has some radical ideas about how to break California’s government gridlock.

    And craft two budgets – one for the liberal coast and one for more conservative inland regions.

    “We’ll have the budget for the coast that has tax increases and services,” Lockyer said in a wide-ranging interview with The Times’ Sacramento bureau. “And in a bunch of other areas in Central and Southern California that don’t have tax increases … their public schools are closed a month of the year – and see what happens.”

    He described the idea as a “genuine thought” that would allow Democrats their preferred solution of raising taxes and Republicans their preferred approach of cutting services.

     This is an idea which makes sense, though rather than “costal” vs “inland” we would have “local” option by county (like in the Midwest, where one county might be “dry” and the one next to it “wet”).  The Board of Supervisors could be tasked with deciding how they want their county to be (including putting it to an election if they wish).

     So–there might be a budget with, say, taxes on millionaires/oil/tobacco which would apply to those counties which are in, and they would get the revenue back (all of the revenue–none of this subsidizing of Modoc anymore).  This would fit the Republican desire for local control, and the Democrats for more revenues.

     That being said, why aren’t the Dems supporting the recall of Schwartz?  We may very well be at IOU’s for the rest of the year (recall–the budget has been passed), so

    if he is booted in June 2010 then Democrats can get through a majority rule fee swap in June of that year and have a livable budget for 2010-2011.  

  2. I don’t know if this is a good idea or not, but at least someone is thinking.  Sacramento is a leadership desert.  Elected officials are so stuck in their ideology that there is no real hope for a permanent solution.  So when someone like Lockyer comes up with a unique idea (even if it started with someone else) I stand up and cheer.  

Comments are closed.