Over on her budget blog, Asseembly Budget Chair Noreen Evans talks about the upcoming mess of a budget season.

I was reminded of an old saying in politics while reading the new report released this week by the Legislative Analyst’s Office (LAO): “a billion here, a billion there, pretty soon you’re talking real money.”

Over the next 18 months we face a $20.7 billion gap in the state’s General Fund: $6.3 billion in the current budget year and a $14.4 billion gap in 2010-2011. A $21.3 billion out-year budget gap follows in 2011-2012.

Robert made a persuasive argument that the Democrats in both Sacramento and DC should simply band together to say “No Cuts.” That would be the optimal solution. Yet, as Robert also pointed out, even Democrats, save for Party Chair John Burton, are pretty much acknowledging that there will be cuts.  At this point, it looks like Asm. Evans’ biggest hope is that at least this time there will be transparency:

Furthermore, the public is just now beginning to see the results of the cuts we made last summer-classrooms are larger, state colleges are getting more expensive, DMV offices are closing, state parks are closing, and courthouses are closed one day a month, already resulting in a severe backlog of cases. The public must be asked to weigh in on how much more it will tolerate.

Since the budget pains will be here to stay for a while, the budget decisions ahead of us must be made out in the open with significant public input. And, every solution available to us must be on the table.

That much is true. We need more transparency, and I’ve written about that, very serious, problem in the past.  But, as I did then, I will include the comment that the lack of transparency is a symptom of the problem, not the cure nor the underlying illness.

But how about we flip the script a bit from how this normally works? Normally, you get a very persistent Republican winger bloc to say no new taxes.  How about we get a progressive bloc to say, at the very least, no budget deal without new revenue. We can’t simply continue to give ground at every opportunity to those who would happily sacrifice our social safety net. Ideally, yes, we would say “No Cuts.” But until we get the gumption for more than just Sandre Swanson to oppose the budget deal on progressive grounds, we are going to get rolled every time.

We’ve heard this one before, but the Assembly will apparently vote on a prison “reform” package today, one that does not meet the $1.2 billion in cuts to the overall prison budget the Assembly supported in July, and which excises the sentencing commission that would actually get to the root cause of the overcrowding crisis by reining in 30 years of expanded sentences from the Legislature.  This makes manly tough guy Alberto Torrico very proud, but the Senate may not go along with it, if this SacBee report is any indication:

If the Assembly approves the plan as expected Monday, Steinberg will withhold concurrence in the Senate until several prison-related issues are settled.

“We’re going to wait for a package that includes reform and gets to the budget number that we need,” Steinberg said.

Steinberg wants the Assembly to act on creating a commission to overhaul sentencing guidelines and for the lower house to adopt an alternative custody program that could release, with electronic monitoring, some nonviolent offenders who are aged or infirm, or whose sentences expire in less than a year.

Gov. Arnold Schwarzenegger supports the Senate-passed plan, which contains both the sentencing commission and the alternative custody proposals.

The Assembly plan is a parole reform plan.  That’s worthwhile and needed, but it’s not a long-range plan that will prevent the Legislature or a federal court from having to make the same decisions about early release 10 years down the road.  It’s also not a short-range plan, as it cuts $220 million less from the budget than is required and leaves that hole to be dealt with later – with cuts to what?  Education?  Health care?  Maybe the Assembly can explain where they would cut in order to keep the terminally ill or blind people with one leg locked up and on the public dole.

It’s a sad commentary that the Department of Corrections is more committed to advancing reform than the State Assembly.

Last Thursday, the CDCR announced it would close the largest youth prison in California, diverting young offenders to local facilities. This is one of the real reforms our coalition has called for to improve public safety and end wasteful prison spending. As part of the People’s Budget Fix, we have proposed keeping young offenders at the local level, closing all six of the costly and ineffective youth prisons, and diverting half of the budget currently spent on these prisons to local programs. If fully implemented, this reform would save $200 million a year.

Closing the largest youth prison is an excellent start which will save $30-40 million by the CDCR’s estimate. But we’ll need to do more if we’re going to come up with $1.2 billion in savings. The need for action could not be more urgent: we must find those savings in the Corrections’ budget to avoid more draconian cuts to education, health care and other public safety programs like domestic violence shelters and drug treatment programs.

Moreover, most Californians agree we need to cut wasteful prison spending. Polls show that most Californians think we should cut the Corrections budget and we should protect funding for education. Most Californians also agree that prison should be reserved for violent offenders, not people who commit petty offenses.

Yet, the Assembly cannot agree on what seems like common sense to the rest of us: people who commit low-level crimes like petty theft and simple drug possession should be punished on the local level, not in prison cells at a cost of nearly $50,000 per person per year. It shocks the conscience that Assembly Members were willing to vote for billions of dollars of cuts to education-the most important program to average Californians-but are afraid to cut wasteful prison spending by even a fraction of that.

Interestingly enough, Noreen Evans, the Chair of the Assembly Budget Committee, wrote an impassioned piece arguing in favor of the Senate’s prison package.  As part of the Assembly leadership, she’s likely to fall in line today.  But she recognizes that the political considerations driving this debate are pretty outrageous.  It’s hard to argue with Dan Walters’ assessment that this episode shows how nobody in the legislature, on either side of the aisle, has earned much of a right to object to the howls and disapprobation from throughout the state.  The Senate could lead the way, at least on this issue, and force the Assembly wobblers, terrified of their own voters, to knuckle under.

Stay tuned.

That’s what happens you are a really big superstar.  You get to make up your own facts and reality as you go. It’s a really convenient super power, and even more super when people will simply write what you say down into pixels and ink.  Specifically, the Governator has decided that “fraud” is responsible for 25% of IHSS (in-home support services) expenses. This despite earlier failing to fund inspectors to review IHSS.

However, Asm. Noreen Evans is calling him out. Specifically, she points to a 2008 admistration audit that failed to show fraud anywhere near those kind of levels.

“It’s disappointing to see the governor making up ‘facts’ to suit his agenda,” said Evans.  “According to his own administration, just 1% of IHSS cases involve fraud.  The governor should not try to criminalize seniors and the disabled in order to close our budget gap.”

“The governor has been unable to produce evidence to support his claim that 25% of IHSS costs are due to fraud,” added Evans.  “In fact, this is just another proposal to gut the IHSS program using fraud as a fig leaf.  Contrary to the governor’s unsupported assertions, this recent audit is an unbiased analysis of fraud in IHSS and provides the best projection for any potential budget savings through reforms geared to reduce fraud.”

But, in the end, this is more of the same from Arnold, who is willing to use any means necessary, including turning a bunch of disabled Californians upside down, to score a point in negotiation.  However, this time it is backfiring upon him as it becomes increasingly clear that this Mr. Universe has no clothes.

Peep the full press release over the flip.

Administration Audit Contradicts Governor’s IHSS Reform Pitch

(SACRAMENTO, CA)  The governor’s claim that his in-home supportive services (IHSS) “reform” to combat fraud will reap 25% in program savings is inconsistent with the findings of a statewide audit released by his own administration in 2008 according to Assemblymember Noreen Evans (D-Santa Rosa), Chair of the Assembly Budget Committee.  Audit attached.

“It’s disappointing to see the governor making up ‘facts’ to suit his agenda,” said Evans.  “According to his own administration, just 1% of IHSS cases involve fraud.  The governor should not try to criminalize seniors and the disabled in order to close our budget gap.”

In 2007, 41 counties performed a random quality assurance review of 23,823 cases as part of the state-mandated California Department of Social Services (CDSS) IHSS Quality Assurance effort.  This review involved intense auditing of each case to insure that state assessments are uniform and that errors are minimized.  These reviews also checked for fraud or any other inconsistencies.

“The governor has been unable to produce evidence to support his claim that 25% of IHSS costs are due to fraud,” added Evans.  “In fact, this is just another proposal to gut the IHSS program using fraud as a fig leaf.  Contrary to the governor’s unsupported assertions, this recent audit is an unbiased analysis of fraud in IHSS and provides the best projection for any potential budget savings through reforms geared to reduce fraud.”

Of the 23,823 cases reviewed, the administration’s own audit found 1,043 cases (4.3 percent of all cases) where there was some type of red flag that warranted further investigation regarding fraud.  Of this amount:

·        786 cases (3.3 percent of all cases) required some type of fraud prevention activity to investigate, like referral to a local district attorney;

·        523 cases (2.2 percent of all cases) were referred to the Department of Health Care Services anti-fraud investigators for further investigation; and

·        248 (1 percent of all cases) of the cases QA investigators found fraudulent overpayment.

IHSS is a program of in-home supportive care that was established in 1979.  The purpose of in-home care is to assist the elderly and disabled to live independently in their own homes and communities in order to avoid the state’s earlier practice of institutionalizing the disabled in state hospitals and the elderly in nursing homes.

UPDATE by Brian: I’ve attached a  summary of the Budget Committee’s bill over the flip.  

The plot thickens.  The Governor today threatened to veto the work of the bipartisan Budget Conference Committee and reject any bill that, essentially, doesn’t hew to his desire to destroy the social safety net of the state.  The Democratic leadership countered that they’ll pass the bill anyway.

Democratic legislative leaders vowed today that the Legislature will pass a “share the pain” budget-balancing plan early next week – with or without tax increases — that will close the state’s spending deficit without completely shredding California’s social services safety net.

The vows by Senate President Darrell Steinberg, D-Sacramento, and Assembly Speaker Karen Bass, D-Los Angeles, came about an hour after Gov. Arnold Schwarzenegger said he wouldn’t sign a plan that was balanced with tax increases.

The rhetorical staking out of ground by the key figures in the current version of the state’s ongoing fiscal melodrama came a day after the Legislature’s joint budget conference committee, on a party-line vote, adopted a plan that included about $2 billion in new oil production and cigarette taxes to help bridge a $24 billion budget gap.

Let’s take a brief look at what else the conference committee has done.  They resisted some of the worst health care cuts, including the total elimination of Healthy Families (the SCHIP program).  They reduced education spending significantly in both K-12 and higher ed.  They reduced corrections spending by a fairly large amount.  Despite the fact that state parks pay for themselves, Democrats agreed to cut state participation in park funding, replacing it with additional fees on park admissions.  They agreed to increasing withholding by 10%, which amounts to an interest-free loans from citizens to the state.  According to Karen Bass, they agreed to 45% of the Governor’s proposals in full, and 93% in part.

So the idea that Democrats are not cutting spending is simply unreasonable and wrong.  At the same time, they rejected additional cuts to state worker salaries.  They rejected the end of Cal Works or Cal Grants or In-Home Support Services.  And some of the Governor’s proposals, like borrowing from local governments, were rejected unanimously.

I don’t even much like what the Democrats came up with.  But they did not agree to completely wipe out the social safety net, calling for moderate increases in revenue on constituencies who have been getting away with murder, pretty much literally, for decades, to pay for the externalities in health care costs that they impose on the public.  As Noreen Evans explains:

Californians expect their schools to be good, a safety net to be available to the needy, a college education to be affordable for working families, their air and water to be clean, and their parks to be open and kept up. In order to meet their expectations, we must to pursue new revenues. Today, for the greater good, we approved two new tax proposals that won’t impact most Californians.

Establishing a 9.9 percent tax on oil extracted from California would generate $830 million in FY 2009-2010 and $1.1 billion in future years. This precise proposal was part of the governor’s budget proposals last year. Increasing the excise tax on cigarettes by $1.50 per pack generates $1 billion in FY 2009-2010.

Tax increases require a 2/3 vote. Absent the pursuit of new revenues, wider and deeper cuts will be required. Getting new revenues requires a mere 6 Republican votes: 2 in the Senate and 4 in the Assembly. It is undemocratic that the votes of 6 Republicans can veto the votes of 75 Democrats.

But Arnold wants to destroy the state of California like a good little neo-Hooverist, so he said no.

The Dem leadership appears to want to have this fight for the moment, so they ought to realize one thing: Arnold will ultimately be responsible – and reviled – in a government shutdown situation.  No question about it.  Not 1 in 10 Californians can even NAME a Democrat in the legislature.  If the ship sinks, Arnold will be perceived as the skipper.  And so, if and when Arnold vetoes the bill, the Democrats should send it back – with MORE tax fairness solutions, daring Arnold to prolong the agony.  That resets the battle and draws clear lines between those who want the richest companies in America to sacrifice along with ordinary Californians, and those who want to protect the rich completely.  Unfortunately, the Dems are tipping their hand that this will not be the case.

But Bass and Steinberg seemed to be reconciled to the likelihood that the tax hike proposals would fail next week. Steinberg said that if they did, the package they sent the governor would have a reserve $2 billion smaller than he had sought.

We have a couple days to change this dynamic.  The progressive movement around the budget has stiffened spines a bit so far.  Time to make the calls and emails.

This is funny:

Schwarzenegger added that he wants a budget plan that will bridge the entire projected deficit of $24 billion, not a stopgap measure to “kick the can down the alley.”

The plan must consist of permanent solutions to the state’s fiscal problems, not one-time revenue that sparks ongoing spending commitments, Schwarzenegger said.

When Schwarzenegger was reminded that his own budget plan contains some one-time revenue proposals, such as acceleration of income tax payments, he smiled.

“Very good point,” he said. “We don’t want to add to the problem.”

The cyborg is not running on all cylinders.  He has a single-minded purpose to kill the California dream and even these extremely moderate revenue enhancements.

June 16 2009 Conference Report – Get more Business Documents  

Arnold Schwarzenegger’s address to the legislature was notable only for its fatuousness.  He demands the destruction of the social safety net in California and pleads that we have “no choice,” while hiding the decisions he made which brought us to this point. He claims that his budget is not “just about cuts,” then offers the same reforms that the voters have time and again rejected, or half-measures like firing groundskeepers (to privatize school responsibilities to low-wage contractors, incidentally).  Evidently, the May 19 special election, which has been massively over-interpreted and interpreted wrongly by the Governor, was supposedly a call to arms against tax increases, but a spending cap and rainy day fund, which were on the ballot and voted down by 66% of the electorate, are still viable ideas.  He drew a line in the sand by calling for the dissolution of the Integrated Waste Management Board, an organization that IS NOT FUNDED WITH ONE PENNY FROM THE GENERAL FUND but instead with fees on garbage collectors.  He talked about spending less per inmate on the prison population but his budget seeks only to get rid of precisely the services, rehabilitation, drug treatment and vocational training, that would lower recidivism rates, unstuff the prisons, and allow us to spend less on their management.  He admitted that money from the sale of surplus property cannot go toward the General Fund, in a fleeting moment of truth, but claims it would lower our debt payments, which is true, but precisely what Arnold has been increases with borrow and spend policies for the last six years.

Of course, Arnold urged swift passage of all his Shock Doctrine proposals, because that’s how it works.  The goal is to give nobody time to think, only to acquiesce in the face of crisis.  Some, like Assemblywoman Nancy Skinner, will not put her brain on autopilot, mindful of the Depression that would ensue from an all-cuts budget and the drastic consequences for our economy.

“The Governor’s opening statement that the voters in rejecting the special election measures said, “don’t ask us to solve complex budget issues, that’s your job,” is right,” she said. “He was wrong however in his assertion that Californians want an all cuts solution …We have choices. For instance, restoring the top income tax rate on high wealth incomes of $250,000 and above in place under Republican Governors Pete Wilson and Ronald Reagan would allow us to avoid $4 billion of these cuts. Enacting an oil severance fee on oil drilled in California, revenue collected by every state and country in the world that produces significant amounts of oil, could avoid another $1 billion in cuts.

“The Governor talked of us acting courageously. Acting courageously is looking at all alternatives and making smart, rational choices that lessen the cuts with some sensible new revenues,” she said.

Noreen Evans, similarly, has stepped up, at least rhetorically, to offer a counter-weight to the Governor’s Shock Doctrine tactics:

SACRAMENTO – Santa Rosa Assemblywoman Noreen Evans is emerging as one of Gov. Arnold Schwarzenegger’s fiercest critics, a noteworthy development given her prominent role in the high-stakes back-and-forth over the state budget crisis […]

“I don’t know what the point of that exercise was, really,” the Democrat said immediately after the speech as she stood outside the Assembly chambers.

Schwarzenegger told Assembly and Senate lawmakers that he has “faith in our ability to once again come together for the good of the state.”

But Evans said the governor was not helpful “at all” in bridging the divide between Republican and Democrat lawmakers. Rather, she labeled Schwarzenegger’s approach to budget matters as one of “shock and awe.”

“It’s working because it’s shocking, and it’s awesome, and it’s terrible,” she said.

While there are some voices in the Legislature creating pushback, my experience is that the Democrats fall in line with their leadership (same with the Yacht Party, actually; it’s practically a Parliamentary system).  And given the clear signs from Bass and Steinberg to bend over backwards to enable Arnold’s proposals and get it done quickly, I think the only way to halt this forward march would be to mass support inside the Capitol around specific proposals.  For instance, the California Budget Project today released a report about the $2.5 billion corporate tax cuts included in recent budgets in September 2008 and February 2009, cuts we certainly cannot afford in this economic climate.  If everyone must share in the pain, as the Governor said, that must mean something. And so these $2.5 billion in corporate giveaways ought to be repealed.  Period.  Full stop.  Here are some of the gems from these tax breaks:

Nine corporations, dubbed the “lucky nine” in the CBP’s analysis, will receive tax cuts averaging $33.1 million each in 2013-14 due to the adoption of the elective single sales factor apportionment, according to estimates by the Franchise Tax Board.

Eighty percent of the benefits of elective single sales factor apportionment will go to the 0.1 percent of California corporations with gross incomes over $1 billion.

Six corporations will receive tax cuts averaging $23.5 million each in 2013-14 from the adoption of credit sharing.

Eighty-seven percent of the benefits of credit sharing will go to the 0.03 percent of California corporations with gross incomes over $1 billion.

Are there 27 Democrats in the Assembly, or 14 in the Senate, willing to go to the mat to force the repeal of these unnecessary corporate giveaways, providing revenue that can go to the poor, the sick, the infirm, the elderly?  Rank and file Democrats never think to show their power in these negotiations.  In a time of crisis, they should – and force the Governor toward a more equitable solution.  Richard Holober’s post, which I referenced earlier, closes with this:

It’s time to re-unite a fractured progressive movement – based on hope, not fear. We need leadership that can think beyond the imminent crisis, reach out to build a coalition, and organize for budget justice. Labor and community based activist organizations must supply the leadership.

Let’s mobilize behind broadly supported values: require corporations to pay their fair share of taxes; increase the progressivity of our tax system; and eliminate undemocratic super-majority budget and tax rules that give a handful of reactionary politicians a stranglehold over funding our schools, health and public safety services. The campaign may take years. We can win, but first we need to get out of the budget crisis bunker.

Which politicians will enable us to escape that bunker?

You can actually see the full list of proposed cuts by the Governor here (Note by Brian: I’ve posted that PDF over the flip).  He has engaged in several tricks to actually slow down the dispersal of the cuts, priming himself for the moment when the Legislature must hurry up and approve everything he proposes immediately.  It’s a neat trick.  He released the cuts in stages, with multiple changes, so the relevant committees could not get a full picture.  Finally, the full release comes with a little more than a week to go.  Noreen Evans, for one, is pissed, and Aaron McLear responds with a healthy dose of sexism.

At the budget conference committee Monday, Assembly Budget Committeee Chairwoman Noreen Evans, D-Santa Rosa, vented some of her frustrations at chief deputy finance director Ana Matosantos.

Noting that the governor had made three separate revisions to his May budget, Evans curtly asked Matosantos “Are we done now?”

Evans’ cross-examination of Matosantos garnered an angry reply from the administration. “We will continue to revise our budget numbers as the situation deteriorates,” Schwarzenegger spokesman Aaron McLear said. “It is our sincere hope that Assemblywoman Evans will be able to keep up.”

McLear is an ass, and his point is ridiculous – nothing’s changed in the three days between new documents of cuts.  This is a deliberate attempt to keep everything fuzzy and not permanent right up until the moment when it all must pass.  It’s a typical shell game.

As to the document, among some of the goodies not already announced:

• The state will increase withholding by 10%, essentially getting an interest-free loan from the citizens.  Employees can opt out, and I’m sure everyone will know to do that.

• The proposal to borrow $2 billion from local governments remains.  This at the same time when Arnold proposes budget “solutions” like moving inmates to county jails, INCREASING their budget burden.

• Eliminating general fund money to stop domestic violence.

• Like everything else, the savings in corrections are vague and potentially unworkable, and almost all the savings in the corrections budget are in precisely the kind of programs we need to expand, like rehabilitation, vocational training, and substance abuse programs.

• I’ve also heard about eliminating the state’s funding of vote by mail ballots, but that’s not in this document (and sounds patently illegal, if the ballots couldn’t go out).

It’s all good, though, because we can just get volunteers to monitor all the state parks.  Sounds like a perfect plan.

The sneakiest part of this whole budget deal, the capper, is that Arnold is proposing a LARGER budget reserve than in previous years, essentially mandating Prop. 1A despite its loss.  He’s actually capping spending.

In recent days, the governor has introduced new budget cuts, including plans to eliminate popular state programs like CalWORKS and Healthy Families, eliminate millions in funding for state parks, and to lay off up to 5,000 state employees.

But in Monday’s conference committee hearing, Evans pointed out that the governor’s latest proposal had a budget reserve of more than $4 billion, even while proposing cuts to popular programs that would not have to be eliminated if the reserve were smaller.

McLear defended the governor’s numbers. “There’s a need to have a reserve,” he said. “The swings in revenue are so dramatic, and we have to make sure we’re able to pay the bills.”

Times like these are what the budget reserve was invented for.

What will happen over the next two weeks is that the Governor will keep tweaking and tweaking, right up until the day where he says “Pass this now or else.”  And given the state of the Democrats in the legislature, I’m not sanguine about the reaction.

All Budget Cuts –

Via OC Progressive, Assemblywoman Noreen Evans, Chair of the Budget Committee, spells out slowly for everyone the structural problems and false assertions about the California budget process.  If you have non-political junkie friends who want to understand this in a quick and easy way, pass them this link.

This is a very good place to start.  Evans puts the lie to three big myths about California:

1) The “runaway spending” assertion.  Um, no.  Population and inflation accounts for 68% of the increase.  I LOVE how Evans cites the tough on crime sentencing laws as a key element of over-spending, in this case on prisons (20% of the inflation and population-adjusting spending increase).  Ballot-box budgeting with no dedicated funding stream (separate from the initiatives voters stopped lawmakers from raiding yesterday, which have funding sources) also contributes to the problem.  And there are the prior tax cuts like Prop. 13 and Arnold’s VLF cut (which would have filled this ENTIRE current deficit).  To cover for this we sell bonds and now have to pay out interest to service that debt.  The problems beget more problems, and necessitate more cuts because the conservative veto resists taxes.

2) There’s all these “waste” in the budget.  Again, no.  The Performance Review of 2004 found virtually nothing that would save the state any real money.

3) It’s just all that messy partisanship from both sides.  No.  The Democrats have made $40 billion in cuts over the past several years.  The Norquistian Yacht Party won’t budget because they don’t have to.  Evans details the 2/3 requirement and the conservative veto, and cites Norquist himself!

Seriously, pass this to your friends.  Facebook it and Twitter about it.  If you internalize these concepts, the solutions are obvious – we need to restore democracy and give our elected officials a budget process and a Constitution they can actually navigate.

And while we’re at it, let me debunk one other myth.  The one that says all California has to do is sell San Quentin and all that surplus property and save the state.  Well, the money raised from selling state property would not be able to be used to balance the budget.

Under the terms of Proposition 60A, approved by voters in November 2004, proceeds from the sale of any state surplus property can only be used to pay the interest on $15 billion in budget-balancing bonds sought by the GOP governor and approved by voters in March of the same year.

Once the bonds are paid off – the Legislative Analyst estimated at the time that cash from the sale of surplus property would speed retirement of the 30-year notes by a “few months” – sale proceeds would be deposited in the state’s reserve account for emergencies.

Oops.