Californias budget: 85 days late & billions of dollars short

After an unprecedented nearly three-month delay, California finally has a budget. The $103 billion-plus spending plan — born of a year-long struggle between legislative majority Democrats trying to minimize cuts to social services, minority Republicans rejecting any new taxes, and a Republican governor seeking to raise revenues through a temporary sales tax hike and gambling on future lottery proceeds — is being roundly criticized on all sides.

At issue was a $15.2 billion gap in the general fund budget, as the financial crisis and especially the sinking housing market depressed revenues. Underlying the unprecedented delay was California’s requirement that budgets and tax increases must both be passed by a two-thirds majority. This has allowed Republican legislators to hold the process hostage to their no-new-tax pledge.

Before signing the budget on Sept. 23, Schwarzenegger removed a further half-billion dollars through line-item vetoes, especially to senior, welfare, health and mental health programs.

Saying the budget “does not represent the values of California’s working families,” California Labor Federation head Art Pulaski said in a statement that it “relies on sleight of hand and downright thievery from those who can least afford it … This ‘no new taxes’ budget really means ‘let the grandkids pay for it later.’”

Anthony Wright, executive director of the Health Access coalition, wrote on the organization’s web site, “With his line item vetoes, the governor has made an already bad budget even worse.” He noted that the budget passed by the legislature already included big cuts for doctors and other health providers, higher premiums for children in the Healthy Families program, and increased reporting requirements for low-income families which he said were aimed at having a quarter-million children drop out of coverage.

Both K-12 education and public higher education were hit hard in the final budget. California Federation of Teachers President Marty Hittelman said in a Sept. 24 San Francisco Chronicle op-ed that CFT believes both “progressive tax policies” under which the wealthiest 1 percent would “pay a bit more,” and elimination of the two-thirds requirement to pass a budget are needed to straighten out the mess.

The final budget includes over $10 billion in spending cuts and only one small permanent tax change, requiring buyers of boats, vehicles and aircraft to keep them out of state for a year (instead of the former three months) to avoid paying a use tax. It limits business’ use of tax credits and net operating loss deductions in the next two years in exchange for a budget-busting loosening of those provisions in future years. It also calls for issuing bonds against future state lottery proceeds. Left mainly intact were so-called public safety programs involving police, juvenile justice programs and rural sheriffs. Left out of their jobs at least for the coming year were about 10,000 “temporary” workers, some employed in state agencies for years.

As they waited for the budget to be finalized, thousands of institutions — from health clinics to senior and substance abuse programs — were left without the payments they depend on to keep their doors open. Earlier this month, San Francisco Bay Area legislators joined the Oakland-based Alzheimers Services of the East Bay for a press conference. “People don’t realize the decisions they make today affect not only my mother” but many others in the community, said Joann Bell, whose mother attends an adult day health care program run by ASEB. Bell said without the program, she would have to quit her job to care for her mother 24 hours a day, putting both of them in dire economic straits.

ASEB’s deputy director, Micheal Pope, told how the agency had used its building as collateral to obtain loans that enabled it to keep going. “But come Halloween, we’ll be in deep trouble,” she said.

As they spoke, they were flanked by Democratic Assemblymembers Sandre Swanson and Loni Hancock. The fundamental issue is “what kind of California we will live in,” Swanson said. “California must decide what it stands for and then we have to provide the needed services.” Hancock called for a constitutional amendment to pass budgets by a simple majority.

Voters would have to okay such an amendment. This week the Public Policy Institute of California released figures showing likely voters for the first time favoring the proposal by 46 percent to 43 percent — a big change from last year when 56 percent thought it was a bad idea.

mbechtel @pww.org