California Family Minute
October 22, 2010
Legislators Punt with Record-Late Budget
by Rebecca Burgoyne,
CFC Research Analyst
Earlier this month, California legislators agreed on an $86.5-billion spending plan to end the state’s record-length budget impasse. One hundred days after the 2010-2011 fiscal year began, following a marathon all-night session, state legislators passed the last of nearly two dozen bills and adjourned for the year. Legislators cobbled together a budget that included optimistic income assumptions, some creative accounting, and reliance on additional, unpromised federal aid. Imagine how bleak the picture would look if fiscal conservatives had not been involved in the process!
The 2010-2011 budget addressed the $19 billion deficit with $7.5 billion in cuts primarily to prisons, health care, and social services. State employees will see reduced income, contribute more of their own income to their pension plans, and be subject to a possible payroll freeze. Legislators waived funding guarantees for public education, but half of the loss in funds would simply be deferred a year. Higher education received an unusual increase in funding, although it does not balance what was lost a year ago. Republicans agreed to delay a business tax break for two years, saving $1.2 billion annually.
Throughout the summer, Republicans sang their no new taxes mantra, while Democrats clung to a no-cuts tune. Governor Arnold Schwarzenegger, who had promised not to sign a budget without budget, tax, and pension reform, received token satisfaction. A measure strengthening California’s “rainy-day” fund will appear on the 2012 ballot, and pension benefits for all new state employees will be rolled back to pre-1999 levels, a year when former Governor Gray Davis, flush with cash from a stock-market boom, signed legislation that greatly sweetened pension deals.
Governor Schwarzenegger sparked controversy by vetoing $962.5 million before signing the budget measures, a move designed to bolster the state’s reserve from a mere $364 million to 1.3 billion. Democratic legislators were especially critical of reductions in funding for childcare, child-welfare services, and mental-health services. Senate President Pro Tem Darrell Steinberg (D-Sacramento) promised to work with the next governor to overturn the vetoes.
Short Sighted
By delaying and punting on the budget – instead of addressing underlying problems – legislators have once again assured that the budget is out of balance before the ink on the governor’s signature has dried. Michael Cohen, deputy legislative analyst with the nonpartisan Legislative Analyst’s Office, said, “We said they were facing a multibillion-dollar shortfall in 2011-12, and nothing has changed the underlying economics and budgeting of that. It’s certainly going to be another really, really difficult situation.”
One of the nation’s largest credit-rating agencies, Moody’s, issued a report earlier this week predicting that California’s reliance on “one-time measures, optimistic revenue assumptions, and the receipt of funds, some of which may not materialize,” will likely result in a mid-year budget shortfall later this year and a significant budget gap next year – likely $12 billion or more. Of the $19.1 billion deficit, less than half is achieved through actual cuts. While Congress has promised $1.3 billion in aid, California’s new budget assumes an optimistic $5.3 billion, and more than $2 billion actually comes from borrowing from other state funds – which will need to be repaid.
While legislative actions solved an immediate problem and enabled legislators to adjourn to concentrate on the fall campaign season, the Legislative Analyst’s Office (LAO) report suggests that the budget “fixes” are short sighted. For example, the planned sale of state buildings may net the state some much-needed cash, but a review by the LAO determined that by next year the state would be paying $30 million in rent. Over the next few decades, the cost is expected to rise to more than $200 million annually, skyrocketing to $1.5 billion in 35 years.
Californians are wise to the antics of Sacramento politicians. Polls continue to show that voters rate their elected representatives at the bottom of the barrel, but in a heavily gerrymandered system – where districts are carved to favor one party or the other – little changes.
For years, legislators were tasked with carving legislative districts – handpicking their own electors. In 2008, Californians changed the redistricting system, passing Proposition 11 to appoint a commission of nonelected citizens to begin drawing the districts. This year’s ballot includes two related redistricting measures – Proposition 27, which would overturn Proposition 11 and revert to legislators drawing the districts, and Proposition 20, which would include drawing congressional districts in the job description of the 14-member citizen’s redistricting commission.
Men and women have gone before us, risking their lives for our voice and our freedom. Be sure to honor them by participating in this general election. And vote wisely – not by political party or campaign rhetoric. Carefully and prayerfully examine the issues. Vote for men and women of character, whose values mirror your own. CFC has prepared a voter guide to enable you to cut through much of the political rhetoric.
Legislators Punt with Record-Late Budget
by Rebecca Burgoyne,
CFC Research Analyst
Earlier this month, California legislators agreed on an $86.5-billion spending plan to end the state’s record-length budget impasse. One hundred days after the 2010-2011 fiscal year began, following a marathon all-night session, state legislators passed the last of nearly two dozen bills and adjourned for the year. Legislators cobbled together a budget that included optimistic income assumptions, some creative accounting, and reliance on additional, unpromised federal aid. Imagine how bleak the picture would look if fiscal conservatives had not been involved in the process!
The 2010-2011 budget addressed the $19 billion deficit with $7.5 billion in cuts primarily to prisons, health care, and social services. State employees will see reduced income, contribute more of their own income to their pension plans, and be subject to a possible payroll freeze. Legislators waived funding guarantees for public education, but half of the loss in funds would simply be deferred a year. Higher education received an unusual increase in funding, although it does not balance what was lost a year ago. Republicans agreed to delay a business tax break for two years, saving $1.2 billion annually.
Throughout the summer, Republicans sang their no new taxes mantra, while Democrats clung to a no-cuts tune. Governor Arnold Schwarzenegger, who had promised not to sign a budget without budget, tax, and pension reform, received token satisfaction. A measure strengthening California’s “rainy-day” fund will appear on the 2012 ballot, and pension benefits for all new state employees will be rolled back to pre-1999 levels, a year when former Governor Gray Davis, flush with cash from a stock-market boom, signed legislation that greatly sweetened pension deals.
Governor Schwarzenegger sparked controversy by vetoing $962.5 million before signing the budget measures, a move designed to bolster the state’s reserve from a mere $364 million to 1.3 billion. Democratic legislators were especially critical of reductions in funding for childcare, child-welfare services, and mental-health services. Senate President Pro Tem Darrell Steinberg (D-Sacramento) promised to work with the next governor to overturn the vetoes.
Short Sighted
By delaying and punting on the budget – instead of addressing underlying problems – legislators have once again assured that the budget is out of balance before the ink on the governor’s signature has dried. Michael Cohen, deputy legislative analyst with the nonpartisan Legislative Analyst’s Office, said, “We said they were facing a multibillion-dollar shortfall in 2011-12, and nothing has changed the underlying economics and budgeting of that. It’s certainly going to be another really, really difficult situation.”
One of the nation’s largest credit-rating agencies, Moody’s, issued a report earlier this week predicting that California’s reliance on “one-time measures, optimistic revenue assumptions, and the receipt of funds, some of which may not materialize,” will likely result in a mid-year budget shortfall later this year and a significant budget gap next year – likely $12 billion or more. Of the $19.1 billion deficit, less than half is achieved through actual cuts. While Congress has promised $1.3 billion in aid, California’s new budget assumes an optimistic $5.3 billion, and more than $2 billion actually comes from borrowing from other state funds – which will need to be repaid.
While legislative actions solved an immediate problem and enabled legislators to adjourn to concentrate on the fall campaign season, the Legislative Analyst’s Office (LAO) report suggests that the budget “fixes” are short sighted. For example, the planned sale of state buildings may net the state some much-needed cash, but a review by the LAO determined that by next year the state would be paying $30 million in rent. Over the next few decades, the cost is expected to rise to more than $200 million annually, skyrocketing to $1.5 billion in 35 years.
Californians are wise to the antics of Sacramento politicians. Polls continue to show that voters rate their elected representatives at the bottom of the barrel, but in a heavily gerrymandered system – where districts are carved to favor one party or the other – little changes.
For years, legislators were tasked with carving legislative districts – handpicking their own electors. In 2008, Californians changed the redistricting system, passing Proposition 11 to appoint a commission of nonelected citizens to begin drawing the districts. This year’s ballot includes two related redistricting measures – Proposition 27, which would overturn Proposition 11 and revert to legislators drawing the districts, and Proposition 20, which would include drawing congressional districts in the job description of the 14-member citizen’s redistricting commission.
Men and women have gone before us, risking their lives for our voice and our freedom. Be sure to honor them by participating in this general election. And vote wisely – not by political party or campaign rhetoric. Carefully and prayerfully examine the issues. Vote for men and women of character, whose values mirror your own. CFC has prepared a voter guide to enable you to cut through much of the political rhetoric.
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