Legislative leaders and the governor will not find the $7 billion they were looking for in President Barack Obama's red-ink budget proposal released February 1.
According to state officials, the proposed $3.8 trillion federal budget contains only $1.5 billion of the $7 billion requested by the state. Finance Department spokesman H.D. Palmer said, "This represents a down payment on what California is owed, and the governor will continue to work with the state's congressional delegation and federal officials to secure the balance."
According to the report, the $1.5 billion is part of $25 billion proposed for all states, and represents an extension of an increase in amounts of the federal reimbursement for Medi-Cal expenses. (Cal-Tax: Even at a minimum, on a population basis, it would seem that California's share should be $2.5 billion.) Adam Abrams, a spokesman for the president, said, "The federal government is providing significant assistance to the states, particularly through the Recovery Act."
Assembly Budget Committee Chair Noreen Evans said, "I question whether the Obama administration is really addressing the huge deficits states are facing." She added, "It points out the fundamental flaw in the governor's proposal, which I call the 'Swiss cheese' proposal because it stinks and is full of holes."
The new federal budget represents $1.56 trillion of red ink and is under criticism for massive deficits as far as the eye can see. The federal budget is predicated on tax increases, particularly on estates, upper-income taxpayers and banks. (Sources: Andrew Taylor of the Associated Press out of Washington D.C.; The Sacramento Bee, February 2; San Francisco Chronicle, February 2.)
In other budget news:
The Sacramento Bee Calls on Legislature to Reduce State Personnel Costs. In a hard-hitting editorial, The Sacramento Bee on February 1 called on the Legislature to reduce personnel costs. The paper noted that the legislative analyst also has recommended cutbacks in the salaries and benefits of state employees.
In a rebuke to Senate President Pro Tempore Darrell Steinberg (a former attorney for the state employees' union), the paper said he "ignores reality" by advocating that wages be determined by collective bargaining. Calling the California collective bargaining process "dysfunctional," the paper stated:
"Because state law allows existing contracts to remain in place if no agreement is reached, employee unions have an incentive to outwait lame duck Governor Arnold Schwarzenegger, betting that a new administration will offer something better.
"Only the Legislature can break the logjam. It has the authority to reduce salaries and benefits. A failure to exercise that authority will lead to deeper cuts for local government, the poor, blind and disabled, schools, and the public at large. The governor's proposal would cut $2.5 billion from personnel costs through a combination of salary reductions, increased employee contributions to pension plans and attrition.
"The 5 percent salary reductions proposed would be less costly to employees than the current three-day-a-month furloughs and less disruptive to the public. It's a reasonable sacrifice given the magnitude of the state's deficit, and lay-offs, pay cuts and hits to retirement savings that private-sector workers have endured."
The editorial concluded on this note: "Majority Democrats in the Legislature can help shape the governor's personnel proposals in ways that are fair to the public and state workers, or they can bow to union bosses and let the state drift deeper into crisis." (Source: The Sacramento Bee, February 1.)
Use of Speed Cameras to Help Fill Budget Hole
Going Nowhere. Services were held at the Capitol on Wednesday afternoon for the
governor's budget proposal to generate $400 million in revenue from fines by
installing speed cameras at intersections. The proposal was caught in a
bipartisan buzzsaw at a hearing of the Senate Budget
and Fiscal Review Committee.
Democratic Senator
Alan Lowenthal, chair of the Senate Transportation Committee, called the
proposal a "terrible idea." Republican Senator Bob Huff also spoke
against the proposal, expressing concerns about whether it would lead to more
rear-end accidents.
Both the Teamsters
and the Auto Club of Southern California testified in opposition. Barry Broad,
representing the Teamsters, said cities could manipulate the length of traffic
light sequences.
One axiom in
analyzing proposals is to "follow the money." In an editorial
denouncing the proposal, The Sacramento
Bee called it a "back-handed tax hike," and said it is being
pushed by Redflex – a company that "supplies
cameras to locales around the country."
(Cal-Tax: We agree with The Bee
that the generation of new revenues to balance a budget through fines is a
tax hike.) (Source: The Sacramento Bee, February
4.)
Legislative Analyst Calls for Reform of
"Broken" Mandate Process. In a February 2 report, Legislative Analyst
Mac Taylor finds the state system for funding education mandates
"broken." By relieving schools of performing the vast majority of
K-14 mandate requirements, the report's recommended reforms will result in
saving more than $350 million annually.
According to the
report, "Currently, the state has more than 50 education mandates, with
each mandate requiring school districts and/or community colleges to perform as
many as a dozen specific activities. In 2009-10, these education mandates are
estimated to cost a total of more than $200 million. When coupled with a
pending mandate relating to high school science graduation requirements, annual
costs total more than $400 million."
The report
identifies the following problems:
·
Districts
are required to perform hundreds of activities even though many of these
requirements do not benefit students or educators.
·
The
existing mandate system also can reward districts for performing activities not
only inefficiently but ineffectively.
·
Oftentimes,
districts claim vastly different amounts for performing comparable activities.
·
The
state does not pay for these activities on a regular basis, instead deferring
district reimbursement to future years. As a result of these deferrals, which
were deem unconstitutional by a superior court in
2008, the state owes roughly $3.6 billion in outstanding mandate claims
(including the high school science mandate, which more than doubled the
backlog).
It concludes that
"districts are required to perform hundreds of activities – many of
dubious merit – without regular pay, resulting in billions of dollars in state
debt." (Source: Legislative Analyst, "Education Mandates: Overhauling
a Broken System." February 2, 2010.)
Cal-TaxReports, February 8, 2010
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