Governor Arnold Schwarzenegger this week proposed more than $6 billion in additional budget cuts for 2008-09 and 2009-10, to replace the revenue that originally was proposed to be generated by borrowing through registered warrants. The governor withdrew the borrowing idea because it would have created a huge problem for the following fiscal year.
According to a table prepared by the Department of Finance, the biggest savings comes from the elimination of the California Work Opportunity and Responsibility to Kids Program (popularly known as "welfare"), which was scored as a $1.3 billion reduction for 2009-10.
Due to more anemic numbers from the legislative analyst, the governor also proposed a 5 percent, across-the-board pay cut for state workers to save nearly $500 million in next year's budget. He also discussed closing state parks to save additional funds.
Later today, he is expected to announce approximately $2.5 billion in further cuts to address the budget gap that his office now pegs at $24.3 billion. Tomorrow, the governor is scheduled to address a joint session of the Assembly and Senate to discuss the budget, followed by a "Big Five" meeting consisting of the governor and the four legislative leaders – including new Assembly Republican Leader Sam Blakeslee. (Cal-Tax: Based on the budgets that have come out of the "Big Five" negotiations in recent years, it might be a good idea to retire this process and let more sunshine into the discussions.)
Assemblywoman Noreen Evans, chair of the Assembly Budget Committee, said the changing estimates about the size of the deficit are "creating chaos in the budget process." She said it would be more responsible to seek additional taxes, despite the voters' rejection of additional tax increases on May 19.
Other large items in the governor's proposal are:
|
|
2008-09 and prior (in millions) |
2009-10 (in millions) |
|
Reduce UC
and CSU Budgets – This option
further reduces the segments to the Federal State Fiscal Stabilization Fund maintenance-of-effort
level. |
415.0 |
335.0 |
|
Furloughs
– Assume savings if proposed labor
agreements with Service Employees International Union 1000 are not ratified
by the Legislature and a two-days-per-month furlough is maintained for all
employees. |
60.0 |
150.0 |
|
Phase Out CalGrants – This
eliminates new awards for the High School Entitlement and Community College
Transfer Entitlement programs and CalGrant C
program. |
0.0 |
173.0 |
|
Eliminate
Healthy Families Program – This
option eliminates remaining funding for the program. |
0.0 |
247.8 |
|
Offset General
Fund Highway Bond Debt Service With Local Share of Gas Tax – Reduce local share from $1.05 billion to $300
million and redirect $750 million to pay current and prior-year debt service
on highway bonds. |
0.0 |
744.0 |
|
Reduce
General Fund Support for Courts by Another 10 percent and Require Electronic
Court Reporting. |
0.0 |
181.6 |
|
Additional
Reduction to Prison Population – Commute
sentences of "non-violent, non-serious, non-sex offenders" one year
early. |
0.0 |
120.5 |
|
Reduce
Corrections Contract Expenditures, Reduce Rehabilitation Program and Make
Other Reductions to the Prison System – Impacted programs include a range of rehabilitative services, such as
substance-abuse counseling, vocational training, and educational programs. In
addition, funding for building maintenance is being eliminated on a one-time
basis in 2009-10, and other operational savings will be achieved. |
0.0 |
788.5 |
|
Eliminate
General Fund Funding for State Parks – Eliminate all general fund support, and require the parks department
to operate on fee revenue and special funding. |
0.0 |
70.0 |
Reaction to the governor's plan was predictable. Frank Mecca, executive director of the County Welfare Directors Association, said, "It boggles the mind that California would be the only state in the Union without a CalWorks-type program." Opponents of the cuts protested these reductions at a long hearing of the budget conference committee on May 27.
In other budget-related news:
Twenty-Five Charged With Defrauding State's IHSS Program. California Attorney General Jerry Brown has charged 25 people with defrauding the state's In-Home Supportive Services program of roughly $93,000.
The individuals charged, all from the Los Angeles area, are accused of submitting fraudulent claims of providing in-home care for relatives and others who were dead, hospitalized or, in one case, incarcerated.
The criminal charges, filed May 21, represent an attempt to crack down on fraud and to "send a signal" that there will be consequences for cheating the IHSS system, said Scott Gerber, a spokesman for Mr. Brown.
About half of the charged individuals allegedly falsified signatures for deceased family members, while others reportedly faked work hours for non-relative clients who had died or were hospitalized. Those charged were ordered to surrender to the court in June, or arrest warrants will be issued. They could face one year in county jail or up to five years in state prison. (Source: The Sacramento Bee, May 22.)
Assemblyman Jim Nielsen Named Assembly GOP Point Person on Budget. Assemblyman Jim Nielsen has been named the Assembly Republican Caucus' "chair of ways and means" by incoming Assembly Republican Leader Sam Blakeslee. In this role, Mr. Nielsen will be the caucus' point person on the budget (replacing Assemblyman Roger Niello, who had this responsibility under Republican Leader Mike Villines), and will serve as vice chair of the Assembly Budget Committee and the Assembly Appropriations Committee.
During a previous stint in the Legislature, Mr. Nielsen served as Senate Republican Leader (from 1983 to 1987), and he sat on the conference committee for the water's-edge election bill in 1986. (That major legislation, SB 85 by Senator Al Alquist, is described in detail in Chapter 21 of "California's Tax Machine: Second Edition," by Cal-Tax Chief Tax Consultant David R. Doerr.) (Source: Capitol Morning Report, May 26.)
Committee Formed to Advise on Sale of Surplus State Property. Senator Dave Cogdill announced May 27 that he will chair the bipartisan Senate Select Committee on Surplus Property, which will conduct an examination of the pros and cons of selling various state properties to help address the state's budget imbalance. Other members of the committee are Senators John J. Benoit, Ron Calderon, Bob Dutton and Alex Padilla. Senator Cogdill, who previously owned a real estate appraisal business, said, "While the sale of surplus property is not a panacea to the state's current fiscal crisis, it plays a significant role as a long-term budget solution." (Source: Press release from Senator Dave Cogdill, May 27.)
Cal-TaxReports, June 1, 2009
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