[Previous Months][Date Index][Thread Index][Join - Register][Login]
  [Message Prev][Message Next][Thread Prev][Thread Next]

[IP] Waves in CA...Not the Surf either.

I got this from my friend who worked with CalOPTIMA (MedicAid) and I thought
I would pass it on.
Assembly Member Fran Pavley sent this assessment of the State budget
situation.  I thought you might be interested in seeing what a dire
situation the state is in so you have an idea of what cuts are coming.

                (Including Agoura Hills, Calabasas, Encino, Malibu, Hidden
Hills, Oak Park, Pacific Palisades,
                 Port Hueneme, South Oxnard, Santa Monica, Tarzana, Topanga,
Westlake Village, and Woodland Hills.)


Governor Releases Budget Proposal ...
... in response to a budget crisis that is worse than anyone anticipated.
The dramatically growing discrepancy between revenues and expenditures will
result in very difficult decisions in the months and years ahead.  The
Federal government, which, unlike the vast majority of states, can engage in
deficit spending (and is doing so), and is still facing an economic
downturn.  California is constitutionally required to operate with a
balanced budget.  40 other states are in similar situations.

California currently has a $77 billion General Fund.  80% of the entire
General Fund goes either to education (K-12 and colleges - 52%) or to health
and human services (28%).  The shortfall that must be closed is estimated to
be $21 billion over the next 18 months -- $6 billion in the remainder of the
current fiscal year and a $15 billion deficit for the fiscal year that
begins in June.  Clearly cuts alone are not going to make up the shortfall,
although serious cuts across the board are going to have to be made.

As an example of the magnitude of the problem, if every single person on the
state payroll were fired today (meaning closing every college, emptying
every prison, stopping all road repair and maintenance, firing every CHP
officer, etc.), we would still be $6-9 billion short.  At the same time, my
office continues to get calls from people complaining about the lines being
too long at the DMV, the delays in getting state licenses processed,
requesting soundwalls in their neighborhood, and demanding more state
services of all kinds.  It isn't going to be possible to do both.

To recap the major reasons that we are now facing such a bleak financial
picture, here are the primary causes:

-The anticipated recovery of the U.S. and California economies has not yet

-A dramatic drop in personal income taxes (which make up 48% of the General
Fund revenue), and which are also tied to the collapse of the dot com

-A drop in capital gains revenues to the state as a result of poor
performance of the stock market.

-Bipartisan investment in education.

-Rebate of vehicle license fees which cost the state billions, plus various
tax credits or reductions.

-A growing population (500-600,000 new Californians every year) who need

Our state faced a similar budget crisis in the recession of the early 1990s
under the Republican administration of Governor Pete Wilson.  They balanced
the state budget with equal amounts of spending cuts and revenue increases.
Governor Davis' Mid Year Spending Reduction document proposes $10.2 billion
in General Fund savings over the current and future budget years, including
$8.7 billion in budget cuts and $1.5 billion in transfers, fund shifts, and
loans.  Education, health care, and services to the poor and disabled will
be the most impacted.

To get an idea of how painful it is going to be to make the needed cuts,
here are a few of what the Governor has put forth for consideration:

-$3.2 billion from public schools and universities, adult education;

-$1.8 billion from transportation;

-$2 billion from health and welfare programs, including senior nutrition
programs, adult day care, reductions in MediCal funding, mental health
programs, and child support services;

-$1 billion budget year General Fund savings by suspending scheduled
transfer from the General Fund to the Transportation Investment Fund, as
provided by Proposition 42;

-$5.165 million through the reinstatement of various State Park fees.

-$90 million reduction in State Highway Account funding for local street and
road maintenance in 2002-03;

-$470 million in state employee compensation savings by implementing salary
freezes; salary reductions, benefit reductions, and layoffs;

-Reductions in personnel, supplies, etc., and elimination of programs across
all state agencies.

If you have any ideas on where cuts can be made or on new taxes/revenues
that you would support, I welcome such positive contributions.  Suggestions
are helpful.  Just saying "don't cut what's important to me" is not.

So, where do we go from here?
On December 9, 2002 the Legislature met in extraordinary session to begin to
evaluate the Governor's proposal for the current fiscal year.

A series of statewide hearings on the California budget crisis will begin
next week in the State Capitol.

Dec. 16:
Full Budget Committee Hearing - 8:30 a.m.
Subcommittee on Resources - 3:00 p.m.

Dec. 17:
Subcommittee on State Admin. - 1:00 p.m.
Subcommittee on HHS - 1:00 p.m. in Los Angeles

Dec. 18:
Subcommittee on Ed. Finance - 1:00 p.m. in San Jose
Subcommittee on IT and Trans. - 3:30 p.m. in Oakland

On January 6, 2003 the Legislature formally reconvenes, and the state budget
is likely to impact every action that we take in the upcoming year.

Clearly California needs to make fundamental changes to its entire budgeting
process.  Speaker of the Assembly Wesson has just created the Commission on
Structural Challenges to Budgeting.  It will be made up of six Democrats and
six Republicans, each named by their own leadership.  "It's time to face
facts," the Speaker says.  "California's budget process is broken.  While
we're working to craft a balanced budget this year, we need to make future
budgets less vulnerable to wild swings in revenue and less susceptible to
partisan gridlock."  I very much look forward to the findings and
recommendations of this very important Commission.

Already Gray Davis is taking vociferous outrage from the citizenry over the
proposed cuts to the Medicaid system.

Without enough sleep, we all become tall two year olds.

Jenny Sutherland
for HELP or to subscribe/unsubscribe, contact: