CA FINALLY starts fixing budget

[J]

Budget signed

Sacremental Bee link

Schwarzenegger signs budget bills, cuts $489 million more

By Steve Wiegand
swiegand@sacbee.com
Published: Wednesday, Jul. 29, 2009 - 12:00 am | Page 1A
Last Modified: Wednesday, Jul. 29, 2009 - 8:09 am

Gov. Arnold Schwarzenegger signed a 27-bill budget-balancing package Tuesday, but only after making another $489 million in spending cuts and likening the experience to "the good, the bad and the ugly."

"This has been a very tough budget, probably the toughest since I have been in office here in Sacramento," the governor said as he signed the bills before a horde of reporters and aides packed into a Capitol conference room.

Schwarzenegger's signings essentially rebalanced the budget he and legislators approved last February for the fiscal year that started July 1.

The state's general fund spending will amount to $85 billion, including the reserve. That's a 7.2 percent drop from spending in the last fiscal year, and a whopping 17 percent less than two years ago.

The governor characterized the rebalancing efforts as "kind of like the good, the bad and the ugly":

• "Good" because it contains no tax increases, makes government "live within our means" and includes reforms of some programs.

• "Bad" because it includes $16 billion in draconian cuts in almost all state programs, particularly those serving California's neediest residents.

• "Ugly" because the package legislators sent Schwarzenegger last Friday lacked a reserve and was $156 million short of being balanced, causing the governor to make even deeper cuts that those agreed to earlier by legislative leaders.

"That's ugly, when already we've cut so much and then we had to make additional cuts," he said.

To eliminate the $156 million deficit and create the $500 million reserve, the governor made $489 million in extra cuts, borrowed $50 million from one of the state's special funds and found about $117 million in savings from money not spent in the last fiscal year.

The biggest single cut was $80 million in funds allocated to counties to pay for programs that investigate and remediate cases of child abuse and neglect. Officials said the program had been spared in earlier rounds of budget cuts.

"The situation has just gotten to the point we can't exempt them anymore," said Mike Genest, Schwarzenegger's finance director.

Other new cuts include:

• $60.6 million from funds used to pay for Medi-Cal eligibility workers at the county level. Aid to recipients was not cut, but they will likely have to wait longer for service.

• $50 million from Healthy Families, a 12-year-old program providing low-cost medical insurance to low-income families that don't qualify for Medi-Cal.

Health care advocates said that coupled with earlier cuts totaling $128.6 million, the reductions could affect more than 900,000 children statewide.

The number ultimately losing coverage will depend on decisions by the state Managed Risk Medical Insurance Board, which runs the program.

The board is scheduled to meet Thursday to consider options. The board's staff has recommended that the program begin actively disenrolling tens of thousands of children a month starting in the fall.

• $52.1 million from the Office of AIDS Prevention and Treatment. Officials said the cut means the elimination of all services except providing drug assistance and monitoring the number of cases.

• $27.8 million from the Williamson Act program, which provides money to counties that give tax breaks to landowners who keep their land as open space. Because the governor couldn't unilaterally abolish the program, he cut the budget to a token $1,000.

• $6.2 million from state parks. Parks director Ruth Coleman said that coupled with earlier reductions, the cuts could mean the closure of about 100 of the state's 279 parks after Labor Day.

Which parks will close, she said, will be determined by several factors, including what kind of revenue they produce and whether sponsors and/or partners can be found among local governments and private organizations and individuals to keep them open.

"Before we just roll out a list and start the closures, we're going to try and find as many partners as possible," Coleman said. "We're not going to give up on these parks. We're hoping Californians will step up and help us."

A full summary of the budget can be found here (PDF file)

It's a start, but they're still in deep trouble. For instance we have this from page 4 of the budget summary:

Preliminary projections for the coming fiscal year
suggest that the state will face a significant budget shortfall; perhaps in the $7 to 8 billion
range, with even larger shortfalls projected in out‑years. However, the state’s ability to
manage its way through the nadir of this economic cycle demonstrates a determination
and ability to overcome future budget challenges. Moreover, the budget contains a wide
range of reforms that will significantly reduce spending growth in the future.

So they've fixed things for now but they'll be back to the exact same position next year, with worsening results in following years.

[SirNitram]

You know, if I wanted to prove government and liberals are bad, evil things, and make out like bandits on the way, California is pretty much how I'd do it. How many people would look at the imploding mess and think 'GOP anti-tax zealotry'? Now how many, nationwide, will think 'Stupid liberals'?

[Serafina]

You know, if I wanted to prove government and liberals are bad, evil things, and make out like bandits on the way, California is pretty much how I'd do it. How many people would look at the imploding mess and think 'GOP anti-tax zealotry'? Now how many, nationwide, will think 'Stupid liberals'?

Well, i would. A state is bankrupt? Well, he needs more money -> raise the taxes. Seems pretty logical to me.

But then again, i am from sane socialist communist europe.

[Pablo Sanchez]

You know, if I wanted to prove government and liberals are bad, evil things, and make out like bandits on the way, California is pretty much how I'd do it. How many people would look at the imploding mess and think 'GOP anti-tax zealotry'? Now how many, nationwide, will think 'Stupid liberals'?

That's what's great about a system that demands a supermajority for all legislation on budgetary work, which is the most important thing a legislature does in a year. It means that a party that is basically represents only a fringe of the state (commanding just barely enough seats to block a 2/3s majority) can dictate how the legislature completes its most critical tasks. For more icing on the cake, the California Republican Party is actually pretty insane even by the standards of the nationwide GOP, at least when it comes to budgets. As an example, the excellent blog Calitics refers to the GOP as "the Yacht Party" because at one point last year they vowed to fight an attempt to close a loophole that allowed people who bought yachts out of state to avoid paying California taxes on their yachts. This is a party that said they would go to the mat so that yacht owners could continue cheating the state out of taxes.

Given the interests that the CA GOP represents (large corporations based in the state, the obscenely wealthy, and rural areas), maybe it's their active intention to destroy the state. If California gets fucked up badly enough, it won't be their constituents who suffer, it will be the Democratic Party's urban constituency that has to flee the state.

[The Yosemite Bear]

but they sure had no objections to putting a tax burden on my online purchases. I mean why else would I put up with highway robbery shipping fees?

[Durandal]

Wah Wah Wah. I love how Prop 13 is always held up as an evil evil thing; when in reality; it's more expensive than in MD:

0.112 Per $100 Assessment - MD State
0.683 Per $100 Assessment - Montgomery County
0.795 Per $100 Assessment

$250,000 under MD Taxes = $1,987.5
$250,000 under CA Prop 13 (1%) = $2,500

Congratulations for flunking reading comprehension. Prop 13 (a) limits the growth of the assessed value of properties, which directly impacts the tax revenue and (b) caps the property tax at 1%. Caps, not sets. Also, it contains a loophole allowing a corporation to transfer ownership of a commercial property without actually giving up the deed. Thus, land can change hands without triggering a re-assessment, thus keeping the taxable amount locked in.

The real issue is that until very recently, the median home price in CA was like $400k; which meant that CA made on average of $4,000 per home. When the entire economy crashed; median housing prices went down to about $280~k, which is more inline with the rest of the US; and means that CA only took in about $2,800.

Except that the state hasn't been running a giant deficit just "very recently". It's been years. Years when home values were higher.

[The Yosemite Bear]

kept afloat by shell games and ponzi scheme bond issues

[Master of Ossus]

Except that the state hasn't been running a giant deficit just "very recently". It's been years. Years when home values were higher.

So in all those years they couldn't adjust the budget lower? Come, now. Also, keep in mind that while everyone on the board is clamoring for higher taxes and somehow blaming the Republicans for this, California still collects more tax revenue per capita than an average state and has a highly progressive tax structure (I believe that CA's highest tax bracket is still charged more than any other state). Also keep in mind that when the legislature asked voters to approve continued elevated taxes, the ballot measures were completely destroyed by bipartisan voters.

[Darth Wong]

Except that the state hasn't been running a giant deficit just "very recently". It's been years. Years when home values were higher.

So in all those years they couldn't adjust the budget lower? Come, now.

That's irrelevant to the point under discussion. Durandal was answering Shep's claim that the "real issue" behind California's deficit is the recent real estate crash.

Also, keep in mind that while everyone on the board is clamoring for higher taxes and somehow blaming the Republicans for this, California still collects more tax revenue per capita than an average state and has a highly progressive tax structure (I believe that CA's highest tax bracket is still charged more than any other state).

Why does that mean they can't raise taxes?

Also keep in mind that when the legislature asked voters to approve continued elevated taxes, the ballot measures were completely destroyed by bipartisan voters.

Everyone is quite aware of that. Precisely which argument do you believe this point refutes?

[Terralthra]

Also keep in mind that when the legislature asked voters to approve continued elevated taxes, the ballot measures were completely destroyed by bipartisan voters.

Really? Can you point to which ballot measure increased taxes or continued prior elevated taxes?

[The Yosemite Bear]

Also keep in mind that when the legislature asked voters to approve continued elevated taxes, the ballot measures were completely destroyed by bipartisan voters.

Really? Can you point to which ballot measure increased taxes or continued prior elevated taxes?

The Ballot measures that were destroyed were:
basically diverting money from schools/health to pay for everything and promising to pay it back later. Requiring the companies that handle the lottery to give the state a larger cut of the profits, and making the profits go to the general fund and not the schools, and setting up a required rainy day fund/budget surpluss.

[Terralthra]

I am aware of what they are. Apparently Master of Ossus was not, because precisely 0 of them raised taxes or continued an elevated tax. They were all budgetary chicanery and shifting money around to make it look as if the budget gap was closed, without actually doing anything substantive.

[The Yosemite Bear]

yeah, I only voted for the "Get more money out of the company that runs the lottery" issue because that was the onlyone actually producing money.

[Master of Ossus]

Also keep in mind that when the legislature asked voters to approve continued elevated taxes, the ballot measures were completely destroyed by bipartisan voters.

Really? Can you point to which ballot measure increased taxes or continued prior elevated taxes?

Uh... Proposition 1A, at least according to the Legislative Analyst's Office

If this measure is approved, several tax increases passed as part of the February 2009 budget package would be extended by one to two years. State tax revenues would increase by about $16 billion from 2010-11 through 2012‑13.

[Master of Ossus]

That's irrelevant to the point under discussion. Durandal was answering Shep's claim that the "real issue" behind California's deficit is the recent real estate crash.

Fair enough.

Also, keep in mind that while everyone on the board is clamoring for higher taxes and somehow blaming the Republicans for this, California still collects more tax revenue per capita than an average state and has a highly progressive tax structure (I believe that CA's highest tax bracket is still charged more than any other state).

Why does that mean they can't raise taxes?

It doesn't mean that they can't raise taxes, but the will of the people was clearly expressed.

I still don't understand the argument that the problem is that it's hard to raise taxes. Firstly, California has consistently charged higher-than-average taxes by any measure (suggesting that the problem is just that the legislature can't work within a budget). Secondly, Californian voters overwhelmingly rejected higher taxes: no reasonable legislature, no matter what is required for approving a tax hike, would disregard such widespread dissatisfaction with increased taxes (and, if they did, they would surely be voted out of office in short-order). The problem with raising taxes in the state is not the legislative difficulty of doing so: it's the fact that an overwhelming majority of taxpayers don't want the state to raise taxes and want the state to slash services to make up the deficit, instead. Third, if it were so difficult to raise taxes in California, why hasn't the legislature adjusted for that by reducing services? Claiming that Prop 13 is somehow responsible for California's budget problems ignores the fact that Legislatures must often work within constraints when passing budgets (imagine that). If Prop 13 is so onerous, a competent legislature would try and keep within that constraint.

[Pablo Sanchez]

The problem with raising taxes in the state is not the legislative difficulty of doing so: it's the fact that an overwhelming majority of taxpayers don't want the state to raise taxes and want the state to slash services to make up the deficit, instead.

In what way did CA voters express their desire that the state make deep service cuts? I'd like to see a direct expression of that, because if you're arguing that their stance against taxes tacitly shows that they want service cuts, let me just raise the alternate possibility that the CA electorate is unreasonable and wanted to have their cake and eat it, too.

[Master of Ossus]

In what way did CA voters express their desire that the state make deep service cuts? I'd like to see a direct expression of that, because if you're arguing that their stance against taxes tacitly shows that they want service cuts, let me just raise the alternate possibility that the CA electorate is unreasonable and wanted to have their cake and eat it, too.

Everyone who voted on the budget bills understood that that was the choice that they were making. Unions, the Legislature, the Governor, etc. bombarded the public with ads about disastrous budget cuts to schools, firefighters, police, jails, etc. if the budget wasn't going to be approved. You're insane if you think that the electorate didn't understand that there would be cuts if the budget measures were voted down, and yet they were soundly defeated.

[Uraniun235]

Everyone who voted on the budget bills understood that that was the choice that they were making. Unions, the Legislature, the Governor, etc. bombarded the public with ads about disastrous budget cuts to schools, firefighters, police, jails, etc. if the budget wasn't going to be approved. You're insane if you think that the electorate didn't understand that there would be cuts if the budget measures were voted down, and yet they were soundly defeated.

I wouldn't be so sure of that. There are people who are convinced that there's a massive amount of inefficiency (or straight-out graft) in the system, and that public agencies should "cut the fat" before asking for more money.

[Terralthra]

Everyone who voted on the budget bills understood that that was the choice that they were making. Unions, the Legislature, the Governor, etc. bombarded the public with ads about disastrous budget cuts to schools, firefighters, police, jails, etc. if the budget wasn't going to be approved. You're insane if you think that the electorate didn't understand that there would be cuts if the budget measures were voted down, and yet they were soundly defeated.

I, and many others I know, voted no on most of the ballot measures because we wanted the state government to actually raise taxes to close the budget gap instead of playing fiscal games.

[Master of Ossus]

I, and many others I know, voted no on most of the ballot measures because we wanted the state government to actually raise taxes to close the budget gap instead of playing fiscal games.

You mean like 1A, which you seem to have voted no on despite the fact that it preserved increased taxes?

Moreover, you might want to let your legislature in on the secret, since they all went back and decided that Californians hated the idea of higher taxes.

[Terralthra]

I, and many others I know, voted no on most of the ballot measures because we wanted the state government to actually raise taxes to close the budget gap instead of playing fiscal games.

You mean like 1A, which you seem to have voted no on despite the fact that it preserved increased taxes?

Please show me where I said I voted no on 1A.

Moreover, you might want to let your legislature in on the secret, since they all went back and decided that Californians hated the idea of higher taxes.

Don't generalize the just-more-than-33% of the legislature which are Republicans and have flat out refused to vote for any budget which increases taxes to be the entire legislature. The fact that a supermajority is required to approve budgets due to Prop. 13 makes it possible for an obstructionist minority party to refuse to accept a compromise measure. Several democratic compromise budgets involving some spending cuts and some increased taxes were rejected by both the minority party and the Governator, who promised to veto any budget with increased taxes. Is there a rational way for you to synthesize your statement regarding the will of the majority with the fact that the no-tax-increases party is the minority?

[Pablo Sanchez]

In what way did CA voters express their desire that the state make deep service cuts? I'd like to see a direct expression of that, because if you're arguing that their stance against taxes tacitly shows that they want service cuts, let me just raise the alternate possibility that the CA electorate is unreasonable and wanted to have their cake and eat it, too.

Everyone who voted on the budget bills understood that that was the choice that they were making. Unions, the Legislature, the Governor, etc. bombarded the public with ads about disastrous budget cuts to schools, firefighters, police, jails, etc. if the budget wasn't going to be approved. You're insane if you think that the electorate didn't understand that there would be cuts if the budget measures were voted down, and yet they were soundly defeated.

So I'm given to understand that what you mean by this is
"Yes, Pablo, you're correct in that I'm just assuming that a majority of voters knew exactly what was at stake and made a fully rational choice to vote against the tax increases, thereby obviously demanding massive service cuts to every sector of the state government. Not only that, but additionally the 60-65% majority of those who voted against propositions 1A through 1E, taking into account the pathetic 28.4% turnout for the special election ballot which means that only around 18% of registered voters actually voted 'No' on those propositions, shows a clear mandate for dismantling the state government."

For comparison California had 79% turnout for the 2008 elections. McCain lost the state by a country mile, yet he garnered more votes in November 2008 than the total number of votes cast in May 2009. Hey, let's look at the official report of the results and see if we can find anything interesting! The first thing that jumps out at me is this special ballot election had the lowest turnout of any such occasion in California history, and it was especially low in heavily populated, urban counties like Los Angeles whose residents would be expected to suffer most from service cuts. How interesting. So I'm thinking that voter apathy and well-targeted GOTV efforts by well-heeled Californians averse to paying taxes could have played a role in those results you have such a hard-on for. I'm also thinking that 18% of registered voters falls short of the overwhelming mandate you seem to think they represent.

But don't mind me, I'm "insane." I'll be waiting for you to roll the goalposts back from "GRAR OVERWHELMING MANDATE" to "that people who don't get to the polls in a non-election year special election don't deserve to have a say."

[Beowulf]

Truthfully, the only indication that I got that there was a election going on was receiving my ballot in the mail. I am, however, an atypical CA voter (being out of state year round).

[Pablo Sanchez]

Truthfully, the only indication that I got that there was a election going on was receiving my ballot in the mail. I am, however, an atypical CA voter (being out of state year round).

I don't think that experience is terribly useful. The fact that it had little national exposure doesn't mean anything. You might not have seen any ads but I'm willing to believe that ads for and against the propositions in the May 9 special ballot election were running in every commercial break on every station in California, because ad buys go by media market. Pick any media market, and I guarantee there are locally famous ads that run constantly and you've never heard word one about them. That's how it works. I never heard of the May special ballot election until recently, but thank God for Google, because I know all about it now.

My point was that the amount of in-state advertising apparently didn't matter, because 80% of registered voters went to the polls in November 2008 but only 25% could be bothered the following May. That is, even with advertising pouring out of their assholes, most people, even a huge majority of those people who cared about politics during a real election a few months earlier, didn't give half a shit about that special ballot vote. 80% in November followed by 25% in May, that's serious dissonance. My read on it is that maybe there's something wrong with conducting state policy via plebiscites that nobody cares about and are thus easily manipulated by special interest GOTV campaigns, but other people might have a different conclusion.

[Master of Ossus]

Please show me where I said I voted no on 1A.

Oh, I see. So you lied about none of the budget measures prolonging tax increases, and said you voted no on "most" of them, but voted yes on 1A because you wanted higher taxes. I had tried to be charitable and assumed you were simply confused about what the ballot measures said, but now I see you are out-and-out dishonest.

Don't generalize the just-more-than-33% of the legislature which are Republicans and have flat out refused to vote for any budget which increases taxes to be the entire legislature. The fact that a supermajority is required to approve budgets due to Prop. 13 makes it possible for an obstructionist minority party to refuse to accept a compromise measure. Several democratic compromise budgets involving some spending cuts and some increased taxes were rejected by both the minority party and the Governator, who promised to veto any budget with increased taxes.

This is so massively dishonest I don't know where to begin. The Governor supported the budget initiatives, including 1A, as did many Republicans because at the time it wasn't clear how staunchly Californians were against them. Immediately after the initiatives were shot down both parties went back and realized that they would have to make cuts to services.

Is there a rational way for you to synthesize your statement regarding the will of the majority with the fact that the no-tax-increases party is the minority?

Uh... in elections that aren't solely and completely about the budget people care about non-budget issues? Incredible, but true. Moreover, you're missing the fact fewer than 1/5 Californians approves of the Legislature as a whole, so it's not as if the Democrats in the Legislature are wildly popular.

Moreover, you still haven't explained why the legislature hasn't been able to live within the bounds of the law, even though CA's tax-revenues remain above-average in spite of Prop 13. So even though the Republicans are just so unreasonable and run the whole state's fiscal policy, the State somehow has the most progressive state income tax in the country and overall collects well above-average tax revenues per capita.