Late last week I received a statement from an anonymous state employee working at the Employment Development Department, which included some pretty stunning allegations about how Arnold Schwarzenegger and the Legislature are dealing with state workers.  For example, the Governor would reduce all state employee salaries by 5%, including ones not paid out of the General Fund but through other dedicated resources, including federal dollars.  Our budget deficit is a General Fund crisis, not a crisis of those other resources, and so there is absolutely no necessity to reduce those salaries.  In addition, the Governor has proposed furloughing such workers, an illegal action since state law excludes Special Fund workers from these types of job reductions.  The State Compensation Insurance Fund just successfully sued the Governor over this matter.

Perhaps worst of all, the Governor and the Legislature have in recent years used special fund money to balance the budget.  This is EXACTLY what Props. 1D and 1E would have done, moving dedicated funds into the General Fund.  And yet the Governor and a compliant legislature goes ahead and does it anyway when the funds at risk are more murky and have lower-profile champions.  This parallels the Governor, despite failing with Prop. 1A, budgeting a $4.5 billion dollar reserve for the upcoming fiscal year, despite the “rainy day” we’re currently facing, essentially moving forward in violation of the will of the voters with a spending cap.  

Democratic lawmakers are floating a plan to use that projected reserve, but resist augmenting that with new revenues, leading to $19 billion in additional cuts and borrowing from local governments, really a terrible plan considering the alternative options on fees.  The unions are getting impatient with the lack of leadership, and advocacy groups seem more interested not in working with them but just going the heck around them.  This note at the bottom of the LAT piece from Lenny Goldberg is the buried lede:

The next step for unions could be going directly to voters. One labor-backed group, the California Tax Reform Assn., has prepared a possible ballot measure to repeal the three corporate tax cuts Democrats agreed to in the last year to get GOP support for the budget.

“It’s ready to go,” said Lenny Goldberg, the group’s executive director.

Reading the statement from the state employee, which I’ve posted on the flip, gives you some of the reasons why workers feel they have no allies in Sacramento anymore.

I’m a California State Employee and I’m currently working approved overtime in the middle of a state financial crisis.  I work for the Employment Development Department (EDD).   EDD is conducting massive hiring.  In the two months alone, my office alone has hired 30 trainees and is continuing to hire.   This action is allowable because approximately 90% of EDD’s budget is paid directly with federal dollars.   The majority of the remaining balance is paid by seven other special funds.  Only one quarter of a percent derives from the General Fund.

Gov. Schwarzenegger would have Californians believe that all state employees are lumped into one sole classification. In reality, state employees work for departments that fall into one of two categories:   General Fund or Special Funds.

Special Funds Departments budgets are allocated by either self sustaining revenue funded entirely on fees or premiums and/or have been designated for a sole purpose by California Voters or funds from the federal government.  There are 51 state departments whose budgets are derived from the Special Fund.   The current State financial crisis is a General Fund crisis, NOT a Special Fund crisis.    Politicians and the media fail to emphasize the distinction.  They would have you believe that there is one state indistinguishable budget.

For example, The Department of Alcoholic Beverage Control, The Department of Community Services and Development, and The State Council on Development Disabilities and are funded entirely out of federal dollars and receive no General Fund dollars. The Department of Motor Vehicles and California Highway Patrol are funded entirely out of special funds.

I and my co-workers are at a loss to understand why the governor is proposing to reduce all state employee salaries by 5%.   His action is illogical.  Special Fund employee salaries are not paid out of the General Fund. This is wasteful management of resources and of personnel.   There is no justification for this action.  Why reduce an employee’s salary when there is no necessity to?   Why continue to hire if the state is in cash flow crisis?  Anyone can review the State Personnel Board’s web site (http://jobs.spb.ca.gov/wvpos/search_p.cfm?showAll ), and can see for themselves that the State is still hiring.  There are currently over 2000 job vacancies with the State of California.

On top of the proposed 5%, the governor implemented a two day furlough for all state employees.  The reality is that I am mandated to report to work on my furlough days to meet public need and not get paid for it. The official policy is that the furlough days are accrued and can be taken at a later date.  However, due to the high work load, requests for time off in exchange for furlough days are denied.   There is a deadline for which all furlough dates must be taken: June 2010.   Use it or lose it.   The California Attorneys, Administrative Law Judges and Hearing Officers in State Employment have filed a lawsuit on behalf of its Special Fund Employees as being unlawful.  Interested parties can read the brief at    http://www.sacbee.com/static/w…

The lawsuit cites how each department is funded and its impact on the General Fund.

My co-workers and I work overtime to recoup lost hours just to pay for my necessities of life, such as my food and my mortgage. Contrary to popular opinion, the average employee does not make six figures.  In issuing furloughs and the proposed 5% cut, the state increases its budget deficit in that it loses income tax revenue from state workers.

In recent years, the governor and the legislative branch have dipped into the Special Funds Budget to cover the General Fund deficit.  Gov. Schwarzenegger balanced last year’s budget by borrowing $574 million from various special funds.  Where does this money go? How is it repaid? No one truly knows.   Californians rejected his budget measures in the May 19 special election to shift money from special funds for mental health services and early childhood care and education.  Why is this practice still being continued?

On February 5, 2009, The Los Angeles Times reported that the U.S. Labor Department objected to EDD employees being furloughed since the salaries were primary paid with Federal dollars.   (http://articles.latimes.com/2009/feb/05/business/fi-unemploy5)  The Labor Department notified the governor that the furloughs could impact EDD’s performance in meeting criteria for the timely handling of unemployment claims and appeals.   The Labor Department notified the EDD that failing to comply could violate Social Security laws.   The governor was unmoved.

Similar to 911, this is a game of power and politics.    It is a tactic to instill fear in the general public to justify actions that would not normally be endorsed or approved.   The governor should follow the President Obama’s lead and use a scalpel rather than an ax to make precise cuts.  The governor can not have budget reform without the trust of the people and without providing the state with crucial and vital details of the nature of the budget.

Signed

Employee Proudly Serving the State of California

Arnold Twitters in that he got “permission” to enact the budget cuts on home health care workers and still qualify for all federal stimulus money in the health care sector.  Cap Weekly has more.

The state of California has received permission from the federal government to cut wages of home healthcare workers without fear of losing federal stimulus dollars.

The ruling comes as a victory for the Schwarzenegger administration, and a defeat for the Service Employees International Union  which had sought federal intervention to stop the cuts.

Cuts in home healthcare worker pay were part of the budget solution passed by Gov. Schwarzenegger and legislative leaders in February. As part of his May budget revision, Schwarzenegger has proposed further cuts for in-home support workers. The Legislature cut IHSS worker pay by $2 per hour, lowering wages from $12.10 to $10.10 per hour. The cuts saved the state an estimated $74 million.

It’s important to note that, while these cuts suck and will really hurt IHSS workers, they are relatively minor compared to the cuts in health care and education Schwarzenegger wants to enact, while still qualifying for stimulus money.  So the Administration can still wield some power here.  But obviously this is a bad sign.  The Governor should not be allowed to essentially reverse the effect of the stimulus on his own.  In fact, he ought to just resign.

…Arnold takes the flawed message from the election that it was a tax revolt.

Schwarzenegger said he received the voters’ message “loud and clear: an overwhelming majority of people told Sacramento, ‘Go and do your work yourself, don’t come to us with your problems….”

“The message was clear from the people, go all out and make those cuts and live within your means,” he said.

Voters were so worked up, in fact, that they turned out in the lowest numbers in state history, and they voted down the same borrowing gimmicks and spending cuts for successful programs that will now compose the Governor’s agenda.  Let me suggest that I don’t believe in his message-taking ability.

Marc Cooper actually has a decent column on Arnold’s total failure.

UPDATED at the top, as the Governor lays off 5,000 state workers, the perfect thing to get California working again.  He’s basically borrowing from the Whitman playbook here.  See below for why that’s crazy.

It’s a long way until the 2010 Governor’s race, but I think Calitics needs to do our part in pointing out that Meg Whitman is frequently full of crap.  She’s seized on this idea that California’s problems can merely be solved by firing all the state employees.  Now, first of all, California has the second-lowest rate of state employees per capita in the entire nation, a conveniently forgotten fact by eMeg and the rest of the swinging corporate raiders in the Yacht Party.  Next, as Josh Richman explains:

“We haven’t looked hard enough at where we can cut. We can lay off 20,000 to 30,000 state employees while prioritizing public safety and teachers,” Whitman told the Long Beach Chamber of Commerce. “We shouldn’t have to lay off teachers, we need to lay off bureaucrats.”

Fact is, “cut the bloated bureaucracy” has been a GOP rallying cry for decades, and yet whenever the study, the audit or the blue-ribbon commission report comes back, we’re suddently talking about far less “waste, fraud and abuse” than they’d implied. Is there some fat to cut? Sure. Should we? Probably. Will it fix this deficit? Not even close.

The budget deficit now looks to be about $21.3 billion; it would be about $15 billion if voters approved Propositions 1C, 1D and 1E next week, but that almost certainly ain’t gonna happen. And $21 billion isn’t 30,000 jobs, as George Skelton so eloquently put it back in February:

According to the state budget document, there is the equivalent of 205,000 full-time jobs controlled by the governor. There actually are more workers than that because some are part-time. Do the math based on 16 months, since that’s now the time frame of the projected deficit, assuming a balanced-budget package could be implemented by March 1.

You could lay off all those state workers – rid yourself of their pay and benefits – and save only $24.4 billion.

Meanwhile, you would have dumped 160,000 convicted felons onto the streets because all the prisons were closed after the guards and wardens were fired. There’d be no Highway Patrol because all the officers were canned. State parks would be closed because there were no fee-collectors or rangers.

Truth is the savings wouldn’t even add up to $24.4 billion because some of those employees are paid out of small special funds that are self-sustaining.

If these people were in an empty trash bin, they’d still clamor to “cut the waste.”

Let me again commend Chris Kelly’s Meg Whitman week on the Huffington Post, he’s doing an oppo research job that should practically ensure him a spot on any number of campaign staffs.  I particularly like the part detailing the $1.78 million she stole from Goldman Sachs, which for all I know might make her a folk hero.

Next year oughta be fun.

…by the way, I’m not letting other Yacht Party gubernatorial hopefuls off the hook either, like Tom Campbell.  He predictably dissembles about California’s low per-pupil spending on K-12 education, making the same debunked “hey, the schools have plenty of money” claim that Dan Walters likes to peddle.  Allow me to introduce them both to Julia Rosen circa April 2008, which by the way is before the even deeper cuts to schools made in the February budget agreement.

…And if you want to laugh, read this “we’re winning, and the fact that everyone makes fun of us PROVES it!” op-ed from Whitman senior adviser Jeff Randle.

Gov. Schwarzenegger is giving a speech right now at the Commonwealth Club in San Francisco, the kickoff of his campaign for the state budget items in the May 19 special election.  In some remarks released earlier, it’s clear Arnold is highlighting – and is most concerned about – the spending cap.

“Our state capital is a town that feeds on dysfunction. The special interests, left and right, need the process to be dysfunctional. That is how they control Sacramento. That is how they prevent change.”

[snip]

“But now we have an agreement, passed by two-thirds of the legislature, that puts on the ballot serious budget reform, including a spending limit and a rainy day fund.

“And the very interests, the far left and the far right, that prefer dysfunction over change have already launched a campaign to confuse people and defeat the reform. But this time they are not going to succeed.”

Arnold probably sees this as a selling point, that if Democrats are against his plan, and Republicans are against his plan, then it must be just right.  But this Goldilocks centrism masks the extremism of the spending cap plan, which would ratchet down revenues and cut vital services permanently.  It also represents a serious miscalculation on the part of the Governor, who apparently still thinks his post-partisan message actually works in this state.  That’s the same political genius that has Schwarzenegger polling worse than Carly Fiorina in potential 2010 Senate matchups against Barbara Boxer.  And even Schwarzenegger’s own strategists seem to know that he cannot be the public face of the special election, lest he doom it to failure.

Opponents of the measures say their private polling has shown linking the initiatives to the governor drives down support of the measures. That has been echoed by some supporters of the ballot measures, who have also started testing potential campaign messages.

But (campaign strategist) Adam Mendelsohn said Schwarzenegger’s star power and his ability to get news coverage is still a great asset for the campaign.

“There is no elected official in this state capable of dominating coverage like Arnold Schwarzenegger. The chattering class loves to look at his approval numbers and then cast dispersions, but communicating in a campaign is a lot more complex than just looking at approval numbers.”

Uh, yeah, Mr. Mendelsohn, that’s the PROBLEM.  He’s extremely unpopular with everyone but the Dan Weintraubs of the world.  And there aren’t 17 million Dan Weintraubs living here.

The spending cap, with something for everyone to hate, is particularly vulnerable in the special election.  Republicans have been calling for a hard cap for years, if not decades, but they’ve become so blinded by the Heads on a Stick faction of their party that they cannot look past the short-term of two years of tax increases and realize what they would be getting.  But the Yacht Party infantry clearly doesn’t care: heck, they’re trying to recall Roy Ashburn, who’s termed out in 2010 anyway.  So their entire side, or at least everyone who wants to be elected in a primary, is lining up against 1A.  Meg Whitman has come out against it.

Republican gubernatorial candidate Meg Whitman has already announced her opposition to Proposition 1A, and Whitman spokesman Mitch Zak did not rule out the possibility that Whitman would spend money against the measure.

“She’s been very outspoken in her opposition to 1A,” Zak said. “We’ve not made a decision how that opposition manifests at this point. We’re keeping our options open.”

The Flash Report is claiming that Steve Poizner will oppose the measure as well, and he is hinting at contributing funding.

They will be joined by at least some segment of Assembly Democrats.

After a long, closed-door meeting Tuesday, Assembly Democrats remain divided over the budget-balancing ballot measure at the heart of the May 19 special election, Proposition 1A, which would impose a cap and raise taxes.

“Our caucus had a very long discussion on this,” Assembly Speaker Karen Bass told Capitol Weekly. “There are a number of members who are supportive of 1A, there are several members who are opposed to 1A, and there are many others who are trying to decide. We are working through this and we will have another caucus next week,” she said Tuesday evening.

Looks like Bass will have a lot more colleagues to boot out of committee assignments.  You’ll remember that she punished the three Democrats who actually voted against the spending cap on the floor back in February.  Now a good bit of the caucus is revolting.

The caucus did vote to support 1B through 1F, and that’s probably because they know that there’s going to be more cuts coming down the road, and voters opposing the revenue-enhancing items on the ballot will make their job harder.

But, she added, “I’m hearing that we are going to have a $4 billion dollar (revenue) hole, so if the ballot measures don’t pass, then it becomes  $9 billion or $10 billion hole.”

As I said, the crisis continues.

So I’m seeing the anti-tax groups, progressive advocates, the big money in the GOP, half the Assembly Democratic caucus, all against 1A.  On the pro side, Arnold, George Skelton, and Steve Westly, who says 1A will “instill much needed fiscal discipline”.  Yeah, poor people and the blind, get some fiscal discipline, you scumbags!

The wildcard remains the unions, who with even a little bit of financial backing could tip the scales on 1A.  SEIU and AFSCME have delayed formal positions until later this month.  But the Administration is trying to intimidate them into going along with it.

Here’s why it matters to state workers: Last week, the Association of California State Supervisors asked administration officials if the governor would still lay off employees, or if he would abandon the plan since lawmakers have passed a budget.

(Remember, state workers’ twice-monthly furlough is just part of how the governor wants to cut costs. Layoff warnings went to 20,000 of the state’s least senior employees last month. Half could lose their jobs, officials have said.)

The administration’s answer, from notes taken by an association representative: “We hope the five budget-related propositions pass … . If the propositions do not pass, we will be in a worse situation, with more furloughs and layoffs.”

This is despite the fact that 1A would have NO IMPACT whatsoever on the immediate bottom line; in fact, passing it would hurt the budget for state workers more than defeating it.  “Vote like your job depends on it… because it does.”  That must be the working motto.

The question is, will the intimidation work?  Obviously, the fact that the tax increase extensions in 1A are practically hidden on the ballot is going to arouse anger amongst the Heads on a Stick crowd.  And progressive advocates are sticking to principle that an artificial spending cap has failed wherever it’s been tried and is wrong for the state.  In the mythical middle you have the vain Mr. Schwarzenegger, desperately trying to stay relevant.  Ultimately, this is a referendum on him.

UPDATE: And here we go.  The League of Women Voters just announced they’re opposing 1A, along with 1C, 1D, and 1E (selling the lottery and moving money from voter-approved funds for children’s programs and mental health).  This is big if it’s a harbinger of how other groups will line up.

So there is going to be a reconvening of the State Senate today at 10am.  I know, that’s what they said yesterday.  But the plan from Sen. Steinberg is to keep the Senate on the floor until 27 members vote for passage and the crisis is (temporarily) averted.  Meanwhile, 20,000 layoff notices and the closure of $3.8 billion in state public works projects will take place today.  Things like projects to eliminate arsenic in Live Oak in the Central Valley.  You know, dispensable things.  And the Times has a bead on the three Assembly members who plan to vote in favor – Roger Niello, Anthony Adams and Minority Leader Mike Villines.  This is a representative sample of the countervailing forces that Yacht Party members have to deal with.

Adams, a bearded 37-year-old who was elected in 2006 after working for San Bernardino County as its legislative liaison to Sacramento and Washington, has said he would provide the Assembly’s third GOP vote.

“It’s unconscionable that we let this state go over the cliff,” Adams said in an interview. “My job is to get the best possible deal for Republicans.”

Adams faces reelection next year, and his support for the budget package has antitax advocates interested in lining up a challenger in the GOP primary. And because he represents a swing district, Adams must also worry about a general-election challenge from a Democrat.Adams said he had not asked for specific concessions for his vote, or for assurances that he would get assistance to fend off election challenges.

“I’m not trying to find some soft landing,” he said, “although my wife is going to kill me if she hears that.”

They are not rewarded for their vote, and they fear their own “head on a stick” party members more than the opposition.  And so you get this gridlock.

It occurs to me that what Steinberg is doing is what progressives have asked Harry Reid to do in the US Senate for years now.  When GOP obstructionists threaten to filibuster key legislation, we always say “Make them filibuster!  Make them stand up in the well of the Senate and talk endlessly about how we can’t afford to provide health care for children, or how we have to offer more tax cuts to the wealthiest 1%.  Let the whole country see it!”  Well, we’re basically doing that.  The 15 members of the Yacht Party caucus in the Senate will be locked down and forced to reiterate their arguments indefinitely.

Problem is, the whole country won’t be seeing it, the whole state won’t be seeing it, in fact almost nobody will be seeing it.  This is the true failure of a lack of political awareness in California, and a lack of political media.  The pressure points are nearly impossible to hit.  A lot of lawmakers will get tired and need to “bring your toothbrush,” as Steinberg said, but there’s precious little drama outside of Sacramento.  And yet the decisions made in that chamber will undoubtedly impact the entire national economy, not just us.

But that is also good, in a sense, because it means that a sliver of opinion makers descending on the phone lines of the legislature can seen like an army.  I’m going to reprint the email alert that Brian sent out last night, which you may have received, because I think he captured the situation perfectly.  The leadership is making them filibuster.  Now it’s up to us to put on the pressure.

Hey there, registered Calitics user –

If you have been watching Calitics or the news this week, you’ve heard about the budget debacle going on in Sacramento.  For the last three days, we have remained one vote short of the required two-thirds majority for a budget deal, with only two Republicans being willing to join the Democratic caucus in the Senate. You can follow our coverage of the Budget here:

http://budget.calitics.com

To be blunt, the budget deal on the table is a mess. It consists of over twenty bills in each chamber. It guts environmental protections on several major projects, it offers gifts to corporations and a few powerful industries.  It relies on cuts and borrowing far too heavily, and does not provide the real long-term fixes of our revenue stream that we so desperately need. And the spending cap that will go to the ballot in the spring represents a major step backward, and progressives will have to expend substantial resources to defeat it. Yet despite all that, only one thing is really clear:

If we do nothing, the state faces systemic collapse.

Because Republicans refused for years to look at new revenues to balance the state’s budget, California is being hit harder by the economic crisis than any other state. We face a $40 billion deficit, and already the state is running out of money. Schools are looking at cutting classes and laying off teachers. Tomorrow, if there is no budget, 276 infrastructure projects will be halted – affecting 38,000 workers in the state, and the governor has announced that he will issue layoff notices to 20,000 state workers. And the state’s credit rating, already low, will suffer further downgrades, effectively costing taxpayers more money.

The media has now taken notice that the Republicans are trying to bring the state down with them. But the media has little power if we aren’t watching and if our leaders don’t know we are watching them. So, here is what we need to do:

Call Senator Abel Maldanado (R-Monterey County, 916-651-4015) and tell him to give up his list of demands and end this hostage situation.

Call Senator Dave Cox (R-Fair Oaks, 916-651-4001) and tell him that the state deserves better than a Senator who goes back on a deal when threatened by his own party’s extremists.

Tell as many people to do the same thing. Use every tool at your disposal, Twitter, facebook, or just word of mouth. The more people that know about this Republican extremism threatening our state, the better.

The Senate is set to once again resume session, and we might be in for another all-nighter. However, keep at it, because this is simply too important to let Republicans play their dangerous games with the lives of Californians.

Incredibly, forcing people to take off two days a month against their will not only lowered morale and increased inefficiency at state agencies, it didn’t put much of a dent in the budget crisis.  Revenues are still coming in short and will for the forseeable future.  So the Governor put the hammer down.

Gov. Arnold Schwarzenegger will move to lay off as many as 10,000 state workers if lawmakers fail to pass a plan to close California’s nearly $42-billion deficit by the end of the week, an administration spokesman said this morning.

Schwarzenegger’s press secretary, Aaron McLear, said at a media briefing that the administration would send out pink slips Friday, absent a budget deal. The layoff process generally takes about six months for state employees due to union rules and other legal considerations, and bureaucratic procedures the state must follow. The move would save the state $150 million annually if the jobs are eliminated by July 1, according to McLear.

This would have been a good thing for the Governor to be working on, I don’t know, yesterday, instead of jetting to Idaho.  It turns out that Arnold was making a scheduled appearance at the Special Olympics – but he cancelled a similarly scheduled appearance at the Republican National Convention when budget talks were ongoing last year, and if anything the crisis is worse now.  This is another case of Arnold making stern pronouncements in the media instead of doing his job.  He is a failed governor and frankly the press are the only people who will listen to him.

…I should mention that George Skelton came out yesterday for lowering the 2/3 requirements for budgets AND taxes, albeit on the latter he added a caveat that tax increases can’t be used to grow government above the rates of inflation and population growth.  I’m not much for the caveat, but Skelton is a bellweather for the media elite in California, so this is important.

The Schwarzenegger Administration unveiled a new budget plan today, calling for more tax hikes and increased borrowing.  One notable omission from the plan was Arnold Schwarzenegger himself.

“We are facing a major crisis, probably the most challenging budget situation the state has ever faced,” said Mike Genest, Schwarzenegger’s finance director. “The governor believes in acting immediately.”

Schwarzenegger is out of state and vacationing at the family residence in Sun Valley, Idaho.

That’s some amusing juxtaposition from the Sacramento Bee.

On to the proposal, which is little more than just a warmed-over recapitulation of earlier proposals the Governor has made, with some new elements from right out of fantasyland.

That plan called for a temporary increase in the state sales tax, expanding the sales tax to cover some services, a nickel-a-drink alcohol tax, a new tax on oil production and a $12 hike on vehicle registration fees. It also called for $15.4 billion in spending cuts, including requiring state employees to take two-days-a-month unpaid furloughs through June 30, 2010 and give up two paid holidays each year.

The new elements include reducing the dependent care exemption on state income tax returns from the current $309 per dependent to $103; carrying over some of the deficit into the 2010-11 fiscal year; borrowing funds from voter-created programs that service the mentally ill and pre-kindergarten children’s health services; changing the operating rules for the state lottery in an effort to make it more profitable, and borrowing $4.7 billion from the private sector.

If there’s one thing the private sector is desperate to do right now, that’s take it’s carefully guarded cash and give it to the state with the worst bond rating in the country.  They’re really dying to get that done.

The real patterns we see here are familiar to all of Arnold’s budget – a deep lack of concern for the most marginalized elements of society, and a hearty desire to break unions.  Schwarzenegger’s lowest point as a politician as maybe as a person was getting blown out in the 2005 special election.  He still believes the ideas he put forward in that election were sound, and blames unions for his defeat.  Thus you see Arnold going after union members’ livelihoods, insisting on state employee furloughs and generally trying to roll back labor protections that this state has held for decades.

In addition, there’s a recognition that this budget hole is impossible to fill without a magic angel.  The proposal names that angel “private borrowing,” but that’s just not going to happen.  The angel is going to have to be federal relief from a stimulus package.  California reducing its public spending by $10-15 billion at a time when no other entity can pump money into the economy is counter-productive and deeply dangerous to any recovery.  The feds are going to have to make up the gap.

Finally, a new proposal looking at the entire $40 billion dollar deficit suggests that the Governor isn’t interested in going forward with the $18 billion dollar work-around budget which he has been negotiating with Democratic leaders.  That would be a mistake, because of the exponential effect of continuing to do nothing in the immediate term.  Then again, if he were interested in action, the Last Action Hero wouldn’t be in Idaho right about now.

…if you want to go through it yourself, the budget plan is here.

…statements from legislative leaders on the flip.

Steinberg:

If the administration’s point today in putting forward a $41 billion solution is to try to impress upon us the urgency of the situation, it’s not necessary. We feel the urgency of the situation, and that’s why Speaker Bass and I and our staffs have been working diligently throughout the holidays to try to meet the administration halfway or more on their economic stimulus proposals. The fundamental problem, of course, with what the administration laid out today is that they don’t bring a single Republican vote to pass the revenue elements of their proposal.

Bass:

The governor’s proposal released today has one positive message: he may finally be coming around and realizing he needs to approve the responsible package of budget solutions the legislature passed December 18.

That package includes $18 billion in real cuts and new revenues to head off the cash crisis and take a big swipe at the deficit. It includes $3 billion in new funds for transportation projects and $3 billion in expedited projects voters have already approved. That means we’d be creating 367,000 new jobs at a time California needs all the new jobs we can get.

So far, legislative leaders have compromised, but the governor has been holding up these budget solutions and these new jobs. We’ve compromised by easing environmental restrictions for transportation projects. We’ve compromised by expanding public private partnerships. We’ve compromised by putting half a billion dollars in state employee compensation on the table.

The governor’s latest proposal assumes the cuts and revenues from the legislative budget solution package. That’s progress. So let’s get agreement on that package, keep California from going over the financial cliff, and then tackle the next round of hard challenges to find solutions to the rest of the deficit.

There are significant questions about what revenue the lottery can really bring in…there are concerns about whether California can manage the additional borrowing the governor is proposing … and there are problems with cuts that seriously harm the students in our schools.

All those issues can be addressed as we move through the rest of the budget process. Right now the most important step is for the governor to recognize that all his demands aren’t nearly important as the jobs we want created.

I appreciate the governor acknowledging today the necessity of the cuts and revenues the legislature approved and I hope the governor’s first act of the new year will be to sign the responsible package we are putting before him.

Villines:

Republicans believe the Governor took important steps to address California’s growing budget crisis by including budget reform and proposals to streamline government in his latest budget plan. We also join with him in making economic incentives and job creation a top budget priority.

We are also pleased to see the Governor has adopted the Republican’s proposal to let voters choose to redirect billions in existing tax dollars to protect the priorities of working families in these tough budget times. However, Republicans cannot support the Governor’s proposal to impose $14 billion in higher taxes on Californians. We believe this will devastate an economy already in turmoil and will hurt people who are struggling to make ends meet. Before we should even consider raising taxes on people, we need to take action to reduce government overspending starting with the elimination of all automatic increases, and enact an economic recovery plan to grow our economy and create jobs.

We cannot wait until the summer to enact responsible budget solutions for California. When the Legislature comes on Monday, we should vote immediately to pass the over $6 billion in common solutions that were in the special session budget plans put forth by Democrats, Republicans and the Governor. Taking urgent action to pass these reductions can get us through our immediate cash flow crisis. If we also take action now to get Californians back to work and to help stimulate our economy, we will be in a better position to address our state’s budget problem for next year and the years ahead.

(that’s cagey.  “We all agree on $6 billion in cuts, just do them now!”)

Cogdill:

I applaud the Governor for including elements of the Republican budget plan into the proposal released today. During these tough economic times, it makes sense to go back to the voters and ask them to redirect money for their intended purposes, such as children’s health and mental health programs, instead of sitting idly in the bank.

While Republicans have serious concerns about raising taxes during a recession, we appreciate that the Governor’s proposal includes difficult, but necessary reductions to bring state spending closer in line with revenues.

Instead of simply asking taxpayers to send more of their hard-earned money to Sacramento we should focus on economic stimulus. Growing and protecting jobs in California has a direct relationship to a robust state treasury. Stimulating our economy should be the Legislature’s top priority and it is unfortunate that the majority party has blocked these common-sense reforms to get more Californians back to work.

In addition, we need to ensure the state never again faces a deficit of this size by enacting long term structural reforms such as a spending cap and rainy day fund.

Republicans continue to stand ready to be a part of a responsible budget solution. The Governor’s early release of his budget underscores the magnitude of the state’s budget problems and the need for urgent action in addressing this crisis.

Dan Smith reports that we’re nearing a deal on the work-around budget which would cover half of the state’s projected deficit between now and mid-2010.

“The areas of negotiations have significantly narrowed, and on those issues we’re very close,” said Senate President Pro Tem Darrell Steinberg, D-Sacramento.

Steinberg and Assembly Speaker Karen Bass, D-Los Angeles, talked via videophone to Schwarzenegger, who is vacationing in Idaho. Talks will continue over the weekend, with leaders hoping lawmakers can be called back to Sacramento by the end of next week to approve a final deal.

Schwarzenegger spokesman Aaron McLear said Democrats are “moving closer” to the governor’s demands for deeper spending cuts and an economic stimulus package. “But we don’t have any agreements,” McLear said.

We know that the main sticking point issues were: 1) eliminating CEQA for certain infrastructure projects, 2) privatizing a lot of those public works contracts and 3) cutting state worker holidays and overtime.  So the fact that Democrats are “moving closer” to those positions isn’t exactly heartening, although it’s contradicted somewhat later in the piece.

Bass said Democrats are trying to meet the governor’s desire to stimulate private investment in public projects without hurting public employees by shifting their jobs to contractors.

The Democrats believe changes to state employee pay must be hashed out at the bargaining table between unions and the administration. “There’s no question that state workers know that they’re going to be part of the solution as well, but we also think it’s very important to respect their ability to have a say in how that is done,” Steinberg said.

Privatization is simply not the answer, it has no relevance on budget savings (cost overruns exist in the private world, too) and is just a way for Arnold to reward his Chamber of Commerce pals.  

But what’s notable here is that these are meetings between the Governor and the Democratic leadership, and the Republicans have been completely frozen out due to their inability to play nice with others.  The byzantine plan for a majority vote on fee increases and tax shifts is still operative, and if it survives the subsequent legal challenge, suddenly the Yacht Party would be powerless.  The Very Serious pundits have already turned against Yacht Party rhetoric on spending as the source of the problem, and even the most casual observer understands that the 2/3 rule is destroying the state.  There ought to be a formal voting down of 2/3 (even this work-around will be insufficient to approve a new budget in June, which requires a 2/3 vote) but this is a creative solution to a crisis largely created by the rulemaking structure of the body and Republican intransigence (not to mention Arnold’s vehicle license fee slash, the dumbest first act by a Governor in many a year).

There were news reports galore about Arnold Schwarzenegger signing the $143 billion dollar state budget (hey, four more of those and they can bail out Wall Street!), but not so many reports about the $515 million he cut out.  Marty Omoto enlightens us.

A wide range of senior programs – including the Multipurpose Senior Services Program (MSSP), Alzhiemers Resource Centers, were especially hard hit with additional cuts by the Governor.

Also hit hard was the CalWORKS program – California’s “welfare to work” program that serves thousands of low income children and families – many of them with special needs and disabilities, was hardest hit by the line item veto, with an additional $70 million reduction on top of what the Legislature approved in the budget bill passed last week.

Two programs overseen by the Department of Social Services, Adult Protective Services and Deaf Access Program were also hit with additional reductions. The reduction to Adult Protective Services was especially significant – and a reduction that was fought earlier this year by advocates.

Alzheimer resource centers, nutrition programs for seniors, the Home Delivered Meals program, the Deaf Access Program, Medi-Cal, Healthy Families, the Alcohol and Drug Program, and the Department of Mental Health – these are just a few programs and departments that got their funding cut.  The common thread is that they all involve struggling communities of need.  Nice guy, that Arnold.  He even cut the California Discount Prescription Drug Fund by $2 million – this was part of one of Schwarzenegger’s main accomplishments in 2006.  Read Omoto’s post for the details.  Oh, and those 10,000 state employees who were fired as a result of insufficient funds?  Don’t bother coming back to work.

State Finance Director Micheal Genest this afternoon said that the state employees whose jobs were a casualty of California’s budget impasse won’t be rehired this budget year.

Gov. Arnold Schwarzenegger’s executive order on July 31 terminated about 10,000 part-time and retired annuitant positions, curbed overtime and suspended some contracts.

“We expect the order to remain in effect the rest of the (fiscal) year,” Genest said to reporters shortly after Schwarzenegger signed the budget.

We talk about removing the 2/3 requirement and bringing some sanity to the budget process.  And the people will have a chance to weigh in on parts of this budget in 2009.  But these heartless cuts are never put up for vote, and it’s important to remember that it matters who’s sitting at the Governor’s desk in 2010.

You may remember that Arnold Schwarzenegger sued John Chiang in state court to follow his order, and his dream, of cutting all state worker salaries to the minimum wage while we wait for a budget.  The court date was set for September 12, which salvaged the salaries for the month of August.  Chiang’s next move was to partner with some labor allies and move the lawsuit into the federal courts.  This not only would delay the question of whether or not Chiang needs to follow the order, but removes a serious liability problem for the state, because if they slashed salaries per a state court order and then had it overturned by the feds, they would be on the hook for expensive penalties and payments.  

Now, this has become complete, with the state canceling the September 12 court date.

This afternoon, controller spokesman Jacob Roper delivered this bit of news via e-mail to the State Worker:

Since the case has moved to the Federal court, the Sept 12th superior court hearing will not be held. A group of labor organizations has filed a motion to move the case from the Eastern Federal district to the Northern district, and a hearing on that motion is scheduled for October 31.

Roper also restated the controller’s position that cutting salaries to minimum wage would be a massive, time-consuming reprogramming task, “so there is no reason to believe that minimum wage checks would be issued anytime soon.”

While the lingering budget crisis is still incredibly painful for all manner of Californians, with missed payments sure to come if nothing is settled by the end of the month, at least the state workers have John Chiang in their corner, fighting for their interests.  And this is mirrored by the stirring testimony of everyday workers who are losing their benefits and the control of their lives as the Yacht Party turns up its nose and turns its back on the people.  John Chiang is doing his part, and Republican rank and file citizens are putting on the pressure in selected districts; the only way to ultimately win this fight is at the ballot box.