Legislative Climate Centers on Budget, Will Turn To Water
Legislative climate center on budget, will turn to water
by Everett Rice
SACRAMENTO, Calif. — Newly elected legislators began the year faced with an estimated $15 billion deficit they inherited from the previous legislature, which failed to resolve the gap. Faced with continually declining revenues, Gov. Arnold Schwarzenegger and the Democrat-controlled legislature spent its first month addressing the deficit and drafting the 2009-10 state budget.
Before the voters had a chance to express their opinion, however, it became apparent that the state’s fiscal situation had become much worse than originally estimated. From that moment forward, the governor and state legislature became mired in an acrimonious budget battle.
Many were hoping that the budget resolution of February would have resulted in a year dedicated exclusively to policy matters. Nevertheless, the subsequent failure of the ballot measures, coupled with the diminishing state revenues, the rising unemployment rate and other fiscal realities, nearly brought California to the brink of insolvency.
Schwarzenegger and the legislature spent most of the legislative year sparring over a deficit that grew to approximately $26 billion. Resolved that the voters’ rejection of the tax-increase measures during the special election had effectively removed the issue as a possible budget remedy, Schwarzenegger demanded the budget deficit be solved by reducing state spending, limiting borrowing and implementing government reforms. He sternly rebuffed repeated legislative attempts to raise taxes, as well as the construction of piecemeal budget solutions that the governor argued would not eliminate the entire $26 billion deficit.
Cutting services
While the squabbles over the budget escalated, Schwarzenegger began initiating cost-saving measures. First, he instituted mandatory furlough days for all state employees. Next, he began laying off state workers. Finally, with revenues continuing to slide, he ordered the state to begin issuing IOUs to state vendors, contractors, public schools and taxpayers.
Embroiled in the worst budget situation in California history and faced with the realization that all traditional budgetary tricks and tools had been exhausted, Schwarzenegger and the legislative leaders ultimately made the tough choices and spared virtually no program, department or people in remedying the $26 billion deficit, in a tentative agreement reached in July. Massive cuts are anticipated to education, corrections and health and human services programs.
Although an agreement was reached, no one could rightly claim victory. Taxpayers lost more of their discretionary programs, government services must do more with less, and budget instabilities and challenges still remain for the future.
Turning to the water
With the budget deficit temporarily shelved, legislators must now focus on the 300-plus bills awaiting approval before the members return to their district for the year on Sept. 11. The legislature’s top priority will be to address California’s dire water situation.
Three years of dry weather conditions have depleted California’s surface and groundwater storage supplies. Despite precipitation increases in 2009, the state continues to suffer from an extended drought. This deepening drought, coupled with the continued federal restrictions on water movement, is leaving California farmers and ranchers to face a potentially severe water shortage.
In addition to water scarcity, court rulings protecting threatened and endangered species and efforts to restore habitats by restricting water pumping in the Sacramento-San Joaquin Delta are magnifying the water crisis. There are approximately 3 million acres of farmland that rely on water from these restricted water projects. Without a reliable water supply, farmers will experience reduced crop production, which directly affects their ability to generate revenue or obtain necessary financing.
Schwarzenegger and legislative leaders will be working intently over the next month to develop a workable water management plan. Their goal will be to find a solution that balances the need to protect and restore natural habitats with the need to maintain reliable and adequate water supplies. A conference committee, with legislative representatives from both houses, has convened to construct and implement a new state water management plan.
As printed in the Christian Examiner
by Everett Rice
SACRAMENTO, Calif. — Newly elected legislators began the year faced with an estimated $15 billion deficit they inherited from the previous legislature, which failed to resolve the gap. Faced with continually declining revenues, Gov. Arnold Schwarzenegger and the Democrat-controlled legislature spent its first month addressing the deficit and drafting the 2009-10 state budget.
In February, the state governing body approved a budget that included reductions in spending, increased taxes and repeated borrowing. The deal also included several measures that required consent from the voters, prompting the governor to call a special election on May 19.
Before the voters had a chance to express their opinion, however, it became apparent that the state’s fiscal situation had become much worse than originally estimated. From that moment forward, the governor and state legislature became mired in an acrimonious budget battle.
Many were hoping that the budget resolution of February would have resulted in a year dedicated exclusively to policy matters. Nevertheless, the subsequent failure of the ballot measures, coupled with the diminishing state revenues, the rising unemployment rate and other fiscal realities, nearly brought California to the brink of insolvency.
Schwarzenegger and the legislature spent most of the legislative year sparring over a deficit that grew to approximately $26 billion. Resolved that the voters’ rejection of the tax-increase measures during the special election had effectively removed the issue as a possible budget remedy, Schwarzenegger demanded the budget deficit be solved by reducing state spending, limiting borrowing and implementing government reforms. He sternly rebuffed repeated legislative attempts to raise taxes, as well as the construction of piecemeal budget solutions that the governor argued would not eliminate the entire $26 billion deficit.
Cutting services
While the squabbles over the budget escalated, Schwarzenegger began initiating cost-saving measures. First, he instituted mandatory furlough days for all state employees. Next, he began laying off state workers. Finally, with revenues continuing to slide, he ordered the state to begin issuing IOUs to state vendors, contractors, public schools and taxpayers.
Despite the governor’s actions, ongoing revenue reductions and stalled budget discussions eventually led to the downgrading of the state’s credit rating to near junk-bond status. One national credit rating agency cited the state’s continual issuance of IOUs as a contributing factor to the downgrade. They reasoned that the prolonged budget impasse and additional IOU issuances could jeopardize the state’s ability to meet its debt service obligations. Lowering California’s credit rating will cost taxpayers millions in additional bond-debt payments.
Embroiled in the worst budget situation in California history and faced with the realization that all traditional budgetary tricks and tools had been exhausted, Schwarzenegger and the legislative leaders ultimately made the tough choices and spared virtually no program, department or people in remedying the $26 billion deficit, in a tentative agreement reached in July. Massive cuts are anticipated to education, corrections and health and human services programs.
Although an agreement was reached, no one could rightly claim victory. Taxpayers lost more of their discretionary programs, government services must do more with less, and budget instabilities and challenges still remain for the future.
Turning to the water
With the budget deficit temporarily shelved, legislators must now focus on the 300-plus bills awaiting approval before the members return to their district for the year on Sept. 11. The legislature’s top priority will be to address California’s dire water situation.
Three years of dry weather conditions have depleted California’s surface and groundwater storage supplies. Despite precipitation increases in 2009, the state continues to suffer from an extended drought. This deepening drought, coupled with the continued federal restrictions on water movement, is leaving California farmers and ranchers to face a potentially severe water shortage.
In addition to water scarcity, court rulings protecting threatened and endangered species and efforts to restore habitats by restricting water pumping in the Sacramento-San Joaquin Delta are magnifying the water crisis. There are approximately 3 million acres of farmland that rely on water from these restricted water projects. Without a reliable water supply, farmers will experience reduced crop production, which directly affects their ability to generate revenue or obtain necessary financing.
Schwarzenegger and legislative leaders will be working intently over the next month to develop a workable water management plan. Their goal will be to find a solution that balances the need to protect and restore natural habitats with the need to maintain reliable and adequate water supplies. A conference committee, with legislative representatives from both houses, has convened to construct and implement a new state water management plan.
As printed in the Christian Examiner
