Category Archives: Budget

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.

Budget

Dick Ackerman’s Certificate Of Merit

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(Here’s a Word doc of the Certificate. You can fax a PDF with a free trial at fax1.com.

Apparently fax1.com requires a non-free email service. If you want to send a free fax and you only have Yahoo! Mail or Gmail, use Fax Zero. – promoted by David Dayen)

This will be faxed to Sen. Ackerman’s office today:

CERTIFICATE OF MERIT

The National Coalition of Yacht Owners Who Hate The Homeless (NCYOWHTH) proudly bestows this award upon State Senate Minority Leader Dick Ackerman (R-Irvine), who has the courage and foresight to be a yachting enthusiast and not a mentally ill homeless person, and is therefore eligible for a major tax break instead of having his social services eliminated.  As an organization of yachters who will also benefit from the same tax cut to the tune of $45 million dollars, coincidentally almost the same amount that would fund the rehabilitation program for mentally ill homeless people, we applaud this setting of the real priorities for our state.  Sen. Ackerman has been a leader in the twin fields of yachting and not being homeless for many years, and we are pleased to award this certificate today.  We ask you to be the keynote speaker at The National Coalition of Yacht Owners Who Hate The Homeless clam bake in Tustin later this year.  After all, there wouldn’t be an organization this strong without you.

Sincerely,
David Dayen
Executive Director, The National Coalition of Yacht Owners Who Hate The Homeless

You can send this too:
Capitol Office fax: (916) 445-9754
District Office fax: (714) 573-1859

Arnold Schwarzenegger, Blog Roundup, Budget, Prisons

August 26, 2007 Blog Roundup

Today’s Blog Roundup is on the flip. Let me know what I missed.

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Budgets are Moral
Documents

Fifteen Percent Doolittle

All the Rest

Budget

Sailing Dick

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Here’s some trivia about State Senate Republican Leader Dick Ackerman which may shed some light on the late round of budget cuts for social services.  No, Ackerman’s not a mentally ill homeless person, but he is a yacht owner.

Several lawmakers at the center of the budget dispute did not return phone calls or could not be reached. They included Senate Republican Leader Dick Ackerman of Irvine — a yacht owner who pushed to ease the tax burden on owners of yachts, planes and RVs.

An Ackerman spokesman said the senator was unavailable.

In other news, it’s 79 degrees and excellent sailing weather in Irvine!

Here’s a little more on this supposedly unnecessary mental health program, cleaved for the benefit of yachting aficianados everywhere:

It has served 13,000 people since November 1999. There are about 4,700 participants today. Among those enrolled as of January, there were 81% fewer days of incarceration, 65% fewer days of psychiatric hospitalization and 76% fewer days of homelessness compared with their pre-enrollment days.

Rusty Selix, executive director of the California Council of Community Mental Health Agencies — like Steinberg, a Proposition 63 coauthor — said the cost of incarceration can be six times higher than the cost of enrolling someone in the mental health program.

“Rehabilitation costs money. But it’s worth it,” said Adrienne Sheff, director of adult services at the San Fernando Valley Community Mental Health Center in Van Nuys. Los Angeles County receives nearly a third of the state funds through AB 2034 and serves 1,700 people.

This program was designed to lessen the cost of those homeless who eat up emergency services – like the guy who showed up at San Diego ERs 87 times in a calendar year.  Ultimately this move, done purely to satisfy short-sighted bean-counters, will end up costing the state far more.  But that burden will be placed on municipalities and local governments, not the state coffers.  Making the bean-counters – and yacht owners like Dick Ackerman – very, very happy.

Arnold Schwarzenegger, Budget

Who Would Arnold De-Fund?

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OK, time for a little role-play.  You’re the post-partisan governor of a large state.  The state budget comes into your hands with cuts almost to the bone, but you promised an additional $700 million and just don’t know what to do.  Who’s going to get the shaft?

Now ask yourself this…

Who doesn’t vote?

Give me a sec…

I know!  Mentally ill homeless people!

The Governor used his line item veto to cut the entire funding nearly $55 million for the AB 2034 housing program that serves over 4,700 adults with severe mental health needs, all of whom were homeless and frequently hospitalized or incarcerated before getting into the program. The Governor said in his veto message deleting the funding that:

“…while I support the goals of the program, this reduction is necessary to limit program expansions and to help bring ongoing expenditures in line with existing resources. To the extent counties find this program beneficial and cost-effective, it can be restructured to meet the needs of each county’s homeless population using other county funding sources, such as federal funds, realignment funds, or Proposition 63 funds. I am reducing Schedule (6) to eliminate the $12,000,000 legislative augmentation for the 5 percent rate restoration for mental health managed care. This technical veto is consistent with the legislative action taken in [Budget] Item 4440-103-0001.”

Mental health advocates say that the immediate effect of the funding cut by the Governor could result in thousands of those people in the program being forced back on the streets at risk of hospitalization and incarceration… The actual outcome of these programs depend on response of local mental health agencies and the Department of Mental Health – but advocates say the cut seeks to supplant funding from the landmark Proposition 63 Mental Health Services Act – funding that was meant they say only for new community based programs – and specifically not meant to fund existing programs.

This is a bait and switch we’ve seen before by budgetary bean counters.  Dedicated funding that’s supposed to go ON TOP of budget outlays ends up being the only funding source.  So the will of the voters is completely overturned; instead of supplementary mental health funding, Prop. 63 becomes the sole funding.

There were some other cuts, including $6.3 million that would have gone toward the California Discount Prescription Drug Program.  But the mentally ill homeless cuts were the most drastic.  And it once again shows that those with the softest voice end up getting hit the hardest.

UPDATE: State Senator Darrell Steinberg, who authored AB 2034, the bill whose funding was eliminated by the Governor’s budget cut, is shrill.

“The program provides over 4,500 homeless Californians living with mental illness with permanent housing, where they can regularly receive medical and psychiatric treatment and job counseling. The program has been wildly successful according to the Department of Mental Health, reducing the number of days spent homeless by 67 percent, increasing the number of days working full-time by 65 percent, and reducing the number of days incarcerated by 72 percent.

“This is a program that works, that saves the state money in incarceration costs and that humanely treats a population that usually gets short shrift in Sacramento,” Steinberg said. “I’m extremely disappointed that the Governor used his veto power in a way that punishes the least among us.”

“Steinberg noted that the Governor chose to keep in the budget a $45 million tax break for yacht, private plane and recreational vehicle owners. Under the tax plan requested by Republican lawmakers, luxury vehicle owners can avoid paying sales taxes on purchases if they keep the vehicles out of California for just 90 days after purchase. According to the Legislative Analyst’s Office, opening the loophole costs Californians $45 million a year.

“That’s the state of California’s budget: $45 million in tax relief for yacht owners will stay while $55 million to save thousands of homeless mentally ill is being sacrificed,” Steinberg said. “It’s wrong morally. It’s wrong economically.”

Blog Roundup, Budget, Environment, Health Care

August 24, 2007 Blog Roundup

Today’s Blog Roundup is on the flip. It’s been a long week, and I’ve got some other things as need doing, so it’s a straight-up link dump. Besides, everyone is
over at FireDogLake talking to Jerry.

Let me know what I missed.

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Budget

Budget Reforms

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As you know, Perata has called for a panel to suggest fixes to the budget process. I’m wondering where you stand on these ideas, follow me over the flip

For the record, I don’t support all these

1. Go back to the constitutional process of adopting a budget (each house adopting its own version of the budget through the subcomittees, then the budget committees, and then the full house votes, and then a conference committee resolves the differences between the two budgets) and do away with the Big 5

2. No spending a dollar more than you’re taking in

3. Restore the governor’s ability to make mid-year cuts (maybe with certain restrictions)

4. Reduce the threshold to a simple majority, while keeping a 2/3 for a tax increase and restoring the 2/3 requirement on any extortion unless: it is for a good or service requested by the user, does not exceed the cost of the good or service, is not required to obtain any governmental action, or is to mitigate externalities caused by the user. Also restoring 2/3 for “revenue neutral” tax increases

5. Require all budgets to contain a 5% reserve

6. No issuing bonds if the minimum payments exceed 6% of the general fund spending

7. Repeal all unfunded mandates on local governments

8. Repeal Props 49 (Arnold’s after school programs) and 63 (Steinberg’s mental health proposition) and all other spending mandates except for education

9. Zero-base budgeting: begin every year’s budget at zero and require all expenditures to be justified anew

10. Allow bonds to be issued  only for the costs of construction or acquisition of tangible physical property that has an expected useful life at least equal to the amount of time in which the bonds that are sold to finance that construction or acquisition will be paid off

11. Repeal or amend Prop 13? If amend, how?
12. What other ideas do you have?

Blog Roundup, Budget, Health Care

August 22, 2007 Blog Roundup

Today’s Blog Roundup is on the flip. Let me know what I missed.

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Budgets are Moral
Documents

Electoral College

Jerry, Jerry, Jerry…

Health Care

Local Motion

All the Rest

Budget

Keeping Up the Pressure on Denham

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I know the budget battle has come and gone, but there is still an outstanding question: What becomes of Senator Jeff Denham (R-Merced)? Do we just forget about the whole Recall Denham thing? (That’s likely to happen in the aftermath, but is that right?)

How do we use the resources that have been spent against him already? Sure, it may not be huge monetary figures as of now, but it sure would be nice to not see that money just down the drain. (Other than drawing $150K of Denham’s money out). So, I’ll give my take in the comments, what do you think?

Budget, Health Care

August 21, 2007 Blog Roundup

Today’s Blog Roundup is on the flip. Let me know what I missed.

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here and do what comes naturally.

Budgets are Moral
Documents

Republican “Reform” vs. Actual Reform

Voting Integrity

Local

The Remainder