Assemblymember Evans' Budget Blog

Governor’s Unconscionable Budget Vetoes Harm Low-Income Children

2010-10-14T16:36:00.000-07:00

Our failed governor is well-known for commuting to the Capitol from his gated mansion in Santa Monica via private jet. Clearly, given his wealth and life-style, he is completely out of touch with the need for child care for ordinary working Californians, as well as the need for protection for vulnerable abused or diabled children.

When signing this year’s belated budget, the governor vetoed nearly $1 billion. True to form, he focused the pain on vulnerable women and children. And, again true to form, he immediately fled the scene of the crime, jetting off to London and other places so he wouldn’t have to face an angry and irate citizenry and Legislature.

The governor’s list of unconscionable budget vetoes includes:

• $80 million from Child Welfare Services. This cut means at least 700 social workers will be lost. That will leave 143,000 reports of child abuse or neglect uninvestigated and prevent the reunification of thousands of foster youth with their families. It also means California will lose millions in matching federal funds, bringing the total loss to this program to $133.5 million.
• $132 million from mental health services for students. Thousands of children with disabilities and mental health needs will be denied help, including children with autism spectrum disorders, children with other developmental disabilities, and mental health needs. The governor is dumping the responsibility to provide care onto the schools.
• $256 million from child care. This absurd, costly and mean-spirited cut eliminates child care for low-income parents who have left welfare and entered the workforce. Without subsidized childcare, these workers will have to stop working so they can look after their children, thus moving them back onto welfare. This cut will end up costing the state even more because 60,000 families - including 81,000 children – will go back to receiving monthly assistance grants under CalWORKS.

Last year the governor’s vetoes included funding for the Black Infant Health program, jeopardizing the lives and well-being of hundreds of California babies. Thank goodness this is his last budget—we really wouldn’t want to see how much lower he could go.

Speaker Perez and President Pro Tempore Steinberg have both committed to restoring these funds as soon as we have a new governor. As incoming Chair of the Legislative Women’s Caucus, I join them in this commitment.

24 Pieces to the State Budget Puzzle

2010-10-08T14:54:00.000-07:00

The comprehensive budget agreement passed by the Legislature includes 23 bills and a proposed constitutional amendment that will go before the voters in November of 2012. An analysis of the budget package is available here and information about each individual item in the budget, including votes, are available here.

The list of each item in the budget package – including the primary budget bill, budget trailer bills, and items negotiated as part of the budget agreement – is as follows:

Primary Budget Bill – SB 870
Education Trailer Bill – AB 1610
Suspension of Proposition 98 – SB 851
Human Services Trailer Bill – AB 1612
Health Trailer Bill – SB 853
Transportation Trailer Bill – SB 854 (Failed passage in the Senate)
Natural Resources Trailer Bill – SB 855
General Government Trailer Bill – SB 856
Judiciary Trailer Bill – SB 857
Revenues – SB 858
Elections – AB 1619
Budget Reform Constitutional Amendment – ACA 4
Public Works Board Trailer Bill – AB 1620
FI$CAL Trailer Bill– AB 1621
Redevelopment and Williamson Act – SB 863
Cash Management – AB 1624
CalPERS Transparency – SB 867
Public Safety Trailer Bill – AB 1628
Department of Developmental Services Trailer Bill – AB 1629
Small Businesses Stimulus – AB 1632
Reimbursement of State Mandates – SB 866
Medi-Cal Waiver – SB 208
Service and Volunteering – AB 10 x6
Pension Reform – SB 22 x6

Finally, the Budget Waiting Game Ends

2010-10-08T13:09:00.000-07:00

California is poised to have a bipartisan budget agreement adopted that is historic for all of the wrong reasons. 100 days into the current fiscal year, this tough budget is the latest in state history. Details are available here.

Two factors forced Californians into this record waiting game: the governor’s failed leadership and the dysfunction of the two-thirds voting requirement to pass a budget in California.

The negotiating environment this year began with the Democrats’ rejection of the proposal shared by the governor and Republicans to balance the budget through cuts that eliminate jobs and safety net programs like CalWORKS, childcare, Adult Day Healthcare, and In-Home Supportive Services. As noted on this blog, this would do more than impose a hardship on working families and vulnerable Californians. It would end lives, especially among women and children who rely more on the safety net. The budget delay was further fueled by the governor’s lack of interest in negotiating with the Legislature. He went to China instead.

But when it comes to the substance of the FY 2010-2011 budget, it reflects the painful compromises that inevitably result from our rigid and outdated procedural rules. In our third year of recession, and after confronting $40 billion worth of deficits last year, no easy options were available to close this year’s $17.9 billion gap. This is equivalent to about 20 percent of our General Fund. And, making matters worse, fewer options were politically feasible because of our two-thirds budget vote requirement.

This dynamic prevented us from considering fair new revenue sources like an Oil Severance Tax. Consequently, solutions to our budget gap rely on a mix of cuts, revenue shifts, and increased federal funds. The largest single area of solutions came from cuts, at approximately 40 percent.

In this budget discussion, my chief concern was that we continue making important investments in our society. Our challenge was to preserve the institutions that shape our quality of life from reckless cuts. We can take pride in the following highlights of this budget that we fought for:
• Protecting 430,000 jobs that the governor’s proposals would have eliminated;
• Protecting school funding by providing over $2 billion more than the governor’s proposals;
• Fully funding the CSU and UC system, and protecting CalGrant scholarships from elimination as proposed by the governor in January;
• Protecting our safety net services from elimination;
• Fully funding health care for a million children through Healthy Families; and
• Restoring funding for domestic violence shelter funding and mammogram access for 100,000 women that the governor eliminated.

Is this budget perfect? No. But it does include some good that was worth fighting and waiting for.

Enough is Enough on Budget

2010-09-09T11:49:00.000-07:00

A group of Democratic women legislators rallied with impacted women and grassroots supporters at the State Capitol yesterday, calling on the governor to stop targeting women, children, and students with the pain of cuts to balance the budget. We also urged the governor to postpone his trip to China and stay in the state until a fair and responsible budget is enacted. My remarks follow.

"Thank you and welcome, everyone. Today, California enters its 70th day without a budget. As we stand here today, California is days away from having the latest budget in its history.

We are here to say enough is enough. And, we are all here today with a message for the governor. Please, governor: respect the people of California. Don’t hold them hostage. Stop targeting women and children with the pain of cuts to balance the budget. And, postpone your trip to China. Stay in the state to work with the Legislature on a fair and balanced budget agreement. Right now, nothing is more important to the people of California.

Remember the John Lennon song “Imagine?” In the recent past, California imagined. Californians dreamed. And California acted on its dreams and made a brighter future come true.

We are here today to do more than imagine. We, the Democratic women of the CA State Legislature, are here to insist. And, typical of women, we don’t insist upon much. But we do insist upon some fundamentals in our state budget.

We insist upon decent education for our children. We insist upon higher education—community colleges and universities so our people can train for jobs and for the responsibilities of citizenship—an education that is sorely needed right now. We insist upon child care so small businesses can find workers and workers can hold down jobs. We insist upon health care for our mothers and our daughters.

We reject the Governor’s notion that we Californians can’t come together and solve this problem for all of us. We reject his divide and conquer strategy. We reject his shock doctrine. We reject his dead-end vision of a decayed state. We reject his notion that wealthy and powerful corporations must enjoy enormous new tax breaks while our children go uneducated and untended. That’s just shameful. As of today, we, the Democratic women of the CA State Legislature, will no longer stand for such nonsense.

No woman is a part of the Big 5 negotiations this year. We want the Big 5 to know where we stand.

Here’s our bottom line: Last year’s budget hit rock bottom. In order to earn our vote, the budget must improve California and get Californians back to work. In order to earn our vote, the budget must fund K-12 education and higher education at last year’s levels or more. It must fund child care and women’s health care such as Every Woman Counts at last year’s levels or higher. Others, I believe, share this bottom line, but I will let them speak for themselves.

As our Governor prepares to leave tomorrow for a business junket to Asia, we want him to know that we are not leaving. We are staying put.

We’re women—we give birth to, raise and believe in the next generation. We will not fail them. We stand for a budget that foresees a brighter day for our state and helps lay the groundwork for that brighter day."

We Sink or We Swim Together

2010-08-31T21:03:00.000-07:00

As the defining institutions of this state crumble from the burden of massive and sustained budget cuts, our quality of life in California suffers. Today, when the Legislature debated the governor’s budget proposal and the Democrats’ budget proposal, the choice was between two starkly different visions for the future of our state.

After closing a $40 billion deficit last year, it’s reckless to argue – as my Republican colleagues do - that we can simply cut our way out of the $19 billion financial hole we face today. That would mean cutting another 20 percent of our General Fund, equal to the amount we spend on corrections and higher education combined.

It’s routinely said that the state must tighten its belt during these tough times just like California’s families are doing. But government is not a family. Government provides vital services that are the foundation on which our society’s peace and the prosperity of our families depend. If we fail to provide that foundation, what kind of society are we left with?

The governor’s vision of our future embodied in his budget proposal, abandons important California values. Do we want a future with fewer schools, larger classrooms and fewer teachers? Do we want a future where our roads are so riddled with potholes and traffic that businesses can’t move goods and services? Do we want a future without local police, where the California Highway Patrol does not patrol our highways, where parks close down and cities turn off street lights because they can’t pay the electric bill? Do we want to lay off more workers and increase our already historically harsh unemployment rate?

Of course not. Failing to make these investments in our state will do far more harm than good.

The Democratic vision is to reinvest in education, to provide the educated workforce all need to thrive. The Democratic vision provides child care so people can get to work throughout California. The Democratic vision protects our natural heritage and provides the regulation necessary to create a level playing field for businesses here in California. Our vision rejects the notion that California can no longer afford to work for a brighter tomorrow.

The Governor’s Hostage Crisis

2010-08-24T16:56:00.000-07:00

While he holds the state budget hostage to meet his demands on the way out of office, our governor poses as the sole fiscally responsible adult in the Capitol. He speaks as if the Legislature is the only thing standing in the way of balancing our state budget and bringing us back to a sound economy.

Let’s take a serious look at what the governor says he wants to do and what would really happen if the Legislature stepped aside and let him do it.

The governor wants to “rein in state spending” with a spending cap, even though the voters soundly rejected his proposal twice during the past few years. In reality, a spending cap would destroy long-standing institutions like the University of California, California State Universities, community colleges, state parks, roads, bridges, highways, public safety, cities, counties and other vital services. The reason (which the governor never mentions) is that unless Proposition 98 is repealed, the voter mandated spending on K-12 becomes a budget PacMan, eating up virtually all revenues available under the cap. The voters rejected this proposal for good reasons.

The governor says he wants to control revenue swings. Sounds responsible. California is subject to wild swings in general fund revenues, depending on how well Wall Street is doing. Smoothing those out would enable us to better plan our budgets from year to year. But the governor’s proposal to adopt the Tax Commission’s recommendations has nothing to do with smoothing out revenues and everything to do with shifting the tax burden from wealthy individuals to poor and middle-class Californians, while benefiting out of state corporate employers.

The governor claims he wants to “reform” public employee pensions and this is so important that he won’t sign a budget until he gets his way. However, he fiddled during his 6 years in office while costs skyrocketed, hoping to force the Legislature into changing the law instead of bargaining within public employee unions. Indeed, this has little to do with saving the state money and everything to do with privatizing pensions and weakening public employee unions.

It’s the same old tired agenda which the voters rejected in the 2005 special election. But this time, the governor is holding the state hostage to do his will. He travels around the state talking to everyone BUT the Legislature all the while claiming he wants to make a deal with us.

Here’s the deal: Our state is on the verge of collapse. Just look at the economic devastation all around us. In some communities, the unemployment rate exceeds 30%. In some neighborhoods every other house has been foreclosed. Schools are shutting down, teachers are being laid off, classroom sizes are being increased, the school year is being shortened. Students can’t get into college and those that do get in can’t get the classes they need to graduate. Once they graduate, they can’t find a job. And the list goes on….

For the past several decades, the argument has been that if we cut taxes, jobs will be created and our economy will expand. Well, we’ve been cutting taxes for the past 30-some years and now we are seeing the truth. The state has been living off the previous generation’s investments, we have failed to plan for our own generation’s needs and the needs of the next generation. We have no reserve to fall back on during tough times. People who continue to believe this canard are deluded. People who continue to repeat it are manipulating or engaging in magical thinking.

The destruction now happening is not random. It is happening as a result of very real decisions being made by real people, both at the federal and state level. I, for one, refuse to enable this economic devastation any longer.

Public Education in Crisis

2010-07-07T10:55:00.000-07:00

Public education is at the heart of our society’s pursuit of equality. But a new report from the California Budget Project shows that California’s K-12 public education system is in crisis.

California is winning a race to the bottom and our children are paying the price. The report finds that, when compared to other states, California ranks:
• 50th in student to teacher ratios, with 21.3:1 compared to a national average of 13.8:1
• 49th in student to guidance counselor ratios, with 809:1 compared to a national average of 440:1
• 46th in student to school administrator ratios, with 358:1 compared to a national average of 216:1
• 46th in education spending as a percentage of personal income, and
• 44th in spending per student, with $8,826 spent per student compared to a national average of $11,372

Unfortunately for our children, in the context of our $19.1 billion deficit, California could soon place 50th in all categories. The governor and Republican legislators are refusing to discuss revenue alternatives. Their cuts-based approach to closing our budget gap inevitably places a huge target on K-12 education because it is the largest single expenditure from our General Fund.

But California is spending less on education now than it has in 40 years. And, our public education system is tasked with educating more students than any other state, with a disproportionate number coming from low-income families. It also has the highest number of English-learning students in the US.

As ongoing negotiations move towards a budget agreement, a responsible combination of budget cuts and new revenues must rule the day. If we can’t make some additional sacrifices for the future of our state’s children, then this crisis will become not only a budget crisis, but a moral one.

Budget Facts vs. the Governor’s Fiction

2010-07-02T11:07:00.000-07:00

As discussed on this blog, the governor has painted a creative picture of our economic woes to suit his ideological budget agenda. But we can get past his spin to the substance of the challenges we face by looking at how California compares with other states.

The Federal Reserve of San Francisco recently issued such a report reviewing the economic and fiscal crises befalling the 50 states. It is a helpful assessment of where we’ve been and when we are likely to see economic improvement.

The most obvious cause of California’s economic crisis is the profound macroeconomic shock that hit all the states, not to mention much of the rest of the world. According to the report, the recent recession was one of the sharpest economic contractions in U.S. history. Nationwide, real GDP fell by 3.8% while non-farm employment fell by 6.1%, or about 8.4 million jobs, from peaks registered around the start of the recession until they bottomed out. The unemployment rate more than doubled, from 5% at the beginning of the recession to a high of 10.1% in October 2009. However, states like California had greater exposure to the housing downturn. Therefore, we suffered more dramatic economic decline.

With historic economic decline comes great budget challenges. The combined budget gap states faced heading into fiscal year 2009 was $110 billion, around 15% of total state general fund budgets. The gap heading into fiscal 2010 was $200 billion, or roughly 30% of general funds.

Some states are worse off than others. The report cites California as one of the worst off, mainly because of our 2/3 vote requirement for budgets and taxes. The report compares California and Oregon:
“Leading up to fiscal year 2009, which began on July 1, 2009, California had a budget gap of 37%, while Oregon’s gap was just 7%, according to the Center on Budget and Policy Priorities. What explains the difference? To gauge the severity of the economic shock state by state, we ask what would each state’s 2009 gap have been if they had kept per capita expenditures constant from 2007 onward as revenue fell. It turns out that Oregon’s and California’s budget gaps would have been roughly the same, around 20%. However, Oregon in 2008 curtailed expenditure growth, enacted some notable tax increases, and tapped into its rainy-day fund to reduce its budget gap. On the other hand, California saw expenditure growth barely slow at all, enacted only limited tax increases, and had nothing in its rainy-day fund coming into the recession. Much of California’s limited policy response reflected institutional constraints on the ability of lawmakers to change fiscal policy. For instance, tax increases in California must be approved by a two-thirds majority of the legislature, and voter propositions approved in the past greatly limit the legislature’s ability to curtail spending growth in many areas.” (Emphasis mine.)

The Federal Reserve believes states will not see much economic improvement for quite some time. Citing estimates from the Center on Budget and Policy Priorities, the report says that significant state budget gaps will likely persist through at least 2012. And, the Federal Reserve believes fiscal conditions are likely to get worse before they get better as the federal stimulus diminishes in 2011 and ends in 2012. Making things worse, California has borrowed and used smoke and mirrors to balance our budget, and recent judicial decisions have rendered some budget cuts and fund shifts off limits.

As negotiations continue for a budget solution in California, let’s not forget this conclusion from the Federal Reserve:
“The solutions states employ to close projected budget gaps will have painful effects on state residents and businesses but pose a more modest risk to the national recovery. Historically, the health of the national economy determines the health of state finances, not the other way around. Sustained improvement in the national economy is essential for states to grow their way out of their current problems and improve their fiscal conditions.”

Destruction of Our Schools

2010-07-01T15:15:00.000-07:00

Because we have been unable to deal realistically with the cost of our state’s basic needs, 174 of our state’s public school districts are now facing fiscal crisis, up from only 22 before this recession began in 2006-07. These are the school districts that are unable to meet their financial needs over a 2-3 year period. State School Superintendent Jack O’Connell says that over the past 2 years, schools have received $17 billion less in funding than they had anticipated.

As we sow, so shall we reap.

Schools have taken a battering during the last few years of California’s recession and budget collapse. The reduced funding referred to by O’Connell doesn’t show the whole picture of the damage California is doing to our public schools because federal stimulus funds made up for much of the funding California failed to provide. Now that the federal stimulus funds have dried up and Congress isn’t providing more, California schools are staring into the abyss.

To make matters worse, the Governor proposes even more cuts to schools this year, although he ties himself up in knots to avoid suspending Proposition 98. The Legislative Analyst, on the other hand, is at least honest about suspending Proposition 98, but his proposal would do nearly as much damage. And, California is already behind the nation in school funding.

It is long past time for us to acknowledge that we are not in a short-term economic crisis that will resolve itself any time soon. The massive cuts being forced upon this state by the governor and Republicans are doing long-term damage to our children. They are bankrupting their future and the future of this state. At this point, the destruction is clear and deliberate. The continued refusal of my Republican colleagues to propose their version of a budget-balancing plan reflects either their desire to avoid the problem or their desire to reap political advantage by making Democrats take the cuts to meet their refusal to agree on new revenues like an oil severance tax. I’m not sure which is worse.

Responsible cuts are one thing — I supported them in the past — willful destruction is quite another.

The Shock Doctrine According to Arnold

2010-06-29T15:12:00.000-07:00

Channeling the late economist Milton Friedman, our governor continues his quest to “shock doctrine” California. As I pointed out a year ago, in my remarks opening the 2009 conference committee, the governor’s plan to shut down services, close parks, and starve California is classic doctrine politics. And like classic shock doctrine, it is being imposed immediately after a severe economic shock when people are worried and disoriented and unsure where to go next.

In his latest weekly radio address, the governor laid out his “philosophy” about how to get California’s economy back on track. He believes in lowering taxes and reducing government as a means to create jobs and grow revenue. In his words “the other side” (presumably the majority Democrats of the State Legislature) believes in “higher taxes, in bigger government, and in protecting public sector employees at the expense of the private sector.” Relating folksy conversations with then-Israeli Finance Minister Netanyahu and with Willie Brown, the governor claims he must shrink state government to get the state’s economy moving again. Using the alchemy of his own imagination, the governor plans to remove massive amounts of money from our local and state economies and lay off state workers to somehow grow our economy.

In sum, Schwarzenegger applies the discredited “trickle down” economic theories that have proven so disastrous for our nation’s economic health. See the impacts of the last 30 years’ worth of these economic policies on the United States.

Schwarzenegger claims that “higher taxes mean fewer jobs.” If that were true, then the huge tax cuts brought to us by the Bush Administration would have resulted in record high rates of employment. Instead, we are experiencing record high rates of unemployment. But let’s not let a few inconvenient facts get in the way of good ideology.

Schwarzenegger boasts that changes to California’s tax structure over the past 10 years have led to an increase in corporate revenues of $9 billion. It’s not clear whether this is a Freudian slip and the governor meant corporate tax revenues have increased or that corporate income has increased. Nevertheless, the facts show that corporate tax receipts paid to the State of California have proportionately decreased over time. According to the California Budget Project, corporate tax receipts are expected to provide 10.7 % of California’s General Fund revenues in FY 2009-10, down from 14.6 % in 1980-81 as a result of new corporate tax breaks and the 1996 corporate tax rate reduction.

Schwarzenegger asks whether it is “tax incentives that are strangling Greece, France, Spain, England and those countries” or “is it unsustainable costs and entitlements of growing governments?” No reputable economist would offer such a simplistic analysis of the world-wide economic collapse that overlooks the role of the financial markets and the bursting of the housing bubble. Furthermore, high unemployment rates are as a result of lack of demand for goods and services, not for lack of tax breaks.

Austerity budgets, such as that being proposed by Schwarzenegger both last year and this year, shrink the economy, not expand it, as a prominent Nobel-prize winning economist has pointed out repeatedly on his blog. See
Fifty-One Herbert Hoovers, Does Fiscal Austerity Assure Markets, and The Bad Logic of Fiscal Austerity.

Government needs to prime the pump and get businesses to invest and hire again.

California is not England, a sovereign country that can set its own fiscal policy. California is not even comparable to countries within the Euro-zone, such as Portugal, Ireland, Greece, and Spain (commonly referred to as the PIGS). Nevertheless, the basic principles of Keynesian economics still apply to states like California. Money is money and whether it is money spent by the state or the federal government or by the private sector, when we put it in average people’s pockets, they spend it, and it circulates through our local and state economies. A job is a job; if you retain a state employee, that is one less unemployed person who needs unemployment insurance and social safety net programs. Cutting state services means removing both state and federal dollars from local economies; it means laying people off, contributing to our unemployment rate. It will harm our local economies and our state economy and lead to higher unemployment and reduced state revenues.

Schwarzenegger wraps up his weekly address by pledging “to fight with all my power to make sure government in California lives within its means.”

Yet, as I have pointed out before, Schwarzenegger and his Republican friends in the Legislature continue to insist upon giving away California’s “means.” Schwarzenegger’s first act as governor was to unilaterally reduce the car tax—his second act was to promise local governments that the state would “backfill” the loss of local revenues resulting from his first act. The cost of the governor’s actions have grown to around $6 billion a year, exacerbating the hole in our annual state budget and creating a structural deficit with which the state will struggle for years to come.

And “living within our means” has selective application. It applies only to services used by every day, average, hard-working, tax-paying Californians, like public schools, parks, transportation, IHSS, CalWORKS, Healthy Families, and Every Woman Counts. It doesn’t apply to billions worth of corporate tax loopholes or even corporate tax cuts adopted last year and poised to take effect in the budget year. And, it doesn’t apply to pork-laden bonds.

If “living within our means” is Schwarzenegger’s promise to Californians, then he’s already broken it—just like he intends to break our state. It’s that simple.

Time to Fix Every Woman Counts

2010-06-16T15:36:00.000-07:00

As reported on this blog, the governor’s first act in 2010 was cutting 100,000 low-income women off from accessing life-saving mammograms provided through the Every Woman Counts program.

I’ve been pushing back to get answers from the administration ever since. I finally got them, but not from the Department of Public Health which oversees Every Woman Counts.

The long awaited information came from reports just released by the California State Auditor and the Legislative Analyst’s Office. Both uncovered what I have long suspected - Every Woman Counts has been mismanaged at the cost of women's health.

Consider these findings about the Department of Public Health:
• While cutting services in Every Woman Counts, it continued to spend money on consulting contracts; these funds could have been used to provide mammograms to an additional 41,500 women;
• For 16 years, the Department of Public Health failed to develop regulations to allow transparency and public oversight of Every Woman Counts; and
• It has failed to provide the Legislature with annual estimates of the number of women it expects to serve through the program even while it provided this information to the federal government to secure federal funds.

While the news about these reports is not positive, the need to fix this program is great. Early detection of breast cancer through mammograms is a key to surviving the disease. When breast cancer is detected early, the 5-year relative survival rate is 98%. In addition, studies show that breast cancer treatment costs can more than double if cancer goes undetected and spreads. Costs for treatment can go from about $21,000 to over $52,000.

This is why we must reverse the governor’s cuts to Every Woman Counts through this year’s budget. But we can’t just throw money at this broken program without fixing it. That is why I am working with breast cancer advocates and others on legislation – AB 1640 – this year. Let’s get past the lip service and make every woman count!

No Republican Budget Plan? No Surprise.

2010-06-15T12:20:00.000-07:00

June 15 is the Constitutional deadline for the Legislature to pass a budget, a feat not accomplished since 1986. The date is never a surprise. So, what is the holdup?

This year, the governor has a budget plan. Ditto for the Democrats in the Assembly and the Senate. But we haven’t heard a peep from our Republican colleagues. They have presented no plan to address our $19.1 billion deficit. Instead, the Senate Republican leadership claims the Legislature as a whole is resistant to dealing with reality. In fact, it is Republican legislators who refuse to deal with reality while feigning outrage at delay they are causing. This is getting old. Indeed, their silence creates paralyzing gridlock.

This year is by no means unique in this respect. The only budget “proposal” that I have ever seen from Republican legislators was two years ago on August 30, 2008 - an astonishing 76 days after the deadline to pass a budget. That proposal was really only a press release. In my six years as a legislator, I have never seen another one.

If Republicans stick with their usual tactics, we won’t hear a peep from them during Conference Committee either. They will wait it out in order to push an extreme right-wing agenda through the Big 5 process.

The elimination of the 8-hour work day…the expansion of offshore oil drilling…tax cuts for the wealthiest of corporations while taxes rise on working people. What do they all have in common? They were pursued by Republicans behind the scenes through Big 5 processes. These attacks on the values of working Californians are why we must all support Speaker John Perez and his commitment to keep budget negotiations out of the Big 5.

Our budget process must empower the people, not special interests gaming the system for goodies. The budget belongs to the people. That is why I call on my Republican colleagues to come clean, come out of the shadows, and have the courage to share a comprehensive budget proposal with the public.

A Smarter Budget, Especially on Jobs

2010-05-27T14:44:00.000-07:00

Our enduring recession demands that California’s leaders offer new and innovative ideas to close our budget gap. And, priority number one is to reduce our 12.6% unemployment rate.

This is precisely why the Assembly Democrats’ budget proposal succeeds where the governor’s fails. The governor’s May Revise is a job killer. It will undermine California’s economic recovery with cuts that sacrifice 430,000 jobs in the private sector, local government, and local schools, increasing California’s unemployment rate to 15%.

The Assembly Democrats propose a $10.1 billion Jobs and Economic Stability Fund. We pay for the fund by borrowing from the state’s recycling program and paying it back through a new oil severance fee. In addition we would borrow $500 million from the Disability Insurance Fund. Our plan invests in education and job creation, and protects the safety net for families struggling in the grip of this recession. Our plan either saves or creates 465,000 jobs. Highlights of our proposal include:
• Local Schools - $3.8 billion repayment of funds borrowed in prior budget years. This will protect tens of thousands of jobs for teachers, aides, and counselors by fully funding Proposition 98 and eliminating portions of the “Education Credit Card.” That’s $750 more per student than the governor’s proposal.
• UC/CSU - $1 billion to restore recent education cuts and fully fund the UC and CSU. We would reduce the Governor’s student fee hike by 50 %, saving UC students $628 and CSU students $202.
• Targeted Jobs Investment - $1.1 billion to strengthen California industries, including green and clean tech industries.
• Community Colleges - $1.4 billion in critical employment services to move people from welfare to work and to retrain workers at Community Colleges.
• Child Care - $1.9 billion to maintain childcare programs funded through CalWORKS and Proposition 98 in order to ensure that working parents can stay employed, over 50,000 small business childcare providers can stay in business, and businesses will not lose employees for lack of child care.
• Local Government - $900 million repayment in funds owed to local governments for past mandates, which will protect thousands of local police, fire and other jobs.
• Revenues – No one in California will pay more in taxes except oil companies. The personal income tax and sales tax increases that were adopted in February of 2009 will expire. The Vehicle License Fee would remain at 1.15%. The corporate tax cuts adopted last year would be delayed for 3 years in order to save over $2 billion to help offset cuts to programs benefiting working families and businesses.

As has been reported on this blog, the governor’s proposed evisceration of the safety net will have a body count. A recent report from the U.C. Center for Labor Research and Education shows how his cuts to the safety net will also kill California’s prospects for economic growth. For example, $1 billion in cuts to the in-home supportive services program costs 215,000 full-time jobs. It also costs us nearly $2.5 billion in matching federal funds and $5.16 billion worth of economic activity. $1 billion in cuts to Medi-Cal costs 35,900 jobs. It also costs us $1.6 billion in federal funds and $5.59billion worth of economic activity

In contrast, establishing an oil severance tax worth $1 billion per year in revenue will not lose federal funds and will have $1.7 billion in economic impacts. While the new oil severance tax may cost potentially 300 local jobs, this loss will be more than offset by the 465,000 jobs that our proposal protects and creates overall. That is a ratio of 1,500 jobs saved or created for 1 job lost.

Californians are crying out for help. This proposal is an innovative approach that will keep Californians working and provide long-term economic relief. We can do this without increasing the tax burden on anyone except oil companies. The question is: will the Governor and our Republican colleagues protect oil companies like Chevon, Exxon, and BP at the expense of California’s seniors, disabled, children, and jobless?

California Cannot Afford Cuts Like These

2010-05-20T16:31:00.000-07:00

An often forgotten fact about our state budget is that, sometimes, spending a little money saves a lot of money. This is especially true when it comes to our spending on family planning.

Nothing in our state budget rivals the financial benefits of each dollar spent on family planning services. For each dollar the state spends, we get another 9 dollars from the federal government. Therefore, it's baffling for the governor to claim that his cuts to family planning services providers will save the state $15 million.

The governor proposes reducing the Medi-Cal reimbursement rate for providers of family planning services – like doctors, clinics, and managed health care plans – to 1985 levels This rolls back a vital rate increase adopted in 2007. In 2007, before the rate increase, clinics throughout the state were turning away 10,000 patients a month and the reimbursement rates for family planning were at 50% of what Medicare paid for similar services. Since 2007, 2 million Californians have lost their insurance, meaning the number of Californians to be turned away each month under the governor’s reductions will be significantly larger.

Fortunately, the Assembly Budget Subcommittee on Health and Human Services rejected the governor’s proposal today.

Reducing the reimbursement rate would undermine one of the most cost-effective programs in California’s budget, Family PACT, which provides contraception to nearly one million women and 100,000 men each year. According to a recent report from U.C. San Francisco, California saves $9.25 per dollar spent on Family PACT.

By providing low-income Californians with contraception, Family PACT has averted an estimated 296,200 unintended pregnancies, 81,200 of which among adolescents. Statistically, these 296,200 pregnancies would have led to 133,000 live births, 122,200 abortions, 3,000 ectopic pregnancies, and 38,000 miscarriages. Because low-income pregnant women qualify for several public programs, like health care, Family PACT saved the public approximately $6,557 in costs per woman and child from conception to age two and $14,111 per woman and child from conception to age 5. In 2007 alone, this translates into saving $1.88 billion and over $4 billion, respectively.

Small investments in family planning reap enormous benefits, both to people and our budget. We should be proud of the results we have achieved in reducing teen pregnancy to record lows. Instead of cutting family planning, we should be looking for ways to replicate its results. California cannot afford cuts like these.

Governor Values Corporations over Children

2010-05-18T11:55:00.000-07:00

Last Friday, the governor issued his May Revision of the state budget. If, as the governor says, it reflects his values, then it is clear he is willing to accept uneducated, undernourished, and uncared for children for $2.4 billion in new corporate tax cuts.

In order to close our $19.1 billion deficit, the governor proposes massive cuts. Despite promising to protect education, the governor’s single biggest cut of nearly $3 billion comes from K-12 education. The picture gets much worse, especially for poor kids.

While the state’s unemployment level soars at over 12%, the governor proposes eliminating the California Work Opportunity and Responsibility to Kids (CalWORKS) program, subsidized child care, and nutrition programs like the California Food Assistance Program. This will drive families into poverty and make it significantly more difficult to transition back into the workforce during this recession.

Eliminating CalWORKS would mark a significant change for California, which has had a welfare program since 1911. It cuts at the well-being of over 1 million kids in California since 3 out of 4 CalWORKS recipients are children. How much are CalWORKS grants? On average, $503 per month for a family of three. Beyond the enormity of human costs associated with eliminating this program, California would lose $4 billion in federal funds in order to save $1.2 billion. And, California would become the only state not to have some form of welfare to work program.

If we eliminate subsidized child care, the parents of 142,000 children will face the lose-lose choice of leaving their children unattended during the day or leaving their jobs. The latter risks hunger, homelessness, and the loss of healthcare insurance.

Eliminating the California Food Assistance Program will affect the food budgets of over 32,000 people. We are not talking about a lot of money. The average monthly benefit is $112 per person. But nearly 3 million more people risk going hungry under the governor’s budget since he has also proposed cuts to the funds that pay for the administration of food stamps, which are paid for entirely with federal funds.

In one budget, the governor wants to create a future of poverty for millions of Californians while assuring extravagant wealth for a small elite. The governor is right in saying that the budget is a reflection of our values. But Californians don’t value corporate profits over people, especially kids.

Impacts of the Recession on California’s Women and Families

2010-05-13T11:58:00.000-07:00

As always, whatever affects California’s women also affects California’s families. The California Budget Project (CBP) recently released a report about the effects of the Great Recession on California’s working women which holds some disturbing demographic information as we look to economic recovery.

Early in the recession, layoffs were concentrated primarily in construction and manufacturing sectors that employ a greater share of men. But, more recently, layoffs have been concentrated in sectors that employ a greater share of women. For example, jobs in K-12 public schools and community colleges started to decline in the summer of 2008, disproportionately affecting women who represent more than six out of 10 workers in the local government sector.

The unemployment rate for women doubled between 2006 and 2009, rising from 5% to 10%. This has hit California’s single mothers the hardest. They were twice as likely as their married counterparts to be unemployed in 2009, and they were more likely to be underemployed.

This recession is taking a serious toll on the earnings of working women and, consequently, the purchasing power of working families. The number of California’s married-couple families with children relying solely on the earnings of wives increased by 77.7 % between 2006 and 2009. Families supported by two working parents fell from 55.1% to 49.7%. The strains on families are exacerbated by this trend since women have yet to achieve economic parity with men. The typical woman earns only 89.1 cents for every dollar earned by a typical working man.

For the past 30 years, family earnings have kept reasonably steady but only because wives and mothers entered the work force in huge numbers. During the past 3 decades, families have required the income of 2 working adults in order to just maintain earning power. Without the earnings of married women, middle-income married-couple families would have lost ground economically. The average inflation-adjusted income of these working families would have declined by 2.2% since 1979. Now that these women, who have yet to achieve economic parity with men, have also been affected by layoffs, underemployment and pay reductions, California’s working families can expect to lose more ground economically.

Working women have provided the economic stability so necessary to California’s families. In the face of this recession, as we proceed with crafting the state budget, we must be mindful of the cuts that will be especially harmful to California’s women and our working families. As reported on this blog, the governor’s proposals are especially lethal. We need more compassionate alternatives.

Women and Children First

2010-05-12T11:06:00.000-07:00

The governor’s proposed budget cuts give new meaning to “women and children first”— first out of the safety net that is.

Yesterday, the California Budget Project (CBP) issued a series of reports analyzing the governor’s proposed budget cuts. And, not surprisingly, they found that the burden of these cuts falls most heavily on the women and children of this great state.

One report found that women comprise more than three out of five adults enrolled in our primary safety net programs. Over 77.7% of adult CalWORKS recipients are women and women comprise 92.5% of single parents who receive cash assistance. 57.3% of SSI/SSP recipients are women. And, 63.5% of Californians receiving in-home supportive services are women and girls.

Another CBP report notes that Medi-Cal is an important source of health coverage for low-income women and their families. Nearly 2/3 of adult enrollees are women and more than half of those women are in their peak reproductive years. Nine out of 10 single parents enrolled in Medi-Cal are women. Women, who usually have lower incomes than men, are more likely to forego medical services or become financially destitute because of medical costs.

The governor’s budget proposals would roll back a 2008 rate increase for family planning services provided through Family PACT. His proposed cut of $15.4 million would cause the state to lose $73.4 million in federal funds. Every dollar the State of California invests in family planning gets $9 in federal funds! In addition, a recent report from U.C. San Francisco found that every dollar spent on the Family PACT program saves California $9.25 by reducing medical and social services costs associated with unintended pregnancies. Add it all up and the total loss to California in one year exceeds $200 million. And most of this loss would be born by female Californians.

The governor also proposes eliminating state funding for Adult Day Health Care. On paper the state would save $134.7 million but we would also lose $216 million in federal funds. Furthermore, 37,000 Medi-Cal recipients would lose access to critical services and likely end up in nursing care, which is nearly 5 times more expensive to the state.

Governor, the numbers don’t add up. Not only are your proposed budget cuts morally bankrupt, they are fiscally foolish.

Making Sure Every Woman Counts, Again

2010-05-10T14:42:00.000-07:00

As previously explained on this blog, the governor’s first act of 2010 was to take mammograms away from 100,000 low-income women in California. In violation of the Legislature’s clear direction last summer, the governor restricted eligibility for Every Woman Counts (EWC) and has proposed to defund the program for the second half of FY 2010. EWC receives no financial support from the state’s General Fund.

Today, the Democratic members of the Assembly Budget Subcommittee on Health and Human Services fought back. They voted to restore funding to EWC. This new fundjng is needed to end the governor’s freeze in new enrollment and new eligibility restrictions to women aged 50 or older.

The pains of the governor’s cuts run deep. As reported over the weekend, the Elizabeth Center for Cancer Detection in downtown Los Angeles has been operating since 1944, now providing 13,000 mammograms a year primarily for low-income Latinas. As a result of the governor’s cuts, the Elizabeth Center has been partially closed for a month and without additional funding, the Center may close entirely within a matter of weeks. This tragedy is being repeated throughout the state.

California is indeed facing rough seas as we weather the worst financial storm since the Great Depression. But we cannot throw women out of the lifeboat first. Our message to women cannot be “sorry, you’re on your own.”

More work lies ahead to assure that today's inspiring action is ultimately included in the budget. But we are working in the right direction. Help us keep the pressure on the governor and Republicans during the rest of the budget process so that, once again, every woman will count in California. Every voice counts!

The Case for More Game Wardens

2010-05-03T17:16:00.000-07:00

Last week, the Joint Committee on Fisheries and Aquaculture held its Annual Fisheries Forum to discuss the strained status of our fisheries and the challenges faced by fishing communities. As California acts to restore its fisheries, we must make sure we are funding the very people who enforce the laws intended to protect our fisheries: game wardens.

Game wardens are understaffed, over worked, and under employed. Without game wardens, our fisheries restoration efforts risk failure and we will be asking the fishing industry, California tribes, and recreational boats to sacrifice for nothing.

With the implementation of the controversial Marine Life Protection Act (MLPA), California’s restrictions on fishing are stronger than ever. In an effort to restore our fisheries, fishing is now prohibited along vast stretches of our coastline, called Marine Protection Areas (MPAs). MPAs have forced fishermen and entire communities to make an immediate sacrifice of their livelihood for the future greater good. They must stand by and give up making their living from the sea in hopes of restoring the fisheries to better health.

If MPAs are to be effective in restoring fish populations, they must be protected from poachers. Otherwise, they risk becoming what some are already calling “Marine Poaching Areas.” As last week’s hearing revealed loud and clear, California must do more to support the men and women on the front lines of this fight. Yet, Fish and Game wardens have long been underfunded.

According to testimony from Director of the Department of Fish and Game, John MacCamman, California should have 1,000 game wardens. Instead, we have only 385 sworn positions, or about 1/3 of what we should have to meet our current needs. This staffing problem is exacerbated by the three furlough days that the governor has imposed on state workers, which has reduced staff hours by some 15%. Adding new MPAs will only make this problem worse.

What’s at stake? McCamman cited a recent example from Sonoma County where wardens stopped 147 cars on suspicion of poaching. Of those 147 cars, 43 had been poaching abalone. With nearly 30% of these cars caught poaching, imagine how many others evade consequences for shamelessly breaking the law. Imagine how much damage that does to salmon and steelhead restoration efforts along the coast or the protection of threatened green sturgeon in the Delta.

It is astonishingly counterproductive to undercut our long-term fisheries restoration needs with enforcement done on the cheap. It is unfair to require law abiding fishermen to make another living or find another hobby while poachers run free. It is immoral to ask Native Americans to stand by while they literally watch law-breakers get away with poaching their traditional fishing grounds. When we are asking others to make enormous sacrifices, its only fair that the state meet its responsibilities too.

Protecting Foster Youth from Petty Politics

2010-04-28T16:10:00.000-07:00

It started out so promising—a bipartisan coalition of legislators and the governor were working together to make steady progress toward improving California’s foster care system. But then the governor abandoned us and foster youth are paying the price.

Under the leadership of former Speaker Karen Bass, the Legislature established a joint, bipartisan Select Committee on Foster Care. Several of us met with the governor in 2005 and received his personal commitment to work with us to improve our foster care system.

Slowly but surely, enormous progress was made by doing much more for foster youth with very little additional resources. California was improving transitional services for youth aging out of the foster care system. California was strengthening its Kinship Guardian Assistance Payment (KinGap) program to identify relatives with whom to place foster children. This progress was something in which all of us took great pride. The Legislature’s partnership with the governor was leaving a brighter legacy of care for foster children in the midst of the greatest economic crisis since the Great Depression.

Then, last year, in what appears to have been a swipe at former Speaker Karen Bass, the governor vetoed $80 million in funding for the Child Welfare Services program. Since this program receives $53 million in matching federal funds, the loss to the program totals $133 million.

As a result of the governor’s line item budget vetoes, abused and neglected children across the state are not receiving the services they need. This is mainly because of a shortage of social workers, 509 of whom have lost their jobs over the last year. Consequently, children are suffering long waits to be reunited with their families. Sacramento County, for example, has cut 30% of its staff and faces another round of staffing cuts. This has forced nearly 3,000 children in the Sacramento region to remain in foster care longer than necessary.

The problems for foster youth don’t end there. Imperial County has eliminated its program to prevent the placement of children in state care, Intensive Family Reunification Services. And court hearings related to child welfare are being delayed across the state, keeping nearly 2 million children trapped in potentially life-threatening situations.

That is why the governor must support the restoration of child welfare funding, which began with today’s vote in the Assembly Budget Subcommittee on Health and Human Services to do just that.

A day in the life of a child is long. A day in the life of an abused or neglected child in foster care is even longer. The abused and neglected children in our foster care system should not continue to face this intolerable and shameful situation.

The Assembly has acted. I hope the governor joins us.

Having Their Cake and Eating It Too

2010-04-23T11:10:00.000-07:00

Earlier this week we had a lively debate in Assembly Budget Committee regarding reducing the 2/3 vote on revenues, budget, and taxation. This is the second of four hearings the Budget Committee will hold to consider reform proposals from California Forward.

California Forward has been working for more than a year to find a compromise proposal to reform California’s dysfunctional budget system. Their proposal includes things that Democrats like but Republicans hate, like reducing the vote necessary to pass a budget to a majority vote; it also includes things that Republicans like but Democrats hate, like increasing the vote necessary to pass certain fees to a supermajority 2/3 vote. The California Forward proposal is the perfect example of a compromise: everyone gives a little something and no one walks away completely happy.

During this week’s debate, it became clear that the Republicans on the Budget Committee do not support changing the 2/3 vote required to adopt a budget. They spun this position as “protecting” the taxpayer. But a majority vote requirement seems to work for 47 other states, for the federal budget, and for every city and county in the US. Somehow all of those “unprotected” jurisdictions seem to function quite well and with a lot less drama at budget-time.

The issue is really about leverage—leverage that the minority party uses every year when it comes time to vote for the state budget. If the issue is really protection, then to be consistent we should also require a 2/3 supermajority vote to create new tax loopholes and to reduce taxes. Too often the price for passing a budget is creation of a new tax give-away. Such “protection” is illusory for the rest of the taxpayers who must then bear a greater share of the burden. Such “protection” is what leads us down the garden-path to more and more cuts to services that Californians value.

As we move forward on this debate, be on the lookout for a political trap being laid: California Forward has already built into its proposal compromises it believes are necessary to capture the support of both Democrat and Republican voters. In fact, polling done by California Forward shows that their proposal gets support from both parties if it manages to get onto the ballot. And California Forward has asked the State Legislature to vote to put it on the ballot. It takes a 2/3 vote to do so. Yet Republicans in the Assembly have thus far made it clear they don’t intend to provide the votes necessary to put the proposal on the ballot. So if Democrats vote to support the California Forward compromise, they will be voting for it without the support of the people with whom they are attempting to compromise. This then allows the Republicans to take the ostensibly reasonable position that there are proposals in the California Forward initiative that they can support and we should all just move forward with those proposals alone, thereby making themselves the “champions” of reform and transforming Democrats into the blockers of reform.

Every year Republicans argue that the Legislature should move forward initially with those items in the budget that we supposedly “all” support, i.e., cuts to services, and reserve the remaining issues for another day. Thus far, we have refused to fall into this trap and have insisted that all issues be negotiated together.

Let’s not fall for it in negotiating budgetary reforms. If we do, we are only negotiating with ourselves.

A Plea for Better Budget Polling

2010-04-20T14:46:00.000-07:00

I’m not a pollster. I’m just a politician wanting to know what voters really think about how we should realistically close a $20B deficit. That’s why I am making this public plea for better budget polling.

Most if not all polls ask voters simple questions about budget issues out of context or in a “vacuum.” Vacuum polls show us that everyone hates cuts to the services they care about and that everyone dislikes the thought of paying more taxes. But a budget with huge deficits like the ones California has recently experienced can’t be balanced without substantial cuts or tax increases or both. So, how can these polls better help politicians determine true public opinion on budget issues?

These polls reflect a tremendous conflict on the part of the voters. It has become clear that voters abhor taxes conceptually. But it has become equally clear that voters love public services and find it hard to identify services to cut in order to balance the state budget. What these polls reflect is incoherent thinking—not on the part of the voters, but on the part of the polls.

By testing voters’ dislike of cuts and taxes in a vacuum, we know little of their opinions in the context of the services they value and the taxes which pay for them. My dream poll would include questions like this:
Q1: Which of these state services do you value:
- public education
- public parks
- public roads and highways
- public libraries
- public safety
- state regulation of food safety
- state regulation of workplace protections
- state regulation for clean water and clean air
Q2: Of these public services, which would you eliminate first in order to balance the state budget?
Q3: Would you prefer to pay slightly higher taxes to protect those services you value?
Q4: Would you pay slightly higher taxes to expand those services?
Q5: Would you prefer to pay slightly lower taxes in order to reduce or eliminate those services?

The data now being produced is less than useless; in fact, it’s downright harmful. Everyone hates taxes in a vacuum. These well-meaning but poorly written polls feed right into the Grover Norquist no tax, no government narrative and fail to give an accurate snapshot of what the voters want. Because these polls provide skewed data, they reinforce the common belief that government is out of touch with the voters’ desires. Please, pollsters and research organizations—start testing voters’ opinions on the budget within the context of why we pay taxes and which services will have to be cut.

Who's Really Taxed Enough Already

2010-04-15T12:15:00.000-07:00

April 15 – Tax Day – has become a day of protest. A new report from the California Budget Project shows exactly which taxpayers in California are entitled to gripe the most. And, it’s probably not who you think.

According to the report, when measured as a share of family income, the poorest of Californians pay the most in taxes. The lowest 20% of non-elderly wage earners with an average annual income of $13,200 pay 11.1% of their income in taxes. By comparison, the wealthiest 1%, with an average income of $2.2 million per year, pays only 7.8% of their income in taxes.

And, to make matters worse, out of nearly 650,000 Californians with an average annual income of over $200,000, 2,044 of them paid no state income taxes. This number has more than tripled since 1997.

Despite the shrill protestations being made today by Tea Party members that Californians are taxed more than any people on earth, the findings of the report prove the opposite. California is 21st among the 50 states in tax burden. That’s right—we are smack in the middle of the 50 states in terms of state taxes as a percentage of personal income. But some never let the facts get in the way of making their argument.

Finally, the report observes that over the past 20 years, California has shifted from reliance upon corporate income taxes to personal income taxes. This year, 53.2% of the state’s General Fund – which pays for core state services like public education, health care, and public safety – will come from personal income taxes, compared to only 35.4% in 1980-81.

One might think that all Californians are paying their fair share during this economic crisis where fairness demands shared sacrifice. One would be wrong.

The people who should be protesting today can’t afford to because they are at work today.

Millions Affected by Governor’s Budget Cuts

2010-03-24T14:38:00.000-07:00

Today the Budget Subcommittee on Health and Human Services held a lengthy hearing to explore the combined human toll of cuts adopted within the current budget and the governor’s proposed cuts for 2010-2011. We learned that 5.4 million Californians have been impacted by cuts to the health and human services budget and another 9.5 million lives are impacted by the governor’s proposals.

Unless we craft a more humane budget, up to 15 million lives – 41 percent of the state’s population – will be affected just by cuts to health and human services.

Last year the Legislature had a gun to its head—California was on the brink of fiscal insolvency. As a result, we had to make tough budgetary choices in order to keep the doors of the state open.

One of these tough choices was to take deep cuts in services to women, children, the elderly and the disabled. But the Legislature strived to avoid making cuts that kill. The governor’s proposals for 2010-2011 show that he does not share this commitment. His cuts will have a body count. Therefore, before we move forward to craft a state budget asking for more sacrifice from Californians, we need to know who is shouldering the burden of last year’s cuts.

As I said in committee, this is the people’s house, this is the people’s budget and the people are getting screwed.

In subcommitee today, we heard testimony about millions of Californians who will suffer as a result of last year’s cuts. Details can be found here. For instance, during this recession, CalWORKS applications have increased by 10%; yet we heard today that the CalWORKS grant has been reduced to the level paid 20 years ago. This huge reduction affects the lives of nearly 1.5 million Californians. Elimination of Medi-Cal optional adult dental benefits means 932,000 Californians will no longer receive any dental care. Suspension of the SSI/SSP COLA affects more than 1.1 million Californians. Reduction to health clinic programs resulted in clinic closures, reduced hours, reduced staff and elimination of some services impacting 1.1 million Californians. Some Californians will feel the effects of more than one of these cuts.

The governor’s proposed reductions for 2010-2011 will increase the misery for Californians in need. For example, unless California receives $6.9 billion in federal funds, an amount widely viewed as unrealistic, the governor proposes to reduce Medi-Cal eligibility to the minimum affecting more than 2.1 million Californians. He also proposes to eliminate CalWORKS, in-home supportive services (IHSS) and Transitional Housing Program-Plus, which will harm more than 2.5 Californians.

While we continue to explore the impacts of the 2010-2011 cuts, we also need to know where will these Californians’ turn? What will they do? Where can they seek help? So far, the administration has turned a blind eye to the impacts of the governor’s proposals. Today the Department of Social Services admitted that it assumed no one being affected by elimination of IHSS services would go into state-subsidized skilled nursing facilities! To borrow a phrase from Congressman Alan Grayson, is the governor’s plan that these folks die and die quickly?

During today’s hearing, the Department of Social Services stated that the governor’s May revise budget proposals will re-examine his current proposals to eliminate services if the federal trigger is not achieved. This is welcome news. By simply proposing wholesale elimination of services, the governor defaults on his responsibility to the people of this state. The Legislature didn’t adopt his proposal to eliminate services last year. And, given the improvements to our state revenues so far this year, it looks like we won’t need to even consider the idea this year.

Today I urged the administration to come back to the Legislature with practical proposals that do not involve the elimination of services. We need to move forward to begin repairing the damage done last year in order to avert certain human disaster. We must protect and restore the services Californians so desperately need.

Governor’s Health Care Cuts Add to the Growing Budget Body Count

2010-03-18T11:31:00.000-07:00

Over 8 million Californians are now uninsured according to a new study released by the UCLA Center for Health Policy Research. The study further found:
• Over the last two years, 2 million Californians lost their health coverage
• The sharp growth in uninsured Californians tracks the growth in unemployment from 5.4 percent in 2007 to 12.3 percent in 2009
• The number of uninsured Californians increased by 28% since 2007
• One in four Californians lack health insurance, including 6.8 million adults and 1.5 million children.

These findings show why Californians desperately needs health care reform at the national level. They also show something far more sinister: The governor’s budget cuts to health care will make California’s health care crisis considerably worse.

The Governor’s proposal to eliminate the Healthy Families program will take health care away from over a million children. His proposal to reduce Medi-Cal eligibility to the federal minimum will take health care away from another 2 million people. Our response to these proposals will literally mean the difference between life or death.

The absence of shared sacrifice in the governor’s budget proposals shows his true priorities. While millions of seniors, working families, and children will lose life-saving health care because of his proposals, the only thing the governor is asking of the rich is to risk waiting another year to break out the champagne when their taxes get cut.

Reportedly, the governor is thinking of his legacy as his failed governorship enters its final months. He campaigned for office saying he wanted to blow up the boxes of waste in state government. But people who need health care are not waste.

Update on Every Woman Counts

2010-03-16T16:35:00.000-07:00

For some time now, I have been saying that the governor’s budget cuts this year come with a body count. Now comes unwelcome news that shows where the bodies of poor women of color will soon begin stacking up.

On March 4, The Elizabeth Center for Cancer Detection sent me a lengthy and detailed letter advising that its board of directors will vote to close the Center in April or May. The Center cannot survive financially due to the governor’s unilateral cuts to the Every Woman Counts (EWC) program. In shutting down California’s historic safety net for the poor, the governor seemed to think that the poor will find help elsewhere. The likely closure of The Elizabeth Center puts the lie to such fantasy.

The Elizabeth Center has served the Los Angeles community for over 65 years and has screened over 750,000 patients for cancer. The Center depends upon EWC for 85% of its funding. Of the 14,183 patients they screened last year, 12,012 were covered by EWC. The Elizabeth Center serves a patient population which is over 90% minority and low income; over 86% of their patients are Latina.

The Elizabeth Center said it best: “The denial of breast cancer screening to women under 50 means that an increasing number of these women will not be diagnosed through breast cancer screening until they are at an advanced stage of this disease, and many of them will die. The irony of this is that the Governor’s strategy will result in increased public costs….” [Emphasis mine]. Not to mention the toll on women and their families resulting from these preventable deaths.

This puts the governor’s priorities in perspective—women must die to create the perception that he is serious about addressing the state’s fiscal problems, even though the cuts save no money and the resulting deaths are preventable. Doubtless, these women are seen as mere collateral damage by the governor. Maybe he was type-cast as The Terminator?

Follow Your Own Direction

2010-03-12T10:33:00.000-08:00

The governor and I don’t agree on much. But two months ago, in his State of the State speech, the governor said we had to get our priorities straight and keep them straight, and the "first priority for the coming year is the economy and jobs." On this we agree.

Accordingly, last week the Legislature sent the governor two budget-related transportation bills that create and protect tens of thousands of jobs at a time when California’s unemployment rate exceeds 11%. It's time for the governor to follow his own direction by signing ABx8 6 and 9.

These two bills, both authored by the Assembly Budget Committee, will fully fund local transit with an ongoing and sustainable funding source, bring more funding for highways, streets and roads, and provide nearly a billion dollars in relief to the state’s General Fund.

More importantly, these bills translate into immediate jobs. Shamefully, public transit has received no state financial support since 2007. As a result, more than 40,000 statewide public transit jobs are in jeopardy. These bills will stabilize transit and protect those jobs. The bills also provide funding to create approximately 6,400 new infrastructure-related jobs. Finally, the bills will pay down bond debt that has created more than 19,000 jobs.

Transit is in crisis, as are the working people who rely on it. The governor issued a challenge, and on Monday these jobs bills were delivered to him. He has until March 20th to act.

Governor, it's time for you to do as you say and keep your priorities straight. Sign these bills and you will protect working families, create jobs, and help the economy. I hope on that we can agree.

Assembly Moves Key Budget Items Forward

2010-02-24T18:09:00.000-08:00

The Assembly Budget Committee met today to hear three pending items in the special session relating to cash management, social services, and the environment. All three bills were passed out of committee on a bipartisan vote and referred to the Assembly Floor for a vote.

Most of the hearing focused on ABx8 5, which provides cash solutions for both the current year and the budget year. State Treasurer Bill Lockyer testified that the state cannot sell GO bonds until this bill is passed. Inaction on this bill has delayed a $2 billion GO bond offering previously scheduled for next week.

We need to pass this bill in order to bolster market confidence in California’s bonds as investments. This will help us to create jobs by rolling out state infrastructure projects. The committee passed ABx8 5 with a 19-3 vote, conditioned with the expressed intent to author any necessary cleanup legislation.

ABx8 7 restores financial solvency to our state’s recycling program – or the California Beverage Container Recycling (Bottle Bill) Program – for the next sixteen months. It also makes the Clean Water State Revolving Fund Program, which provides low interest financing for water quality projects, eligible for federal funding. The committee passed ABx8 7 with a 24-0 vote.

SBx8 4 provides statutory changes in developmental services and foster care. The committee passed SBx8 4 with amendments focusing on caseload ratios at regional centers with a 15-3 vote.

As urgency legislation, passing ABx8 5 and ABx8 7 will require a two-thirds vote of the Assembly. So, they cannot pass without Republican votes. I hope that my Republican colleagues join me in supporting these bills, along with SBx8 4 which makes tough but necessary cuts to reduce our budget deficit.

This conclusion simply reinforces the fact that difficult and painful cuts are basically all that are left for us to consider as we continue working to close our budget gap. Therefore, we must proceed with great caution and care in the months ahead.

Plugging the Holes in the California Lifeboat

2010-02-19T16:03:00.000-08:00

I met today in my District Office with local advocates for the Children’s Health Initiative. They came armed with some alarming numbers: If the Healthy Families program is eliminated, as proposed by the governor within the 2010-2011 budget, 80,769 children in the County of Riverside will lose their state-subsidized health care, 69,703 in San Bernardino County, 26,687 in Kern County, 23,076 in Fresno County, 80,451 in San Diego County, 90,143 in Orange County, and 242,660 in LA County. Further information available here.

Multiply this by the millions of Californians affected by the unraveling of our state, and you will start to get the picture of the carnage that is being wreaked by the governor’s proposals to address California’s deficit. Well-meaning advocates plead their cases for various important programs proposed for closure or cuts by the governor: each asking that their program be given priority: Healthy Families, CalWORKS, CalGrants, K-12 education, UC students, CSU students, community colleges, game wardens, state parks, public transit, MediCal, community medical clinics, rural hospitals, Every Woman Counts, inter-city rail, family planning, women’s health care, domestic violence shelters, the Williamson Act, firefighting services, local police departments, CHP, HIV/AIDS, local streets and roads, adult day health care, In Home Supportive Services, Black Infant Health, child care, “optional” Medi-Cal treatments such as dental, podiatry, and vision—and the list goes on and on….

When the impacts of the current recession are factored in, over 17% of Californians are expected to be living in poverty. Twenty percent of African-American Californians live in poverty. Poverty rates in certain counties are very high: 19% of Kern County residents live in poverty; 20% of Tulare County residents live in poverty. In Los Angeles, the poverty rate is 15%. For children, the rates are even higher: in Fresno County, 37.3% of children live in poverty. In San Bernardino County, 20.6% of children live in poverty. Overall, nearly 20% of California’s children lived in poverty in 2008, the last year for which data is available. Due to the recent recession, continued increased unemployment rate, and ongoing mortgage foreclosures, that number has surely soared.

Meanwhile, billions of dollars in new corporate tax giveaways are scheduled to go into effect next summer. The governor threatens to veto legislation aimed at tax cheats and tax avoiders. Last year, billionaire tobacco and oil companies ran mail and telephone campaigns opposing even small tax levies on their products to balance the budget. Anthem Blue Cross not only opposes federal health care reform which would solve the biggest part of our state deficit, but it threatens premium increases of 39%.

For the advocates I met with today, and the many like them who work daily to provide basic services to Californians, the message is simple but bleak: we all need to realize that a terrible change is happening here in our state. Our long-time, unified commitment to a basic standard of living and equal opportunity for all Californians is being torn apart. While we face unprecedented levels of debt and deficit, it should be possible for all of us to join together to find solutions that protect the least among us and that keep our fundamentals intact, allowing us to weather this crisis together as a community. Instead, the Governor and his kind use this crisis to drive a wedge between Californians to divide us along economic lines. They would use this crisis to drive more Californians further into poverty, while enriching those at the very top.

Those of us who continue to believe in California’s historic commitment to a common purpose would share the sacrifices while we work toward a better future for all. Last year at this time, our commitment held—we rejected the governor’s proposed shut-down of state services and put everything on life support, funded at minimal levels. We must continue to fight those who would force the poorest and most vulnerable among us to bear the burdens of this recession and do the same this year. We must keep our eye on a collective better future by continuing to invest in public education and providing the most basic care to our children, our elderly, and the disabled in our communities until California pulls out of this recession and we can all do better. No one should be left behind or thrown off our lifeboat.

Sacrificing Women First

2010-02-09T17:28:00.000-08:00

The governor’s plan for solving California’s budget crisis is for low-income Californians to die. And, because of the governor’s cuts to Every Woman Counts, it's ladies first.

As previously explained on this blog, the governor’s first act of 2010 was to take mammograms away from 100,000 low-income women provided through the Every Woman Counts program. This was in direct violation of the Legislature’s direction this summer. We appropriated what the Department of Public Health (DPH) told us was anticipated to be sufficient funding for the year. We denied DPH’s proposal to reduce eligibility for the program because we did not want to cut women off from this life-saving screening.

Yesterday, the Assembly Budget Committee held a hearing on the governor’s cuts. Dr. Mark Horton, Director of the Department of Public Health, testified that the administration’s decision to reduce mammogram access through EWC was strictly a fiscal decision. But testimony from Dr. Jon Grief of the American Cancer Society showed that early breast cancer detection has an enormous financial benefit to our public health system and these cuts will lead to substantially higher state costs. He cited a U.C. San Francisco study, which found that cancer heath care costs increased from $21,320 for women diagnosed with in situ cancer, to $26,747 for localized cancer, $40,096 for regional cancer, and $52,288 for distant cancer. The majority of these increased costs would be paid for by MediCal.

The administration has offered numerous rationales and defenses for the governor’s cuts to EWC. We have been told that Proposition 99, which funds EWC, is experiencing declining revenues; but there is no evidence that Proposition 99 funds are insufficient to support the current program. In fact, the Legislative Analyst’s Office told us that the state had collected $285 million in 2009/10; the appropriation for EWC was roughly $47million. And, the administration further claims that the Legislature authorized these cuts, which is simply not true.

The governor’s budget proposals for FY 2010-2011 shift Proposition 99 funds away from providing mammograms to other programs usually paid for out of the General Fund. It is, therefore, clear that the governor wants to take Proposition 99 funds to solve the state’s budget crisis.

It appears from evidence produced at the hearing that the governor has taken money appropriated by the Legislature for Every Woman Counts and shifted it to pay for other state liabilities. In order to achieve that funding shift, he shut down enrollment for 6 months and limited eligibility. In doing so, he violated legislative authorization, ensured that low-income women will not get life-saving breast cancer detection, and guaranteed the state will incur more costs for treatment.

Dr. Grief posed the question: What is a life worth? That is the question of this state budget debate. And, it’s time to fight back! Women’s lives are at stake. Every one of us is in some way impacted by breast cancer. While we undoubtedly have a state budget crisis, these cuts create a moral crisis as well. We must pursue less deadly alternatives.

Power Plays and Smelly Cheese

2010-02-04T14:34:00.000-08:00

The Assembly Budget Committee met yesterday to discuss California’s cash crisis and deficit. State Controller John Chiang testified that we face a cash crunch for a three week period in March and April. He said any solutions we come up with must be “credible and sustainable.”

What’s the governor’s proposal to address California’s cash crisis? Sadly, it’s just another power play. He seeks unprecedented unilateral authority for the Department of Finance to delay almost all state payments at any time during the next two fiscal years. This would include payments to K-12 schools, community colleges, UCs and CSU, trial courts, Medi-Cal providers, all state vendors, tax refunds, and SSI and CalGrant payments. Such broad, unfettered authority would wreak havoc throughout our state because no one would know when or if they could expect payment.

This is part of a continuing pattern of the Administration’s failure to address California’s problems. Despite the State Controller’s numerous warnings that the state lacks a proper cash cushion and may run out of cash, the Administration has no plan to deal with this crisis.

Once again, the governor has punted to the Legislature. If previous patterns hold true, the governor will soon begin whining to the press that the Legislature is failing to act on his proposal to address the cash crisis. Never mind that his proposal is like Swiss cheese—smelly and full of holes.

The Committee expressed bi-partisan frustration with the administration for failing to make a legitimate proposal to assure that the state pays its bills. One member called this proposal “outrageous;” another called it “breathtaking.” I call it irresponsible and insufficient. It utterly fails the Controller’s test of “credible and sustainable.” I told the Department of Finance to return with a real cash management plan.

Last year, California’s cash shortage stopped 5,400 bond-funded projects, putting many people out of work. It also delayed $2.2 billion worth of tax refunds and resulted in the issuance of 450,000 IOUs. We can and must avoid the same problem this year.

Next week we will begin detailed subcommittee hearings and the Legislature will act before the special session deadline of February 22. We will be working with the Controller, the Legislative Analyst's Office, and the Department of Finance to develop a serious plan that avoids a cash problem. Once we have that immediate problem behind us, we will focus on enacting a fair, timely, and credible budget for FY 2010-2011.

IHSS Community: Protect Your Rights, Protect Yourselves

2010-02-03T16:15:00.000-08:00

Nancy Riley is the long-time in-home care provider for Michael Condon, a Vietnam veteran who was recently interrogated and threatened at his home by an armed state investigator questioning his IHSS benefits. This alarming incident demands a thorough investigation and I encourage anyone with a similar experience to report it immediately.

Legislation adopted last year calls for unannounced home visits to investigate suspected fraud. However, the legislation also required the Department of Social Services (DSS) to develop protocols for these visits. These protocols have not yet been developed, so it was a big surprise to find out that unannounced visits have already begun with no guidance in place to protect anyone involved. It was also a surprise to find out that the Department plans to purchase Polaroid cameras to photograph IHSS recipients.

These protocols will ensure that home visits are conducted in such a way to protect the integrity of the IHSS program while respecting IHSS clients and providers. DSS has committed to undertaking the requisite stakeholder process, and the Legislature will monitor it to ensure that it does.

In the meantime, I believe these unannounced visits may not yet be legal. Photography is certainly not authorized by law. The governor himself requested this new law and signed it. Now, his administration must abide by it.

Until the home visit protocols are finalized, there is an opportunity for scam artists posing as investigators to come into the homes of IHSS recipients and defraud or abuse them. Therefore, I want to alert everyone in the IHSS community to take the necessary steps to protect yourselves. Confirm the identity of anyone claiming to be a fraud investigator before allowing them to enter your home.

If you are a provider or consumer with concerns about a visit from a fraud investigator, please call the Department of Health Care Services toll free at 1-800-822-6222.

Finally, Some Less Bad News for IHSS

2010-01-28T16:57:00.000-08:00

The Assembly and Senate held an oversight hearing yesterday regarding the administration’s continuing implementation of IHSS changes adopted as part of the FY 2009-2010 budget, affecting 460,000 IHSS consumers and 385,000 IHSS providers. After two contentious hearings in the past few months, we heard encouraging news that the administration is starting to work with stakeholders and improve its approach.

When the first changes to IHSS took effect on November 1 for the enrollment of new IHSS providers, there was great confusion about how the new enrollment procedures would work. Our hearings revealed that this was the result of poor, conflicting, and late communications from the Department of Social Services (DSS). Further information is here.

As a result of our oversight hearings, DSS has developed a more collaborative working relationship with counties and it has begun more meaningful stakeholder consultations. This is encouraging news, especially since more program changes loom just around the corner.

But we are not out of the woods yet. We continue to face new challenges:
• New provider requirements - The number of providers in "pending" status (those who have begun the enrollment process, but not yet completed it), totals 20,172. Only 9,556 providers have completed the process. The gap between providers who have and haven't met the requirements is growing wider every passing day. In order to meet demand, 385,000 current providers need to complete this process by June 30. Based on our experience to date, this looks unrealistic.
• Governor wants IHSS consumers photographed – The governor’s 2010-2011 budget proposes to buy Polaroid cameras to photograph IHSS consumers in order to prevent fraud. New changes to the law require fingerprinting of IHSS consumers as of April 1, but because the administration is unable to implement this requirement on a timely basis, the governor proposes to photograph all consumers in the meantime. As I said at the hearing, IHSS consumers are entitled to a measure of privacy and the law at this time does not require photographing; my budget committee will look skeptically at this proposal.
• IHSS consumers and providers are being harassed – Nancy Riley, an IHSS provider from San Diego, told the committee that an armed state investigator recently conducted a surprise anti-fraud visit to her client’s home. The investigator aggressively interrogated them and threatened to revoke her client’s IHSS services. Since the law allows anti-fraud visits to occur only after protocols are developed with stakeholder involvement, which has not begun, the committee had serious questions about this incident and we are investigating it.

With these and other significant issues to work through, it was constructive to hear DSS representatives make the following points in their testimony.
• John Wagner, Director of DSS, announced that the department will conduct a stakeholder process to provide opportunities for the IHSS community to engage the department on the issues raised at the hearing. He also announced that DSS will soon offer the Legislature budget trailer bill language relating to IHSS implementation challenges. After his department lobbied the Senate to oppose SB 69 which would have resolved these problems last year, I look forward to seeing their ideas.
• Eva Lopez, Deputy Director of Adult Programs at DSS, also announced that new materials relating to IHSS program changes will be posted on the department’s website to improve information access and transparency.

My bottom line in this discussion is that the mistakes of the past must be avoided so that all will be prepared for the significant changes to come in IHSS. The IHSS community needs to know that the ball won’t be dropped again.

Access to IHSS cannot be jeopardized needlessly because of bureaucratic fumbling. That is not reform. It’s a formula for creating a crisis that preys on the vulnerable who have a right to receive these services.

We won’t agree on everything. But we do need to work together openly and honestly. I look forward to seeing a more transparent and collaborative process in the months ahead, with better program outcomes for all involved.

All materials produced by the Assembly Budget Committee for this hearing are available here.

Governor’s Budget Gets Bad Reviews

2010-01-13T17:16:00.000-08:00

The Assembly Budget Committee met today to begin its work evaluating the governor’s budget proposal to close our state’s $19.9 billion deficit. Here are just a few preliminary observations.

The governor’s budget proposal passes the buck to Congress and, once again, balances the budget of the world’s 8th largest economy on the backs of our poorest and most vulnerable citizens.

The governor proposes $8.5 billion in cuts, primarily K-12 education and health and human services. And, in a breathtaking act of hostage-taking, if California fails to receive $6.9 billion in federal aid, the governor would automatically cut an additional $4.6 billion from those same services. The Legislative Analyst does not believe that California would likely receive $6.9 billion from the federal government, so the governor’s budget proposal really closes the $19.9 billion deficit from nearly $13 billion in cuts to the poorest and most vulnerable among us. This is sacrifice, but it certainly isn’t shared.

The governor seeks exemption from CEQA liability for 25 new projects per year over the next four years. The projects would be identified by the Secretary of Business, Transportation and Housing. Which projects would qualify is undefined; potentially the administration could exempt a project as large, as controversial, as expensive, and with such far-reaching environmental impacts as the proposed Peripheral Canal.

In his trigger cuts, the governor would eliminate programs currently funded by Proposition 99, including Every Woman Counts which provides breast cancer screening for low-income women. Proposition 99, of course, is independent from the general fund so it is hard to know how this would help the state balance its budget. We have asked the Legislative Analyst to look into this further and it will be the subject of future Budget Committee hearings.

When asked by Assemblymember Swanson to identify waste in state government that could be eliminated to close the deficit, the administration pointed to the proposal to reduce state employee salary costs by another 5%. This proposal includes what the Governor euphemistically calls his “5-5-5” proposal, requiring state employees to give up 5% of their salaries, increase their pension contributions by 5% and directs departments to reduce their employee salaries by another 5%. The governor has stated publicly he will not negotiate these changes with employee bargaining units as required by law.

Despite stating emphatically that he would protect education this year, the governor’s proposal includes two back-door methods of cutting K-12 Proposition 98 funding by about $2.4 billion. In today’s hearing, his staff denied that the governor had promised to protect K-12 funding. What did he mean by saying he would protect education?

Like a bad rerun, this budget proposal would go back to the voters to seek approval to shift funds away from Proposition 63 and 10. The voters rejected this proposal in the failed May special election and the governor offers no objective evidence that the voters have changed their minds; nor does he have any backup plan if this proposal fails.

The citizens of this state have seen smoke and mirrors budgets before. This one rises above all the others in its cynicism, questionable savings, and faulty assumptions. The people of the state of California deserve better. Over the coming months, the Assembly Budget Committee will continue to analyze this proposal and all available alternatives in order to help craft a budget that meets the needs of this state and reflects the values and priorities of its residents.

NUMMI: A Bad Omen for the Governor's Jobs Package

2010-01-11T15:36:00.000-08:00

Editor’s note: Originally posted on January 7, this entry has been changed to clarify an issue identified by one of my readers: Toyota has not been paid $2 million by ETP. However, it continues to pursue these funds from the state.

In his State of the State address, the governor made much of his proposal which would supposedly create new jobs this year. But, it is long on corporate handouts and short on job creation.

The governor’s proposal is to commit $500 million to the existing Employment Training Program (ETP). Unfortunately for California workers, this is yet another corporate giveaway that fails to guarantee a single new job.

The fiasco at the Toyota NUMMI plant is a prime example of why the governor’s proposal is so flawed. As we all know, Toyota is closing its New United Motor Vehicle Manufacturing, Inc. (NUMMI) plant in Fremont, resulting in a loss of 20,000 jobs with thousands of other jobs and business indirectly impacted throughout California.

Despite these huge job losses, Toyota is seeking $2 million from ETP for the training it provided to NUMMI workers last year. Translation: NUMMI workers get pink slips while Toyota pursues a big public handout. This scenario is likely to repeat itself under the governor’s so-called jobs package.

The governor’s plan gives companies money to train or retrain workers. But firms can get reimbursed for providing as little as three months of employment. That’s not a job. That’s an internship.

The governor’s plan is further based on the faulty assumption that our high unemployment rate is due to a lack of skilled workers. In fact, California is full of experienced, highly trained, and employable workers looking for jobs. Our challenge right now is that no one is hiring. The governor’s proposal tries to solve the wrong problem.

The sad thing is, the administration is dragging its feet on implementing programs already in place that would create immediate jobs. The governor’s appointed watchdog for California’s use of federal stimulus dollars, Laura Chick, just issued a scathing report criticizing the administration for failing to distribute ARRA funds which would create jobs. We also need to get the administration to move on appropriating $3 billion in infrastructure bonds on approved projects would create jobs. This would be a good start, but we need to go further.

For every $1 billion of bond funds we spend, we get approximately 18,000 new jobs. That is why I am authoring legislation to address responsible management of our general fund debt and to use existing bond funds to create real, immediate jobs for Californians.

The Governor's Budget

2010-01-08T16:09:00.000-08:00

The governor released his budget proposals today, relying mainly on large cuts to health and human services programs to balance the $19.9 billion deficit over the next 18 months.

The governor’s budget will have a body count. We are not talking about simple cuts. The Legislature’s reaction to the governor’s proposals will mean the difference between life or death for our seniors, working families, and children. This budget clearly shows the governor is not fighting for them.

Like a bad rerun we’d rather forget, the governor is making the same threats meant to shock and awe Californians. Just like last year, he proposes to eliminate life-saving and sustaining services like in-home care, CalWORKS, and Healthy Families. He is also risking our coastline for an uncertain gain in continuing his call for expanded offshore oil drilling. I was hoping to see new and fresh ideas from the governor. But we got a lot of recycled ideas that the Legislature has already rejected. There’s a difference between persistence and denial. And, there’s a lot of denial in this budget plan.

The absence of shared sacrifice is what is most upsetting in this budget. The only thing the governor is asking of the rich is to risk waiting another year to break out the champagne when their taxes get cut.

An initial Assembly Budget Committee analysis of the governor’s 2010-2011 budget proposals is available here. The committee will begin a more thorough review of the governor’s proposals next week during a January 13th hearing.

Governor Promises to Protect Education

2010-01-06T16:46:00.000-08:00

The brightest spot in the governor’s State of the State speech today was his promise not to cut education: both K-12 and higher education. I applaud the governor for prioritizing education because it is the single greatest service the state provides to enable our people to achieve the California and American dreams.

The governor said:
“…I am drawing this line. Because our future economic well-being is so dependant upon education, I will protect education funding in this budget. And, we can no longer afford to cut higher education either.” (My emphasis.)

Education funding has been decimated in recent years. Education has been cut by over $17 billion and the US/CSU systems by $550 million. Enough is enough!

What have these cuts meant to our schools and our children? Check out the Education Coalition’s report “Chronicling the Cuts” here.

While it is easy for the Governor to make this promise because K-12 education is already protected by Proposition 98, I for one, want to take the Governor at his word. No more cuts to K-12, community colleges, UC/CSU and CalGrants.

Meeting this goal remains challenging. California faces a $6.6 billion deficit in the remainder of the current budget year and a $13.3 billion deficit in 2010-2011. At $35 billion, K-12 is the largest portion of our budget. And, at $10.5 billion, higher education is the third largest portion of our budget. And we cannot protect education at the cost of all the other necessary services the state provides.

On Friday the governor releases his specific budget proposals. I look forward to seeing how the governor’s proposed budget will honor his admirable promise to protect education.

The Pig and the Pony

2010-01-06T16:42:00.000-08:00

In his final State of the State speech, the governor told a story about his pig and his pony teaming up to open a canister of dog food.

My question is, doesn’t the governor feed his pets? Why are they left to fend for themselves?

All kidding aside, when the governor reveals his budget proposals on Friday will he leave Californians to fend for themselves by destroying basic services that create our quality of life? We’ll soon see.

New Year Wishes for California

2009-12-23T22:12:00.000-08:00

As we prepare for the Christmas holiday and for the New Year, it is also time to consider wishes for our collective future. Here is my number one holiday wish—JOBS.

California’s unemployment rate remains at an unacceptable 12.3 percent. Given our fiscal problems, we need the federal government to help jump-start our economy by investing in California infrastructure. Some economists estimate that for every $1 billion dollars of bond funding we invest in infrastructure, we get over 18,000 jobs.

But our state is saddled with massive debts of the past—which results in us having lower bond ratings than the Philippines and Mexico and in huge debt service costs which negatively impact our general fund. Even though we have ample bond funding that has been approved by the voters, we can’t issue the bonds because we are already overwhelmed with debt. Therefore, we need the federal government’s help to get Californians back to work. We can’t do it alone.

The federal government can do many things to help. It can guarantee our debt at little or no cost to the federal treasury. In fact, the Speaker and I went to Washington earlier this year to request such assistance and its time to renew our efforts. The federal government can provide us stimulus funds which we can leverage through issuing bonds. It can assist us with paying off bonds that create jobs. Or, it can provide us direct, cash assistance to create jobs.

Such assistance should not be considered a gift. It is in our country’s best interests to invest in California. California is getting historic low prices on public works and infrastructure projects—the construction industry needs work and competition is fierce. California has over $300 billion in infrastructure improvements we need to make and NOW is the best time to make that investment. We have bonds that have been approved by voters but which we are economically unable to issue because we can’t pay even the debt service in the short-term. Help us fix our infrastructure problems now, when we are getting such a good deal on the investment and kick-start our economy in the process.

In addition, California is a donor state. In other words, the money we send to the US Treasury goes to help other states. If the California economy crashes, so will economies in other states. Give us the jobs and tools to get ourselves back to economic health and we will make sure the rest of America reaps the dividends of our growth and innovation for years to come.

Now that’s change we can all believe in for the New Year.

Governor Avoids Responsibility for Cutting Every Woman Counts

2009-12-22T11:25:00.000-08:00

Instead of spending its time and energy finding ways to save the Every Woman Counts program, Governor Schwarzenegger’s administration spins a red herring to deflect attention from his Grinch-like cuts during the holidays.

As usual, the Administration points blame at the Legislature. In a letter to me, the Department of Public Health (DPH) erroneously claims the Budget Conference Committee, which I chaired, approved its proposal to reduce program eligibility and included it in the 2009-10 Budget. DPH immediately provided its letter to media in my home town of Santa Rosa. The Department’s letter and my response are both available here.

The problem is that letter’s claim is patently false. So, let’s set the record straight.

The Legislature specifically refused granting authority to DPH to take these actions. DPH’s proposal to increase the age of eligibility to 50 was never adopted by the Conference Committee and was not included in the 2009-10 Budget. Nor did DPH ever make a proposal to Conference Committee to cut off new enrollment in the program.

During 2008, Every Woman Counts began running a deficit. Several legislators believed DPH had mismanaged the program, so DPH decided not to pursue mid-year legislation to resolve the deficiency. Instead, DPH submitted a request to fund the deficiency in its 2009-10 Finance Letter submitted to the Budget Conference Committee. In the letter, DPH requested an appropriation of $9.3 million for the mid-year deficiency, as well as legislative authority to make other changes to the program, including increasing the age of enrollment to 50. And, again, cutting off new enrollment as of January 1, 2010 was not mentioned.

As Chair of Conference Committee, I supported the $9.3 million in deficiency funding to keep the program alive and placed that item on the Committee agenda. However, I did not support the other changes requested by DPH and did not agendize or act on them. See page 77 of this conference agenda. When DPH tried to raise these changes at the Conference Committee hearing, they were told in no uncertain terms to find another way.

Contrary to the Schwarzenegger Administration’s claims, Conference Committee only adopted the $9.3 million in deficiency funding. The Legislature never considered, voted on or authorized the remaining proposals. Without legislative authorization, DPH made made these changes anyway. The Legislature learned of the administration’s action by press release on December 2. We held a press conference in protest.

Please, Governor Schwarzenegger, take responsibility for your administration’s actions. If you don’t want to make these cuts, then don’t make them. But don’t try to hide behind the Legislature which refused to authorize your actions. Early in the new year, I plan to hold a budget committee hearing on this issue. Every woman should count in this state, regardless of income.

Back and Forth on Every Woman Counts

2009-12-21T16:43:00.001-08:00

Check out this letter exchange that I had with the Schwarzenegger Administration about its cuts to the Every Woman Counts program. For easier reading, please click on each image below.

Does Every Woman Count in California?

2009-12-21T10:34:00.000-08:00

Happy Holidays from Governor Schwarzenegger! This month, his administration announced that the 8th largest economy in the world would start the New Year by risking the lives of thousands of low-income women by terminating them from breast cancer screening provided by the Every Woman Counts program.

The Assembly responded immediately, protesting these reductions with a press conference attended by numerous breast cancer survivors and the Susan G. Komen Foundation for the Cure. In addition, 21 of California’s Congressional representatives signed a bipartisan letter to Gov. Schwarzenegger, pleading with him to continue the program.

Breast cancer is the most pervasive and deadly of all cancers affecting women. In California alone, 21,700 women will have been diagnosed with breast cancer this year and more than 4,000 will have lost their battle with the disease. With such destructive power, all of our lives are touched by this disease. My own mother-in-law died from it.

Starting January 1, the Administration will restrict access to a program that provides free mammograms to low income women. Every Woman Counts is jointly run by the State Department of Public Health and the Federal Center for Disease Control and Prevention’s National Breast and Cervical Cancer Early Detection Program. It provides clinical breast exams, mammograms, pelvic exams and Pap tests to California’s women over the age of 40. More than 1.2 million California women are eligible for the program.

The governor’s new guidelines exclude women between the ages of 40 and 49 for mammograms and the enrollment of new women into the program altogether for the remainder of this fiscal year. When announced on December 2, no explanation was given about why this course of action was necessary or preferred over alternatives.

Breast cancer survival rates are very high when detected early. Unfortunately, women with low incomes who are uninsured or underinsured are more likely to be unable to afford potentially life-saving cancer screenings, which leads to later diagnoses, larger tumors and lower survival rates. That is why programs like Every Woman Counts are so important.

California faces unprecedented budget challenges. We’ve faced $60 billion in budget shortfalls and we have another $20 billion more to resolve next year. But cutting this program would have NO general fund savings because it is funded from Proposition 99 tobacco tax revenues.

This sorry episode shows a continuing failure of leadership by our governor. Instead of fighting to protect this basic service that sustains life, the governor’s message to the women of California is, “Sorry, you’re on your own.” He’s throwing women off the lifeboat first in 2010. Adding insult to injury, the governor and his administration are running from ownership of this crisis they created. See separate blog post.

Pac-Man Fever

2009-12-18T17:08:00.000-08:00

On December 14, the Assembly Budget Committee met to review California’s growing general fund debt and the need to plan the use of future infrastructure bonds. With bond repayment growing faster than any other part of our budget, we need to plan how we can best use bonds to create jobs, invest in our crumbling infrastructure, and grow our economy. But these investments must be balanced with the budget impacts caused by the state’s rising debt burden.

The hearing featured testimony from State Treasurer Bill Lockyer and Legislative Analyst Mac Taylor. Here are some of the highlights:

• In the mid 1980's debt service was less than 2 percent of the overall budget. Now it is approximately 7 percent. Most of this growth in debt occurred after Governor Schwarzenegger took office in 2003.
• We have the lowest bond rating in the country – BBB. But many other states—even those with big budget gaps of their own—have perfect AAA ratings.
• We pay a premium for our low bond rating – 1.72 percent in higher interest for our bonds than other states. That means $18 billion more in interest costs on our current bond debt.
• We pay more than developing nations to borrow money – 1.25 percent more in interest costs than Mexico's bonds issued this year, 1.38 percent than Brazil, 0.44 more than the Philippines, and 0.24 percent more than Indonesia.
• We borrow more than anyone—and it makes it hard for us to find investors. We borrowed $36 billion in 2009 in both long and short term debt, $19.7 billion of which was in infrastructure bonds. The year’s next biggest bond seller was New York State at $7.4 billion. The next biggest corporate bond issue was Roche at $16.5 billion, followed by Anheuser Busch-InBev at $13.5 billion, Pfizer at $13.5 billion and General Electric for $11.8 billion.

Experts estimate that needed repairs and improvements to California’s infrastructure—roads, schools, hospitals, parks, and levees—will $300-$400 billion over the next twenty years. But how can our State meet these needs when we are historically unable to produce a balanced budget, face years of future deficits, and we have the lowest bond ratings of any state in the country?

So far, we have used a "first come, first served" model to fund our infrastructure needs. We keep identifying projects we like and piling the borrowing costs for them on top of each other. This practice has built a mountain of infrastructure bond debt: $62.1 billion in repayment while another $49.5 billion waits to be spent.

The result is a "Pac-Man" of debt repayment swallowing up more and more of our General Fund budget, which pays for education, public safety, and life saving services. Over the next five years, debt service will grow at 8.4 percent a year. By 2014-2015, debt service costs will consume over 9 percent of our total General Fund budget—an unprecedented level.

We need to start thinking about how much borrowing we can afford and how we handle the legacy of these debt costs we have already incurred. Our committee hearing was a good start.

Every $1 billion of bond funds brings in approximately 18,000 new jobs. Given the state’s 12.5 percent unemployment rate, I believe we must focus on funding projects that will bring new jobs to California and help us move forward to a more prosperous future. For that reason, I will author legislation this year to address responsible management of our debt and to use existing bond funds to create jobs for Californians.

Evans Urges State to Use Bonds to Create Immediate Jobs

2009-12-14T17:41:00.000-08:00

For Immediate Release: December 14, 2009
Contact: Anthony Matthews – tel. (916) 319-2007

SACRAMENTO — The Assembly Budget Committee met today to review California’s debt burden, featuring testimony from State Treasurer Bill Lockyer and Legislative Analyst Mac Taylor. The following is a statement from Assemblymember Noreen Evans (D-Santa Rosa), Chair of the Assembly Budget Committee, about the hearing and the need for legislation to improve how California plans the use of future bond debt.

“California is drowning in debt. The debt service on bond debts is the fastest growing part of our General Fund budget and is expected to exceed ten percent over the next five years. But our economy continues to deteriorate and is not expected to recover for years.

We need to plan how to get out from under this mountain of debt and how to use existing bond funding wisely to create jobs and invest in our infrastructure. Job creation must be at the top of our list of priorities for how we use bond funds. When the Governor announces his plans for use of bond funds next year, I hope he will address this need.

I will introduce legislation in the coming year to improve how the state uses infrastructure bonds to meet California’s priorities, based upon recommendations made by the State Treasurer. We can’t continue to shoot in the dark and expect to hit our target of a better tomorrow.”

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LAO: Real Budget Pain to Endure

2009-11-20T14:29:00.000-08:00

I was reminded of an old saying in politics while reading the new report released this week by the Legislative Analyst’s Office (LAO): “a billion here, a billion there, pretty soon you’re talking real money.”

Over the next 18 months we face a $20.7 billion gap in the state’s General Fund: $6.3 billion in the current budget year and a $14.4 billion gap in 2010-2011. A $21.3 billion out-year budget gap follows in 2011-2012.

Most of the current budget gap originates in the failure of some of the solutions we adopted as part of the July budget revision, including the governor’s proposed sale of the State Compensation Insurance Fund (SCIF), losing court cases relating to budget solutions, and failing to reduce prison costs. The $14.4 billion gap for 2010-2011 results from losing one-time solutions in the current budget and more realistic forecasts for next year. And, the gap grows to $21.3 billion in 2011-2012 because the temporary tax increases adopted last February will sunset – a one-cent sales tax increase and a 0.25% income tax surcharge on all income brackets.

In order to close the budget gap, the LAO recommends a four-pronged approach of early action, long-lasting solutions, assessing budget priorities, and new revenue options.
Simply cutting $20.7 billion from the budget, as some Republicans have proposed, means eliminating basic programs that literally keep Californians alive. The day the LAO’s report was issued, the governor declared he would not consider new tax revenues as part of the solution.

Consider these figures. Our 18-month $20.7 billion budget gap is more than we spend on higher education ($10.547 billion) and corrections ($8.21 billion) combined. It is over 80 percent of what we spend on all health and human services programs ($24.95 billion) and nearly 60 percent of what we spend on K-12 education ($35.04 billion).

Therefore, gravity of the budget decisions before us is extreme. And, the decisions we make now will function as a new budget baseline for years to come because our state revenues will not pick up in the mid-term. The revenue returns of a more precipitous economic recovery elude us because of what economists call a “U-shaped recession.”

Furthermore, the public is just now beginning to see the results of the cuts we made last summer—classrooms are larger, state colleges are getting more expensive, DMV offices are closing, state parks are closing, and courthouses are closed one day a month, already resulting in a severe backlog of cases. The public must be asked to weigh in on how much more it will tolerate.

Since the budget pains will be here to stay for a while, the budget decisions ahead of us must be made out in the open with significant public input. And, every solution available to us must be on the table.

Fight Continues to Save IHSS

2009-11-20T14:23:00.000-08:00

460,000 individuals across California rely on in-home supportive services (IHSS). Sadly, some of them will face real life or death situations because of the administration’s ongoing assault on the program.

Last May, the governor proposed to help close our state’s historic budget deficit by reducing IHSS caseloads by 90%. Had we adopted it, this proposal would have returned seniors to nursing homes and institutionalized disabled individuals. Such treatment of our seniors and disabled Californians is not only inhumane and in conflict with public policy in this state for the past several decades, but it is many times more costly than in-home care. The Legislature, therefore, rejected the governor’s proposal.

In subsequent Big 5 negotiations, however, the governor demanded changes in law to address what he considered fraud in the IHSS system. As part of the final budget deal, he demanded substantial changes to the enrollment process for new IHSS providers and anti-fraud requirements, such as fingerprinting, for recipients of IHSS. At the governor’s request, these changes were to be implemented on November 1, 2009.

But the administration has severely botched implementation of these changes. Here is what we know:
• The Department of Social Services (DSS) has been giving counties – who implement the IHSS program—incomplete, incorrect and conflicting information about the new IHSS laws that took effect on November 1;
• The “final” and still incomplete guidance issued to counties detailing how to comply with the law was issued by DSS at 10:21pm on Saturday, October 31;
• Counties have not been provided the necessary materials and resources to meet the new IHSS requirements – such as background checks on in-home care workers;
• 28 counties representing 86% of the IHSS caseload indicated that they will have difficulty meeting the requirements imposed by DSS;
• Without action, IHSS providers may not be able to provide services to clients already enrolled in and eligible for IHSS; and
• Numerous seniors and disabled individuals throughout the state have been unable to obtain the IHSS services they need, at risk to their safety, their well-being, and in some cases, to their very lives.

On October 28, I held an Assembly Budget Committee hearing on the chaos that resulted from the incomplete and conflicting guidance provided by DSS. Counties testified that they had been unable to meet the deadlines set by legislation because of their inability to obtain guidance and resources to implement the IHSS changes. Nevertheless, DSS testified that as of November 1, it would not be paying any new providers for their services. This meant that many IHSS recipients would go without care.

I crafted emergency legislation, Senate Bill (SB) 69, to help clear up this mess. It was a simple bill, requiring DSS to convene a stakeholder process prior to implementing any changes to IHSS. It also delayed implementation of such changes until 60 days after the stakeholder process completed so that counties as well as IHSS clients and providers had time to prepare.

SB 69 required a two-thirds vote of the Legislature because it included an urgency clause so that it could take effect immediately. SB 69 easily passed the Assembly with a unanimous 68-0 vote on November 2. However, working with the administration, Senate Republicans withheld their votes and killed SB 69. I suspect the letter of opposition circulated by DSS to each Senator (enclosed below) had something to do with that. This opposition was unexpected, especially since I crafted the bill based on testimony provided by John Wagner, Director of DSS at my October hearing.

Subsequently, on November 5, I held a second hearing to determine what, if anything, the administration had done to clear up the chaos it had caused in IHSS. The administration effectively thumbed its nose at the Legislature and at the many IHSS recipients in need of services because the Secretary of Health and Human Services and the Director of DSS refused to attend the hearing. I can only conclude that the governor is satisfied with the way his administration has handled these changes to IHSS.

DSS has a history of cooperating with the counties and implementing complex changes in an orderly and professional fashion, sometimes even delaying implementation past the deadline set in statute. The focus has been on getting it right and preventing lapses in service. Why DSS has departed from its stellar record is baffling. It appears that the governor intends to achieve his desired cuts to IHSS indirectly through so-called “reform.”

Until the problems plaguing IHSS are resolved, I will keep pressing every avenue available to me to find a solution. There is real suffering, pain, fear, and even death if we fail to come together and act for the common good.

Water Bond Makes Bad Budget Worse

2009-11-05T16:45:00.001-08:00

On November 4th, the State Legislature passed an $11 billion water bond. This action has been widely described as an historic achievement. Unfortunately, this is true for all the wrong reasons.

This bond was crafted behind closed doors, never received a public vetting, and was passed on the fly in the middle of the night by legislators who lacked an adequate analysis of it. It brings our debt burden to historic new levels. And, for the first time, it requires the public to finance half the cost of new dams and reservoirs benefiting private interests.

By passing this bond, the Legislature is flirting with financial disaster. Already, the state is unable to pay for services demanded by Californians. We’ve just gone through three horrific state budgets to close a $60 billion gap. And, more troubles lay ahead. We face an $8 billion gap next year and a $15 billion gap after that. Servicing the debt on an $11 billion water bond will make our bad budget situation worse.

For more information, check out my remarks during the debate about the water bond on the Assembly Floor.

IHSS "Reform" Disaster

2009-11-03T11:45:00.000-08:00

On October 28th the Assembly Budget Committee convened an oversight hearing on the Schwarzenegger Administration’s botched implementation of its own proposals to reduce fraud the governor claims is in the In-Home Supportive Services (IHSS) Program.

IHSS provides medical, nursing, and day to day living assistance to 460,000 elderly and disabled in their own homes. It has proven itself a less expensive and more effective alternative to nursing home care while enabling individuals to live with dignity in their community. Please watch the video to see how this program is needlessly under threat. That’s why I am pushing through emergency legislation to prevent the imminent collapse of the IHSS program.

BNRT—Not a European Vacation

2009-10-15T12:09:00.000-07:00

The proposal by the Commission on the 21st Century Economy (COTCE—rhymes with “gotcha”) to scrap the California tax system and replace it with the Business Net Receipts Tax (BNRT) is riddled with problems and full of questions without answers. It begs the question—how stupid do they think we really are?

Few people understand how the BNRT works and no one knows how it will impact California. Some compare the BNRT with the European Union's Value Added Tax (VAT). That’s like saying the Oakland Raiders and Manchester United both play football.

On the surface, both tax systems sound similar. The proposed BNRT would be imposed as a percentage of a business’ gross receipts from the sale of goods and services, minus the business’ purchases of goods and services from other businesses (which have already been taxed). A VAT is a tax on manufacturers at each stage of production on the amount of value an additional producer adds to a product. This cost is typically passed on to the consumer in the end.

A key distinction between the VAT and BNRT lies in the fact that California is a state, not a sovereign nation. So, the BNRT lacks a critical element of Europe's VAT—the border adjustment. The United States Constitution prevents California from implementing a border adjustment because that interferes with interstate commerce, which can only be regulated by the federal government.

This creates an enormous problem for California businesses. Europe’s VAT system ensures that products made in Europe are taxed at the same rate as products made abroad by placing the VAT on products entering Europe and rebating the tax for those products leaving Europe. However, under the United States Constitution, businesses without a nexus to California cannot be taxed by California. Thus, California products will be subject to the BNRT while products made elsewhere will enjoy a competitive tax advantage.

The BNRT’s problems don’t end there. Most importantly, the BNRT reduces incentives to create jobs in California.

The Commission’s proposal provides a tax deduction for payments to independent contractors, but not for employee wages. It’s almost as if the Commission was trying to find a way to punish California workers. Under this proposal, California businesses would be taxed for keeping employees on their payroll. The logical result is that California businesses will turn to out-of-state labor contractors who hire workers in California and then contract them out to California businesses. Thus, Californians will have even less stable employment and we would see fewer jobs created here.

Adopting the untested BNRT proposal requires blind faith in the Commission’s promises that it will somehow benefit California, despite all the evidence to the contrary. It’s like quitting your dull, but reliable job because a late night commercial promises you can make $100,000 working from home.

Who benefits from this proposal? California workers don’t benefit. California’s small businesses don’t benefit. California corporations don’t benefit. Any benefit to California’s taxpayers is entirely speculative. The only certain beneficiaries from this proposal are out-of-state businesses, large, multi-state or multi-national businesses, and out-of-state labor contractors. Was this really the purpose of the Commission on the 21st Century Economy?

Many economists love Europe's VAT and extol its benefits to the European economy. But don't be tricked into believing that the proposed BNRT will bring these or similar benefits to California. The greatest lessons Californians can learn from Europe regarding the BNRT are the lessons learned the hard way in the casinos of Monte Carlo.

The Volatility Monster—Be Afraid, Be Very Afraid

2009-10-13T17:03:00.000-07:00

As Californians suffer through the worst recession in decades, the Commission on the 21st Century Economy and the governor are seeking massive tax cuts for the super rich. How can such an outrageous proposal be sold to unemployed, underemployed, and underpaid Californians? By calling this giveaway a “reform” to our budget crisis.

The Commission and governor suggest that the source of our budget woes is a sinister monster called--(cue scary music)--“revenue volatility.” As their story goes, if we slay the revenue volatility monster all our budget problems will disappear. So we have no choice but to give very rich people jaw-dropping tax cuts.

Their rationale is that Sacramento cannot responsibly manage a one-time spike in revenues because the revenue volatility monster tricks the Legislature into committing to long-term spending of money the state does not have, thereby condemning California to years of budget stalemates, and tough choices between higher taxes and painful spending cuts. The inference is that these tough choices can be avoided if the state changes its tax structure to eliminate the volatility monster.

Here is the real volatility problem. Very rich people pay a lot of income taxes when they make lots of money in good economic years. Their income taxes go down in recessions because they earn less money. Equity markets, stock options, bonuses, and capital gains depend upon the health of the economy, and with the economy, are volatile. Volatility is not limited to the State of California; we have seen the same volatility across the nation as the richest of the rich have begun to accumulate wealth and income at proportions not seen since the 1920. As a result of accumulation of income in a few hands, the state collects more in income taxes because our personal income tax (PIT) is progressive.

About half of California's General Fund revenues come from the PIT, a progressive tax which increases as amount of taxable income grows. Although the PIT revenues have gone up and down throughout the years, since 1989 it has increased by an average annual rate of 6.7 percent. This outpaces the growth of other taxes, such as the sales tax. Most economists support a progressive tax system – even Adam Smith praised its merits in The Wealth of Nations. And, almost all tax systems in the world contain progressive elements.

The Commission’s report proposes reducing volatility by reducing the tax burden on the wealthy. The Commission proposes flattening the PIT tax structure by reducing the number of tax brackets from six to two. The new tax rate would be 2.75 percent for taxable income up to $56,000 for joint filers ($28,000 for single) and 6.5 percent for taxable income above that amount. Under this proposal, a person struggling to eke out a living on $28,001 will pay the same rate (6.5 percent) as someone earning $2,800,001. If we just don’t tax upper incomes much, voila—we slay the volatility monster.

The benefits to the wealthy don't stop there—the higher income earners still get the benefits of mortgage deductions, property tax deductions and charitable contribution deductions. On the flip side, the Commission’s report recommends we eliminate child care deductions and dependent credits which benefits low-income taxpayers. For some families this leads to a tax increase—a family of four making $65,000 per year with $15,000 of itemized deductions and special credits worth $500 for child care would see their PIT liability increase by a whopping 437.7 percent

This is classic supply-side, “trickle down” economics. The Commission’s report assumes that the super wealthy and corporations which benefit directly from their proposed tax cuts will translate the cuts into lower prices and more investment. In fact, some have argued that lowering the tax rate is going to spur so much investment that overall tax revenue is going to increase. But we’ve heard that tired sales pitch before when the Reagan and Bush federal tax cuts didn’t result in tax revenue increases.

“Trickle down” economics has been thoroughly discredited. The true response to solving the volatility problem is to make sure Californians are fully employed and decently paid.

The Commission proposes reducing PIT revenues under the fig leaf of stabilizing revenues. Using this logic, if California just stopped collecting taxes, the problem of volatility would be solved forever.

VOTE YES--OR ELSE

2009-10-07T13:59:00.000-07:00

During the last session, the Legislature worked diligently on big issues, including renewable energy, balancing the budget, and water. Unfortunately, the governor has done little to move the ball forward on these issues, other than to issue demands and now, to tell the Legislature, “vote yes--or else.”

Now, he has taken 700 bills hostage in an attempt to force a deal on a water bond benefiting some Californians, but paid for by all Californians. Something is very wrong with this picture.

The Legislature is keenly aware of the urgency of the crisis faced by agriculture, fisheries, and communities dependent on the Delta for their drinking water. During the final days of session, the Legislature came very close to passing 2 bills on water, both of which it continues to work on. One bill would set substantive policy for the Delta; the second bill would put a water bond on the ballot for voters to consider.

As complicated as the substantive policy is, the funding is just as problematic. The proposed general obligation bond for dams and conveyances burdens the state’s already over-stretched General Fund by $780 million annually. In a year when we cut billions of dollars from the state’s General Fund, decimated state services, nearly closed state parks, furloughed state employees and backed away from the state’s long-standing commitment to higher education, adding another $780 million annually to finance bond costs is fiscally irresponsible. We need the governor’s help to identify better ways to pay for this.

On October 5, the governor suggested to the Senate President Pro Tem that the Legislature withdraw nearly 700 bills now on his desk awaiting signature. The clear inference is that if they are not withdrawn, the governor will make good his threat to veto them because he has not yet gotten his way on water.

The veto power overrides the work of the Legislature which represents the will of the people. It is an extraordinary power and should not be exercised capriciously or casually. This governor, however, has repeatedly abused his veto power and threatens to do it again.

Last year, the Governor vetoed over 400 bills, 136 of them with a generic veto message, because he was unhappy after protracted budget negotiations.

Soon after, the state saw an unprecedented drop in General Fund revenues and we were forced to make billions of dollars in painful cuts to services. Public hearings were held, the Big Five met, an agreement was reached with the governor, and was passed by the Legislature. The governor promptly vetoed funding for several programs, including domestic violence shelters and HIV/AIDS prevention. A lawsuit is pending to challenge the legality of these vetoes. Legal or not, these vetoes violated the agreement between the governor and the Legislature, put the safety of many Californians at risk, and jeopardized the public's trust in the governor.

In September, the governor gave Californians another taste of how far he would go. He asked the Legislature to withdraw all bills pending on his desk so that he could evaluate what had or had not passed before deciding whether to sign or veto bills. The Legislature did not withdraw Assemblymember Cook’s AB 264, a unanimously passed bill to honor Vietnam veterans. He then vetoed the bill out of spite.

This brings us to the governor’s most recent threat to veto the bills currently on his desk. Like last year, many of the bills threatened by the governor save the state money during this dire recession. Some correct flaws in existing law or make life easier for Californians. All of them deserve serious consideration. Yet he threatens to veto them without regard to their merits because he hasn’t yet gotten exactly what he wants on water right now. Vote “yes” on the water bill—or else.

Assembly Majority Leader Alberto Torrico has announced that he's writing to the Attorney General, urging him to investigate the governor's use of intimidation to influence legislation as a form of extortion. Whether the governor’s clumsy attempt at hostage-taking is illegal remains to be seen. It may constitute misconduct and, at minimum, is an abuse of his executive powers at the expense of all Californians.

Instead of bullying, now is the time California needs its governor to step up to the plate and work cooperatively with the Legislature to find ways to solve our water problems without mortgaging our future.

Tax Reform for Billionaires

2009-09-29T14:42:00.000-07:00

The Commission on the 21st Century Economy, tasked with crafting proposals to modernize California’s tax policy and ease the volatility of its revenues, released its final report today. Leona Helmsley would be proud.

Helmsley – a billionaire New York City hotel operator and real estate developer sentenced to prison for tax evasion – famously said, “Only the little people pay taxes.” With all the tax cuts being proposed by the Commission for big business and the wealthy, her observation will be true in California.

If adopted, the report’s recommendations – available here – would dramatically reshape tax policy in California and place the burden squarely on our already over-burdened, underpaid, and under-employed working families. These recommendations include:
• Reducing the number of tax brackets from six to two. The new tax rate would be 2.75 percent for taxable income up to $56,000 for joint filers ($28,000 for single) and 6.5 percent for taxable income above that amount;
• Eliminating the 8.84 percent corporate tax and the $800 minimum franchise tax;
• Eliminating the current 5 percent state sales tax, with the exception of the sales tax on gas and diesel fuels which would continue to be dedicated to transportation;
• Establishing a new tax, not to exceed 4 percent, applied to the net receipts of businesses. Small businesses with less than $500,000 in gross annual receipts would be exempt from this tax;
• Creating an independent tax dispute forum – This forum would provide taxpayers with a forum for resolving disputes with the state; and
• Increasing the state’s Rainy Day Reserve Fund from 5 percent of revenues to 12.5 percent and restricting the government's ability to use the reserves.

By flattening our tax policy, these recommendations coddle CEOs and billionaires while kicking California families to the curb. No wonder the Commission shut the public out of the process to complete its work in secret.

It is equally important to note what is not recommended by the report, but would have contributed to increasing and stabilizing the state’s tax base: a new carbon tax, an oil severance tax, extending the sales tax to certain services, and requiring corporate-owned real estate to be reassessed at market value on a regular basis.

California families are struggling to make ends meet. This recession has produced record unemployment, fueled massive wage reductions, and resulted in huge sales declines. Increasing the tax burden on hard-working families cannot fairly and reliably fill the huge revenue gap created by reducing income taxes on the wealthy and eliminating corporate taxes.

Tax reform decisions are too important for experimental guesswork. But this is exactly what the Commission’s report is urging. While the Commission asserts that its proposals will create a tax structure that will more reliably support state services, that assertion is unsupported by the available evidence. In fact, the Commission has thus far refused to make available to the public studies and information that form the basis of its proposals. Adopting the Commission’s proposals would be playing Russian roulette with California’s future.

Children Paying Price from Governor’s Blue Pencil Cuts

2009-09-12T03:28:00.001-07:00

When signing the budget revision in July, the governor vetoed hundreds of millions of dollars worth of services the Legislature fought to protect.

Across the state, counties are reporting that must adapt to these cuts by eliminating positions of Child Welfare Services (CWS) workers who protect children. Consider these examples:
• Contra Costa County is holding 70 CWS positions vacant agency-wide and closing offices.
• Tulare County laid off 55 CWS workers; and
• Sacramento County is considering eliminating 212 positions in CWS.

How much protection will the most vulnerable children in California lose? Counties are only now beginning to sift through the details of how the cut will impact each local county department and then we will find out how many children will fall through the cracks.

Cost of Inaction on Corrections Reform

2009-08-28T14:53:00.000-07:00

Anyone not prepared to support corrections reform legislation must justify that position against the inevitable cost of inaction: K-12 education, higher education, human services, and health care will pay the price if we don’t control corrections costs. They must also justify their position against the bloated inefficiencies of our corrections system which could be keeping Californians safer.

Every part of the state budget has faced enormous cuts over recent years, except corrections. In fact, the corrections budget has consistently been the fastest growing part of state spending. It is now the 4th largest area of spending, comprising nearly 10 percent of our state budget.

What does California get for its money? We spend more on corrections than any other state but we have the highest recidivism rate in the nation – approximately 70 percent. And, without experiencing a massive spike in crime, 1 in 36 Californians today is under control of our corrections system compared with 1 in 69 in 1982. Basic reforms to our corrections system are long overdue. They will save us money and make California a much safer place.

On August 20, the Senate narrowly passed ABx3 14. It saves $524 million in corrections spending by enacting various reforms to focus our incarceration system on violent offenders, including:
· Adjusting property crime thresholds for inflation;
· Changing three wobblers - petty theft with a prior, check-kiting and receiving stolen property - to misdemeanor offenses;
· Establishing a Sentencing Commission in California to establish new sentencing guidelines by July 1, 2012;
· Establishing alternative home custody with electronic monitoring for inmates with less than 12 months to serve on their prison terms or for inmates over 60 years of age; and
· Enacting a series of reforms to our parole system.

Unfortunately, this legislation lost momentum. As negotiations continue to reach a corrections agreement, where is the outrage in this debate? Failing to enact corrections reforms shows a perverse preference for putting the burden of future budget cuts on the backs of productive Californians and the working poor of our state. Failure also risks losing control of our prison system to the federal government.

After fighting tooth and nail to keep CalWORKS, Healthy Families and CalGrants this year, I encourage the advocates for these and other programs to fight for corrections reform. If we fail, it is their programs that will pay the price.

According to the Legislative Analyst’s Office, in General Fund dollars, each year we spend approximately $46,000 per prison inmate and $248,000 per youth incarcerated in California. Compare these figures with:
· $5,888 per child in K-12 education;
· $3,721 per student enrolled in community college;
· $6,612 per student enrolled at CSU and $12,756 per student enrolled in UC;
· $5,707 per child in our foster care system;
· $1,408 per participant enrolled in CalWORKS; and
· $435 per child enrolled in Healthy Families.

Is this really the kind of state you want to live in?

Governor’s Budget Signature Lands with Thud

2009-07-28T17:37:00.000-07:00

The governor demanded more sacrifice today from working and needy Californians when he cut an additional $586 million while signing California’s budget revision.

A full list of these cuts is available through the Department of Finance starting on page 43 of this document. Most of these cuts were resoundingly rejected by the Conference Committee, after receiving days of input from the public.

A clear pattern emerges in looking at the governor’s list of cuts: it is harder than ever to be a kid in California. Among other things, the governor cut:
• $79.9 million from Child Welfare Services, which investigates instances of child abuse and neglect;
• $50 million from Healthy Families by throwing children off health insurance;
• $50 million from the Early Start Program, which provides disabled young children with early intervention services; and
• $2 million from the Student Aid Commission.

The pain does not stop there. $120 million was cut from county administration funds for Medi-Cal, making it harder for Californians to actually use Medi-Cal. All funding – about $52 million – for the Office of Aids Prevention and Treatment was eliminated. It provided AIDS prevention education as well as counseling services and community care to those living with AIDS. And, all funding for the Domestic Violence Program was eliminated – about $16 million. It provided comprehensive shelter-based domestic violence services to victims of domestic violence and their children.

People will suffer and die because of the cuts the governor made today. I know the governor will be okay. He will relax in his jacuzzi tonight and light up a stogie. It’s the rest of California that I’m worried about.

Legislature Approves Revised Budget

2009-07-24T14:45:00.000-07:00

After a two-day marathon, the Legislature approved approximately $22.5 billion in budget solutions.

An analysis of the budget revision is available on the Assembly Budget Committee website. Two items that were part of the Big 5 budget agreement failed to pass: a $1.7 billion two-year take of local road maintenance funds and opening up our coast to offshore drilling for the first time in 40 years.

With this budget revision California will chart a new course of great, but not shared, sacrifice. Fewer teachers will teach our children. Thousands of seniors and disabled Californians will lose the care they need to live in their own homes. And, dreams of a state university education will be dashed for many Californians because it is about to become much more expensive. But, absent this budget revision, financial insolvency is days away. While these cuts are painful, the alternative is worse.

The California dream is the victim of our dysfunctional process. Californians want quality public schools, a safety net for vulnerable residents, and their coastline protected from expanded oil drilling. The tragedy is that these and other California values took a backseat to the interests of an empowered minority who shut the public out from crafting their own budget. No other budget has so clearly shown the need for budget reforms to restore the integrity of our democracy.

Budget Deal Breakdown

2009-07-21T17:39:00.000-07:00

California will soon have a revised budget in place to put this fiscal crisis behind us and to address our ongoing cash crisis. Yesterday evening, the Big 5 announced a budget agreement on which we plan to have a vote this Thursday. A light is at the end of the tunnel.

A comprehensive analysis of the budget package is now being compiled by the Assembly Budget Committee for release tomorrow. Below is a brief summary of the $24.2 billion in solutions to close our $23.3 billion budget deficit:
• $15.5 billion in cuts;
• $3.9 billion in revenue enhancements;
• $2.1 billion in borrowing;
• $1.5 billion in funding shifts;
• $1.2 billion in deferrals; and
• $875 million in financial reserves.

About 95% of the agreement is based upon Conference Committee recommendations or proposals made in the one or more of the Governor’s May revisions, which means the deal could have been accomplished weeks ago, saving the state and Californians $25 million a day and the drama of IOUs. The major differences between this budget and the Conference Budget include approximately $2.6 billion more in cuts, $4.3 billion less in revenues, and nearly $2 billion more in borrowing.

This revised budget includes something for everyone to dislike, such as the Tranquillon Ridge off-shore drilling proposal. And almost all borrowing is from local government, meaning cash-strapped cities and counties will either be forced to cut more local services or borrow against the state’s promise to repay them in the future. Others are very concerned about the impacts of cuts to the corrections budget.

However, I am pleased to say that the budget agreement does not include the following:
• Proposition 98 will not be suspended; K-12 education will be repaid $11.2 billion when the state can afford it;
• CalWORKS will not be eliminated or decimated by extreme cuts;
• In-home supportive services (IHSS) programs are preserved for the neediest Californians;
• Healthy Families Program will not be eliminated or face eligibility reductions;
• State parks will not face sweeping and massive closures at over 200 park locations, although some of the lesser-used parks may close;
• Transportation will not face a suspension of Proposition 42;
• No new tax giveaways will be given to special interests; and
• Billions in federal funds will continue flowing into California because the Legislature rejected the governor’s proposals that failed to meet federal maintenance of effort requirements.

Legislative Counsel is in the process of drafting the appropriate language and the Legislature is expected to begin voting as early as Thursday afternoon. More details to follow tomorrow.

Stand Up for Education

2009-07-16T18:26:00.000-07:00

All parents want their children to grow up to reach their potential and make their dreams come true. A quality education makes this possible.

About 90 percent of children are educated in our public schools. Californians love their schools. This is why Californians have prioritized education funding more than anything else in the budget. In 1988, voters passed Proposition 98 to lock in our state constitution protection of education funding.

Despite the voters’ strong support for education funding, the self-proclaimed “people’s governor” proposed suspending Proposition 98 earlier this month to help close California’s record deficit. Although cuts to public education are inevitable, because Proposition 98 requires that roughly 40% of our General Fund be directed to K-14 education, Democrats want to protect education as much as possible from long-term harm. Therefore, we want to make sure that in the future, as our revenues improve, we meet the requirements of Proposition 98 to repay education for earlier cuts.

A lot is at stake for California’s children. If we were to suspend Proposition 98 as proposed by the Governor, and fail to commit to repay schools in the future, our schools will lose about $11 billion per year forever. In other words if these cuts are never restored, a child born today will see about $165 billion less invested in his or her education from kindergarten through community college. Is this really the legacy we want to leave our children? In other words, it means about $11 billion a year for public education. Repayment of these funds will enhance the learning environment by keeping class sizes low, keeping quality teachers in our classrooms, and keeping updated instructional materials within school curriculum.

California ranks among the lowest states in the nation in per pupil funding. Yet, we are the 8th largest economy in the world. Failure to invest in our children’s education is failure to prepare ourselves and them to meet the challenges of a world-class economy in the 21st Century and to compete with other world-class economies who do invest in education, such as Japan and China. Failure to repay the funds as required by Proposition 98 is not only penny-wise and pound foolish, but irresponsible in the extreme. It is also deeply anti-business because state businesses depend upon a skilled local workforce and care about the availability of quality education for their employees’ children.

The Governor will no doubt contend that legislative Democrats seek to protect special interests. This is true only if one considers our children are not to be “special interests” unworthy of protection.

Nothing is more important to California’s future than its children. This is not an unreasonable request on the part of legislative Democrats. We need to make this commitment to our children a reality in this budget.

Shock Therapy for California

2009-07-15T18:24:00.000-07:00

As we wait for Big 5 to complete their negotiations, it's time to ponder what this budget means to the future of the state of California.

This budget, more than any other, is about what kind of future our state will have. Unfortunately for California, the governor is taking his vision straight out of the Milton Friedman playbook.

Friedman recommended a three-part policy prescription of privatization, deregulation, and cuts to social programs. He believed government should remove all rules and regulations standing in the way of business; government should sell everything private business could run at a profit (parks, health care, education, pensions, administration of social services); and government should dramatically cut social services. Economic crises - including huge public debts - have typically been the context where such policies are implemented.

Sound familiar? When this economic crisis hit California, the governor grandly proclaimed the crisis as an opportunity for “reform.” But it is the Friedman model he considers “reform.”

To close our current, record deficit, the governor’s first proposal was to eliminate CalGrants, CalWORKS, Healthy Families and 90% of IHSS. He also proposed closing over 200 state parks. He now proposes new, relaxed procurement rules, despite our state’s dismal experience in the Oracle debacle. He wants to privatize CalWORKS—even though Massachussets’ experience with Maximus was an enormously costly failure—and will use this budget to lay the groundwork. He mounts an all-out assault on state workers through furloughs, salary cuts and layoffs—which will make it easier to privatize their functions. He proposes to take money from cities and counties, ensuring their fiscal crises will deepen and local governments will be unable to provide necessary services.

Californians do not want to sell their state to the highest bidder. But the gun is to our head. The governor revoked authority necessary for the State Controller to borrow emergency cash and the state is now paying its bills with IOUs. The Legislature is hamstrung by the 2/3 vote requirement and term limits. Revenues are falling, while unemployment is rising. California’s credit rating was recently downgraded to just barely above junk bond status. The federal government has refused to provide us with loan guarantees. And, California is poised to borrow yet more from local government to balance its budget, ensuring that our fiscal crisis will deepen in coming years.

To the governor, this crisis represents an opportunity to remake California according to the Friedman model, but not according to the California dream. His proposals, after all, will deepen the economic misery for hundreds of thousands for Californians by throwing low-income women and children on the streets, forcing the elderly and disabled out of their homes into more expensive, private care, make college too expensive for most California families, turn away federal matching funds, close parks, and greatly add to the unemployment rate while depriving cities and counties of the funds they need to function.

How does this serve the interests of ordinary Californians?

The Governor's Contradictions

2009-07-14T15:07:00.000-07:00

The governor has been quick to say that the Legislature should work on solving the budget problem and nothing else. But, as a condition of passing a budget, the governor wants to make numerous policy changes unrelated to our budget deficit or our cash crisis.

Sounds like the governor might break his glass house with all the sticks and stones he’s been throwing.

As the Big 5 continues meeting this week to complete the details of a bipartisan budget revision agreement, let’s hope that the governor stays focused on solving the budget problem. And, let's help him keep his facts straight. Check out this video made by the Assembly Democrats about the governor’s contradictions.

Indentured Servants

2009-07-13T16:18:00.000-07:00

As California weathers this budget crisis, it has been disappointing to see the governor target the men and women who devote their lives to serving their fellow citizens.

Public servants work to make California better. They are not the enemy in this budget crisis. But the governor would use this crisis to destroy the incentives for our best and brightest to consider a career path in public service.

Business managers know that employee morale is key to a productive workforce. The same goes for recruiting and retaining talent. So what is to be gained from the governor scapegoating our public servants to make them feel more like indentured servants?

All together, the Governor has proposed to reduce state employee pay by nearly 25%, eliminate two holidays, reduce health care services and increase employee premiums costs, eliminate state health care payments, increase required employee contributions for health care and pension plans, reduce retirement benefit formulas, extend service time needed for vesting in CalPERS, and to layoff 5,000 employees.

Some attack state workers for earning any benefits at all, but a decent salary and decent benefits are crucial to attracting and retaining a stable workforce. Some have argued that the state workforce should be trimmed and that these cutbacks are necessary to “trim the fat.” But studies have shown that California’s public sector is actually quite lean compared to other states. According to a 2008 study, California had the second lowest number of public employees relative to population among the states.

Yes, there is a financial imperative to reduce state spending. That means cuts for state workers may be necessary, just as cuts are necessary in the private sector, to help the state weather the current financial storm. But if pushed too far, the state stops functioning, just as any private business stops functioning without its workforce.

Schoolchildren don’t teach themselves, fires don’t put themselves out, and parks don’t manage themselves. We need dedicated, educated, and qualified people to do these jobs. If the governor continues waging his war against public servants, we face a difficult question: what caliber of individual will be willing to do these important jobs if they can’t make a decent living and are constantly scapegoated? A functional, experienced, dynamic public workforce is critical to California’s future.

Governor’s Fig Leaf IHSS “Reform”

2009-07-10T17:24:00.000-07:00

The governor claims his in-home supportive services (IHSS) “reform” proposal to combat fraud will reap 25% in program savings. While he brought forward several county District Attorneys to talk about anecdotal evidence of fraud, his assertions contradict the findings of a recent state audit of IHSS fraud overseen by his own administration. This audit released just last year, found only 1% of IHSS cases involved fraud.

This is just another sham proposal from the governor to gut the IHSS program using fraud as a fig leaf.

Contrary to the governor’s unsupported assertions, the recent audit is an unbiased analysis of fraud in IHSS and provides the best projection for any potential budget savings through reforms geared to reduce fraud.

41 counties performed a random quality assurance review of 23,823 IHSS cases. The review included intense auditing of each case to insure that state assessments are uniform and that errors are minimized. It also checked for fraud or any other inconsistencies. Of the 23,823 IHSS cases reviewed, the administration’s own audit found 1,043 cases (4.3 percent of all cases) where there was some type of red flag that warranted further investigation regarding fraud.

Nowhere did this audit find anything near 25% fraud.

IHSS is a program of in-home supportive care that was established in 1979 to replace other types of in-home care programs. Those of us who have been around a while remember the days when the elderly were forced into nursing homes because there was no other care available. These nursing homes were expensive and care was often at best indifferent and at worse abusive. The cost of nursing home care was astronomical. Similarly, the disabled were warehoused in state institutions, even though many were able to live independently with a little assistance. Decades ago, the people of this state decided the elderly and disabled should stay in their homes and enabled them to do so by adopting programs such as IHSS. Those who forget this history would doom us to repeat it.

The elderly and disabled will not simply disappear when the governor destroys IHSS. Their needs will not go away. The choices they face will be: suffer and die alone or find institutionalized care at much greater expense.

We must question the governor’s intentions when he makes these unsubstantiated claims. What is his true agenda here? For years he has tried to reduce IHSS worker pay. This year, he proposed to nearly eliminate IHSS by reducing caseloads by 90%. Now he has shifted to making unsupported assertions about rampant fraud. And at the same time the governor is making allegations about fraud, he is furloughing the very state workers charged with uncovering fraud and enforcing the rules. Nor did he bring forward these assertions at any time during the month-long process of Conference Committee hearings.

While the governor criminalizes elderly and people in wheelchairs, California’s budget crisis deepens. The Controller just released new figures showing how far state revenues have dropped below projections. In addition, a state appeals court recently held that the state’s shift of transit funds from transit agencies to balance the general fund budget was illegal. Another state court stayed the furlough to State Compensation Insurance Fund lawyers and administrative law judges pending decision in the case-in-chief. The National Parks Service threatens to take over some state parks if they are closed. Medi-Cal providers won a lawsuit in the 9th Circuit challenging the state’s 10% reduction in reimbursements last August and the court ordered the state to repay $111 million.

California burns while Schwarzenegger fiddles.

An Uncertain Road for IOU Recipients

2009-07-09T17:27:00.000-07:00

For lack of a budget revision in place, our State Controller will issue more than $3 billion of IOUs this month. But after tomorrow the nation’s largest banks – including Bank of America, Citigroup, Wells Fargo and J.P. Morgan Chase – will cease accepting them as legal tender.

So, what are IOU recipients to do? That is not entirely clear.

Generally, the options are limited and mixed:
• Identify alternative banks or credit unions to cash their IOUs, which the institutions will redeem upon maturity on October 2;
• Sell their IOUs to third parties with a notarized bill of sale, which the buyers can redeem on October 2; or
• Redeem their IOUs with the State Treasurer on October 2.

Earlier this week, the Treasurer published guidelines for redeeming or selling IOUs. He also established a toll-free IOU help line at 1-888-864-2762.

But just yesterday the Securities and Exchange Commission claimed California's IOUs fall under federal securities law. Among other things, it stated “Persons acting as intermediaries between buyers and sellers of the warrants may need to register as brokers, dealers or municipal securities dealers, or as alternative trading systems or national securities exchanges.”

Clearly the recipients of IOUs and prospective buyers need to be careful on the road ahead. Let’s hope that it becomes clear for the benefit of all through this challenging time.

Go Be Poor Somewhere Else

2009-07-08T18:07:00.000-07:00

As the state proceeds down the road to insolvency, the governor has 16 policy proposals on which he would condition the adoption of a budget agreement. But an Assembly Budget Committee analysis released today reveals that nearly all of his ideas have no effect on our cash crisis or budget deficit.

In yesterday’s blog we discussed the return of Oracle-style contracting as proposed by the governor. Today, let’s examine the governor’s latest CalWORKS proposal. Our Assembly Budget Committee analysis reveals that the governor’s proposal basically throws to the wolves the individuals unemployed by our recession. Symbolically, it is saying to these struggling families “go and be poor somewhere else.” Substantively, it won’t help resolve our budget problem.

The governor’s CalWORKS proposal:
• Reduces the maximum time one can be enrolled in CalWORKS from 60 to 24 months;
• Requires CalWORKs recipients to attend a face-to-face self-sufficiency interview every six months;
• Counts months in sanction status towards the lifetime limit on aid, undercutting the welfare to work character of the program;
• Cuts all aid for families receiving safety net benefits beyond the time limit unless families meet federal work participation rates;
• Cuts monthly grants to CalWORKS enrollees by six percent to $651, lower than it was 20 years ago; and
• Eliminates future COLAs for CalWORKS grants.

In one of his several May Revise budgets, the governor proposed to eliminate CalWORKS. Since the budget Conference Committee resoundingly rejected that proposal, the governor is repackaging the idea with thin veneer of “reform.” The effect of his new proposal is to reduce CalWORKS eligibility so enormously that only the most employable people can enroll. That ignores the people who need help the most at a time when more people need CalWORKS to find work or transition into a new career.

The facts show a need for CalWORKS. Unfortunately, the governor is using the power of myth to justify his draconian proposal. The worst of these myths is that CalWORKS is a drain on the budget. As pointed out in a publication by the County Welfare Directors Association of California, CalWORKs has contributed over $12 billion to the General Fund since its inception. And, CalWORKs provides an important boost to the state’s economy, generating $7.1 billion in economic output, 137,000 private and public‐sector jobs, and $130 million in sales tax revenues. Why would we ever want to stop that?

CalWORKS is a job creator; the governor’s proposal is a family-killer.

Governor's Game-playing Continues

2009-07-07T17:52:00.000-07:00

LAST MINUTE UPDATE: The governor continues to play puerile games with the Legislature as we go about doing the people’s business. Tonight, his spokesman Aaron McLear suggested a local television station send a camera and reporter to my office to inquire about a bill I presented in Senate Agriculture which must have taken all of 30 seconds to present and pass out of committee. Doesn’t the governor's office have anything better to do, like solving the budget crisis? Join us Governor, and get back to work!

Oracle – The Sequel

2009-07-07T17:32:00.000-07:00

The governor continues to demand adoption of last-minute policy proposals which have nothing to do with solving California’s immediate cash crisis or closing this year’s deficit. In today’s blog let’s examine another one of the Governor’s so called “reforms.”

The governor proposes to change the method by which the state procures services from outside contractors. Anyone remember the “Oracle” scandal which haunted the Davis administration? Living up to the prophetic meaning of its name, Oracle is back!

As noted in a state audit, in 2001, a firm called Logicon was hired to advise the state regarding awarding a $95 million contract for information technology services. Logicon projected $111 million in savings to the state. After providing these consulting services to the state, Logicon served as a liaison and representative for Oracle. Then, the state entered into the contract with Oracle. But, instead of saving $111 million, the state ultimately lost millions of dollars and never got the services it contracted for. The contract was finally cancelled.

The governor’s proposal undermines the integrity of competitive bidding and actually encourages self-dealing. Current state law prohibits a firm which advises the state on awarding contracts from receiving the contract itself. This long-standing rule is simply common-sense protection for taxpayers and reflects the lessons learned from the Oracle debacle. But the governor now wants to create a loophole that would allow the same firm that advises the state to also be awarded the contract! All the consulting firm would need to do is advise the state that the contract would best be awarded in multiple phases.

Sounds like a pretty sweet deal for special interests, doesn’t it? But we’ve seen this movie before and it didn’t end well for the state. Now the governor proposes to make this flawed method our state’s standard process, arguing it will save the state an unknown amount of money. Such a process will surely benefit someone, but it isn’t the people of the State of California.

Governor Making Children Pay the Price

2009-07-06T18:41:00.000-07:00

It didn’t take long for Wall Street to react to our governor deliberately using our fiscal crisis to try to force a “reform” agenda completely unrelated to our cash crisis or our budget deficit.

Today, California’s fiscal outlook darkened with news that our credit rating – already the lowest credit rating of any state - just got lowered to BBB because we have started to issue IOUs. Now, the state will have to pay even higher rates of interest for any debt. Surely, this rate hike will not help our deficit.

The worst part about this terrible situation is that California didn’t have to be in it. The Assembly passed legislation on a bipartisan vote to prevent IOUs from occurring. But the governor recruited Senate Republicans to withhold their support, killing the legislation for lack of 2 Republican votes.

Subsequently, we discovered that the governor was too clever by half. It turned out that his maneuver impacted Proposition 98 funding in ways he had not anticipated, potentially costing the state billions in future years. As a result, he proposed suspending Proposition 98 for the second time in his 6-year tenure.

In addition, every day we fail to close the deficit costs the state another $25 million. By my calculations, that’s $17,361.11 per minute.

On Friday, the Big 5 met in the governor’s office. After a period of time, Speaker Karen Bass stomped out of the meeting declaring, “He broke it, he should fix it.” Serious negotiations cannot proceed to resolve the deficit until the governor gets real and stops issuing demands that have nothing to do with the deficit. While he contends that he can find $2 billion in savings this fiscal year, I remain skeptical. The governor never included any of these supposed cost-saving proposals in any of his 4 May Revise budget proposals or his July Revise. And, he never submitted them during the month-long Conference Committee process where numerous cost-cutting proposals were publicly studied and debated.

Take, for example, the governor’s new in-home supportive services (IHSS) proposal. He suggests we can find billions in IHSS savings by fingerprinting elderly and disabled clients, among other things. However, the entire program costs $1.4 billion per year. In other words, the governor says we can save more than the entire program costs.

I stand with the Speaker. We cannot continue to negotiate proposals that have nothing to do with our cash flow crisis or our budget crisis. Let’s stay focused on the problem at hand.

Stranger than Fiction

2009-07-02T17:50:00.000-07:00

Our Hollywood governor has a fine appreciation for drama, suspense, and blowing things up. I just wish he had an appreciation for happy endings.

We need the governor to find common ground instead of creating new divisions by demanding last-minute policy changes unrelated to budgeting. Take the proclamation of fiscal emergency he made yesterday. It demonstrates a use of creative license we expect from a team of Hollywood script writers, but not from a responsible governor. It shows a preference for fiction over fact.

The governor’s proclamation reads:
“WHEREAS California planned to borrow up to $6 billion through Reimbursement Warrants (commonly referred to as RAWs) to address part of the budget deficit, but this short-term borrowing is no longer an available option due to the recent decision of the federal government not to provide financial assistance or loan guarantees for this emergency, short-term borrowing.” (Emphasis added.)

The truth is the governor himself unilaterally revoked the authority necessary for the Controller to issue RAWs on June 11, 2009. See the governor’s letter here.

The governor’s proclamation also reads:
“WHEREAS On June 30, 2009, the Legislature failed to take action to pass a revised budget for fiscal years 2008-09 and 2009-10 to effectively address the unprecedented statewide fiscal crisis, thereby requiring billions of dollars in additional solutions.”

The truth is the governor actively recruited Senate Republicans to vote against the 3 bill package passed nearly unanimously by the Assembly which would have provided immediate cash relief to the state’s treasury. This maneuver cost the state an additional $7 billion. Finally, Democratic legislators bypassed the Republicans and passed a package of legislation by a majority vote which made deep cuts to services and altogether would have closed the entire deficit. When we sent the governor the first two bills worth $7.9 billion in spending reductions and $4.4 billion in revenue accelerations and enforcement, the governor vetoed them even though there were no new taxes.

California needs the governor to set aside political theatrics and help us get to a balanced budget. That’s the happy ending we are all waiting for.

Setting the Record Straight

2009-07-01T17:24:00.000-07:00

Today, the governor held a press conference that reminded me of the phrase “everyone is entitled to his own opinion but not his own facts.”

As was expected, the governor pointed the finger at the Legislature to explain why we do not have a budget revision in place today. But this criticism, among other things he said, is simply a manipulation of the facts. So, let me set the record straight. Consider these examples:
• The Legislature only had endless hearings and no negotiations – The Conference Committee had public hearings to give the public a say in the public’s budget. And, we have had negotiations. But the governor has consistently used Republican legislators to blow up the agreements we have made.
• The Legislature is protecting special interests – This is true only if one defines special interests to be children, the elderly, the disabled, college students from working families, and state park lovers. Conference Committee protected the people of California from their own governor. That is why we rejected the governor’s proposals to eliminate healthcare for a million children, to eliminate welfare to work programs while unemployment in teeters over 11%, to eliminate CalGrants, and to close 220 state parks.
• The Legislature must look at reforming state pensions, CalWORKS, and in-home care - Here we go again. Remember the multi-million dollar 2005 special election no one but the governor wanted? Every single one of the so-called “reform” initiatives written by the governor were resoundingly rejected by the voters. The governor is bringing them back and doesn’t want public scrutiny of the sweeping policy changes he wants as part of a budget agreement.
• The Legislature must solve the entire budget problem – The Legislature has solved the entire budget problem, including adopting many - but not all - of the governor's own proposals. The Conference Budget provides $23.6 billion in budget solutions that would have resolved our $19.5 billion deficit, including a $4.1 billion reserve. And, the majority vote budget provides $23.5 billion in budget solutions with a $4 billion reserve.

The governor also said that he wants to fully fund education. But the governor’s new budget proposal submitted today would suspend Proposition 98.

While the governor spins the state into chaos, California pays the price. Our fiscal condition continues to deteriorate. A court ruled that the state’s transfer of transit funds is illegal, potentially costing the state up to $3.4 billion. The National Park Service advised California that they would take over several state parks if the governor insists on closing them. And, the governor rejected his administration’s agreement with the federal receiver on state prison health care.

As we move forward, the context of our work is now shaped by three announcements made by the governor today:
• The governor signed an executive order requiring state workers to have three furlough days a month, the equivalent of a 14 percent pay cut;
• The governor called an emergency session under Proposition 58, which means the Legislature has 45 days to act on the budget; and
• The governor will not sign any legislation until the budget is passed.

Despite the governor’s antics, the Assembly passed a package of budget bills today that – with the exception of the first item – is similar to what the governor vetoed yesterday:
• AB x3 7 – Provides the State Controller with flexibility to manage IOUs so that they may be redeemed earlier than October for payment, pending the passage of a state budget revision;
• AB x3 10 – Enacts $7.9 billion in spending reductions; and
• ABx3 19 – Provides $4.4 billion in accelerated revenues and tax compliance measures.

Further information about these bills will be available here.

Without Compromise, the IOUs are Coming

2009-06-30T19:45:00.000-07:00

Compromise is the heart of politics. Unfortunately for California, the state may go off the cliff tonight because the governor and Republican legislators are uninterested in the concept. So, Californian may begin issuing IOUs for the second time in its history on July 2.

After saying for months that it’s the Legislature’s job to pass a budget, the governor has suddenly decided that he wants to dictate the terms of any budget agreement. But sweeping policy changes to CalWORKS, Medi-Cal, and state employment deserve a public vetting. The governor had all year to make public any of these proposals in his State of the State address, his address after the special election, or any of his four May Revision budget proposals.

And, contrary to their claims of wanting “sunshine and accountability” during budget negotiations, Republicans in the Legislature have never offered a comprehensive budget alternative for the public to consider. Like the governor, they want to negotiate a backroom deal in secret.

The public deserves better than that. We had a month of public hearings within the Conference Committee process. That was the appropriate time and place for budget proposals to be vetted. The budget belongs to the people of this state. The Conference Committee process was the public’s opportunity to weigh in on it. That is why we took over 30 hours of public comment.

But California’s fiscal crisis is bigger than any single person or political party in Sacramento. All legislators and the governor have taken oaths of office to serve the people of this state. All of us must make sacrifices in order to reach a budget agreement that can take effect immediately.

Absent that, the Democrats took responsibility for the state and sent the governor elements of our own budget plan. SBx3 16 included over $7.9 billion in spending reductions and SBx3 17 included $4.4 billion in accelerated revenues and tax compliance provisions, including some of the governor’s own proposals. The governor just dug in deeper and vetoed them.

And, absent Senate Republican support before midnight tonight for the SB 64 and SB 80, passed with strong bipartisan support by the Assembly last Thursday, we incur $7 billion in lost savings and new costs.

In the meantime, the clock keeps ticking towards IOUs. Those state payments subject to IOUs are listed here.

No Plan B, Governor?

2009-06-29T18:24:00.000-07:00

The Assembly passed three bills providing cash solutions to keep the state from issuing IOUs on July 2. Republicans in the Senate still refuse to support these solutions, which means that we will lose over $3 billion.

Recognizing that these are the governor’s proposals, Senate Budget Chair Denise Moreno Ducheny and I sent a letter to the governor’s Department of Finance today to ask for the governor’s backup plan. Our letter reads:

“As Chairwomen of the respective Budget Committees, we request that you outline, by close of business today, how your administration specifically plans to fill the $3.3 billion hole through 2009-2010, if the measures are not enacted.”

The response from Mike Genest, Director of the Department of Finance, states:

“…we have not developed a specific plan for addressing the potential loss of these solutions.”

In addition, the governor is holding the state hostage. As part of a budget agreement, he has submitted a list of new demands – sweeping policy changes – which could have been submitted with one of any of his four May Revision budget proposals. Now, he wants to reduce what the state contributes in pensions for new hires, change state retiree health care, scale back eligibility for people in the welfare-to-work program, create rules to root out fraud in-home services, and change portions of Medi-Cal.

While I am not averse to discussing these issues, none of them are simple subjects with simple solutions. The governor can’t lose focus on the real problem. His new demands don’t solve the immediate cash crisis. We have 30 hours until California faces financial ruin.

These are disappointing developments. The governor himself has imposed a July 1 deadline for passing a budget revision, yet he continues to throw roadblocks in our way.

48 Hours from Edge, Assembly Moves Majority Vote Budget

2009-06-28T21:18:00.000-07:00

Late into the night, the Assembly Democrats moved a budget revision to close our $19.5 billion deficit and provide a $4 billion budget reserve through a package of bills that only required a majority vote to pass.

The majority approach was not our first choice. We spent weeks in Conference Committee pursuing a bipartisan budget solution. But we have hit a wall. And, we cannot afford to wait any longer. We are 48 hours away from the state plunging into financial ruin. The Legislature has a duty to act with or without Republicans for the good of California.

There is no duty more fundamental for a Legislator than preventing the state from sinking into insolvency. This is not a political game. Unfortunately, some Republicans forget that.

As the old saying goes: lead, follow, or get out of the way. By voting against cuts and revenues tonight, the basis of any budget, Republicans ran from their responsibility to govern.

We gave legislative Republicans a chance to lead with us through a month of public hearings in the Conference Committee. That was the opportunity to present alternative budget proposals. Republicans squandered this opportunity.

With just 48 hours until our state begins issuing IOUs, now is not the time to come forward with sweeping ideas that will take more time to responsibly study than we have to act. As was noted by Assembly Speaker Karen Bass, to insist upon this as a negotiating tactic is no different than hijacking an ambulance.

Tomorrow, we expect the Senate will begin session to take up this majority vote budget. If it passes, the governor will finally get what he has asked for: a budget that resolves the entirety of our budget deficit with an adequate reserve.

While a complete analysis of this budget package will soon be available here, the budget passed by Assembly Democrats is largely based on the Conference Budget. When broken down by the individual bills within the budget package, the distinctions are within the chart below.

102 Hours to the Edge

2009-06-26T18:31:00.000-07:00

Over the last three days, the Legislature has been voting on elements of a budget revision package. The Assembly has taken up four bills totaling nearly $12.4 billion in cuts and savings towards our $19.5 billion deficit. Today, the Senate attempted to go even further toward closing the deficit, voting on other components of the budget package but obtaining no Republican support.

With just a little over 100 hours until the state plunges into financial ruin, I wonder when at least the bare minimum of Republicans will come out of their corners and do the business of governing that this state so desperately needs. We only need 4 Republicans in the Assembly and 2 in the Senate to pass these budget revisions, and, of course, 1 governor to sign it.

I am encouraged by the Assembly Republican leadership’s interest in working over the weekend to find common ground and reach an agreement. I was proud of our bipartisan approach taken yesterday when we passed three bills enabling the State Controller to pay the state’s bills this summer. These bills were not passed with a bare minimum of support, but in a nearly unanimous bipartisan effort. Nevertheless, the governor and Senate Republicans quashed yesterday’s fledgling bipartisan effort.

But here’s the real rub. Neither the governor nor Senate Republicans are offering solutions toward an agreement.

As the old saying goes, it’s deja vu all over again. The governor makes threats on an almost daily basis. Today’s threat is a third furlough day each month for state workers if we don’t send him a $24 billion budget solution all at once.

And, Senate Republicans are in tow. They apparently voted down the budget bills over the past three days because they were not solving the entire budget deficit all in one day. They also say that they want up to another $8 billion in cuts to reach any budget agreement but refuse to say where and how such cuts should be made. Recognizing their refusal to cut public safety or prisons, cuts of this scale can only come from education and eliminating the health and human services safety net.

The bottom line remains the same: we need to pass a budget package within a matter of hours. That means the governor and Senate Republicans must rise to the occasion and work with Democrats and Assembly Republicans to guide our state through this financial crisis. This is not a game. This is not a drill. The cost of their bravado is the financial ruin of California.

126 Hours from the Edge

2009-06-25T17:31:00.000-07:00

The Assembly passed three bills today that provide $4 billion in immediate cash solutions to avoid the state’s need to begin issuing IOUs on July 2. And, we plan to continue working on budget solutions every day into next week in order to close our budget gap.

The bills approved with bipartisan support by the Assembly today include:
• SB 64—Passed 68-0, it allows current year education savings to be applied immediately, bringing in almost $3 billion;
• SB 74—Passed 73-2, it utilizes cash management strategies to bring in $1 to $2 billion in July and August and $5 billion overall in fiscal year 2009-10; and
• SB 80—Passed 58-3, it makes technical changes to redevelopment funding action in the current year budget to ensure savings is legally achieved.

These bills must be enacted by July 1 in order to achieve this savings. Full analyses of these bills will soon be online.

In the middle of today’s vote, however, the governor issued this press release threatening a veto of these items if they reached his desk. Perhaps as a consequence of this threat, these three bills did not pass the Senate today. This serves no constructive purpose. We need the governor to engage in and encourage this bipartisan process to solve our budget challenges. The clock is ticking and time is running out. We don’t need the governor standing on the sidelines criticizing us for doing the work that must be done.

The State Controller has said that we need a budget passed by the end of June in order to keep California afloat. We must also pass a budget by this time in order to keep billions in federal stimulus funds that will help mitigate the effects of our economic crisis. That means California is roughly 126 hours away from going off the cliff.

Today, the Assembly passed a bipartisan solution to keep California financially afloat and make headway against our larger budget challenges. We are not making excuses or avoiding the hard decisions. We are charting the course of governance through this crisis.

6 Days from the Edge

2009-06-24T18:37:00.000-07:00

State Controller John Chiang announced today that California is 6 days from the edge. Unless the Legislature passes a budget by the end of June, California will begin to issue IOUs on July 2.

Check out the full press release here.

Unfortunately, Republican legislators withheld their support from a budget bill today that would make over $12 billion in cuts to help balance the budget. Apparently, they oppose revenues and cuts as strategies to close our budget gap.

These budget cuts were crafted with their input within the Conference Committee composed of 6 Democrats and 4 Republicans. Therefore, I don’t see the logic behind statements made by some Republicans today that Democrats have somehow “shut us [Republicans] out of the process.”

But encouraging signs are to be found. This afternoon Speaker Karen Bass announced that she will be meeting with Assembly Republican Leader Sam Blakeslee tonight to find common ground with the objective of identifying budget items for a vote tomorrow.

Vote Tomorrow on Conference Budget

2009-06-23T17:46:00.000-07:00

After weeks of hard work to craft a budget, a fiscal plan is ready to be passed by the Legislature and signed by the governor. With the budget vote set for tomorrow, we have the opportunity to put the budget crisis behind us, dust ourselves off, and chart a new course for California.

Crafted by the Conference Committee, this budget plan is guided by a simple goal: to protect valued public institutions that have been built over the last century within in a diminished capacity as we weather the current economic storm.

In this context, the Conference Budget:
• Bridges the projected deficit for the next two years;
• Provides a healthy reserve;
• Makes deep cuts in every area of the budget;
• Protects California's access to federal funds;
• Protects institutions Californians depend upon - The plan does not eliminate CalGrants, Healthy Families, State Parks, CalWORKs, Poison Control Centers and long term care programs (Adult Day Health Care, Linkages, MSSP) targeted by the governor; and
• Seeks targeted revenue - The plan includes targeted tax increases on oil companies and cigarettes. Also includes some fee increases to support parks and protect Californians against fires, earthquakes, floods, and other natural disasters.

In terms of overall budget solutions, the Conference Budget is very close to the governor’s $24 billion in budget proposals. The Conference Budget includes $23.6 billion in budget solutions and a $4.09 billion reserve. More specific details of the budget solutions are as follows:
• $12.27 billion in spending cuts and program savings;
• $3.7 billion in funding shifts;
• $3.2 billion in other solutions, including the $1 billion partial sale of the State Compensation Insurance Fund;
• $2.1 billion in revenue acceleration and fees;
• $1.9 billion in taxes;
• $194.8 million in revenue collection and enforcement; and
• $139 million in borrowing.

A detailed analysis of how the Conference Budget generally compares with the governor’s budget proposals was prepared by the nonpartisan California Budget Project. It is available online here.

Comparing Budget Plans

2009-06-17T16:32:00.000-07:00

The Assembly Budget Committee released an analysis of the budget plan crafted by the Conference Committee. A full copy of the full report is available online at the Budget Committee's Website. For a brief side-by-side comparison of our budget plan with the governor's, please refer to this chart.

Conference Committee Closes Budget Gap with Cuts and Revenues

2009-06-16T19:36:00.000-07:00

After 17 days of public testimony and hearings to close our state’s $24 billion deficit, the Conference Committee has taken action on all budget proposals. As a result of our actions, the conferees have voted to create a budget that includes both cuts and new revenues.

We made some difficult and painful cuts to the budget that we would never consider if our state’s financial circumstances were better. But with the need for state services rising each day, fairness demands that reject the governor’s proposals to eliminate the safety net. In order to maintain the safety net and a minimum of other services Californians value, revenues must be on the table.

Today in Conference Committee, we unveiled and approved new revenue proposals to obviate the need for further cuts. These proposals do not impact most Californians. But they help prevent cuts that would impact most Californians. This is the simple logic at work.

Californians expect their schools to be good, a safety net to be available to the needy, a college education to be affordable for working families, their air and water to be clean, and their parks to be open and kept up. In order to meet their expectations, we must to pursue new revenues. Today, for the greater good, we approved two new tax proposals that won’t impact most Californians.

Establishing a 9.9 percent tax on oil extracted from California would generate $830 million in FY 2009-2010 and $1.1 billion in future years. This precise proposal was part of the governor’s budget proposals last year. Increasing the excise tax on cigarettes by $1.50 per pack generates $1 billion in FY 2009-2010.

Tax increases require a 2/3 vote. Absent the pursuit of new revenues, wider and deeper cuts will be required. Getting new revenues requires a mere 6 Republican votes: 2 in the Senate and 4 in the Assembly. It is undemocratic that the votes of 6 Republicans can veto the votes of 75 Democrats.

Republican legislators and the governor claim the outcome of the May 19 special election is a referendum on new taxes. But the voters also rejected propositions that would have cut social programs for which voters approved new taxes. Therefore, it would be inappropriate to suggest anything other than a balanced approach is what the voters expect to our budget crisis.

While a complete run down of all actions made by the Conference Committee will be made available tomorrow by the Assembly Budget Committee and posted on this blog, here is a sample of the actions taken by the conferees today.
• Education – Adopted $5.5 billion in Proposition 98 reductions for K-14 education, including $4.5 billion to K-12 education. Provided $496 million in Proposition 98 funding for Home-to-School Transportation
• Higher Education – Adopted the level of General Fund reductions proposed by the governor for the UC and CSU system, $1.44 billion in 2008-2009 and $533 million in 2009-2010. The intent is to backfill these amounts with federal funds. Restored full funding for CalGrants. Retained academic preparation programs at UC/CSU.
• Corrections – Adopted a compromise proposal which reduces spending by $787 million, including $402 million in savings by restricting wobbler prosecutions to misdemeanors, targeted commutations, and alternative custody options. We also cut rehabilitation programs by $175 million instead of eliminating them as was proposed by the governor.
• Human Services – Rejected the governor’s proposal to eliminate Multipurpose Senior Services Program and minimized the reductions to other Aging programs. Adopted a compromise proposal restricting in-home supportive services. Domestic services will be provided to individuals FI scores of 4 and above, with critical exemptions for the most fragile recipients.

Budgeting Responsibly and Openly

2009-06-15T18:09:00.000-07:00

It takes time to craft a responsible budget. Is a governor who turned in the final details of his May 14 Revise Budget on June 12 in a position to lecture the Legislature on budget deadlines?

Yes, the Legislature needs to act quickly. But the Conference Committee is balancing this need with transparent deliberations about the budget options that lay ahead so that the public can monitor our decisions. I am committed to this as a responsible course of action, which takes a little time. But it doesn’t take a lot of time. Conference Committee is diligently working to conclude in the coming days.

The governor has politicized our commitment to an open budget process in saying that he would shut down the state on July 1 if the Legislature does not act quickly. Then, he revoked the Controller's authority to issue RAWs for short term money management. But every year the state borrows billions of dollars in short term capital during the summer months to meet cash flow needs. Surely the governor’s announcement didn't improve the market’s perception of California as an investment destination.

Today, the Conference Committee began the second run through the budget. Here are some of the highlights of today’s actions.
• Local Government – Rejected the governor’s proposal to borrow nearly $2 billion from local government through the suspension of Proposition 1A.
• Natural Resources – Approved the governor’s proposal to eliminate all General Fund support for the state park system, about $110 million. Approved a $15 vehicle license fee to fund state parks while providing free public access to most state parks.
• Health – Rejected the governor’s proposal to eliminate Healthy Families and approved a $70 million cut, which would create a waiting list for the program unless other funds are identified. Rejected the governor’s proposals to eliminate funding for HIV/AIDS prevention and education, HIV/AIDS testing, home care and counseling services to those living with AIDS. Rejected the governor’s proposed $12.3 million cut to the AIDS Drug Assistance Program, which provides low and moderate income people with access to retroviral therapies at subsidized prices. Adopted a compromise proposal cutting a combined $8 million from all HIV/AIDS programs.
• Transportation – Approved governor’s proposal to use $336 million in “spillover” funds from gas excise tax for General Fund relief. Approved governor’s proposal for $139 million in Proposition 1A funding for the High Speed Rail Authority.

Check out my new video about the challenges we face in order to craft a responsible budget.

http://www.youtube.com/watch?v=Ca3cZGWki04

Conferees Complete First Pass Through of Budget

2009-06-12T15:28:00.000-07:00

Day 15 of Conference Committee completed our initial review of budget proposals from the governor and the Legislative Analyst’s Office.

Some highlights of our actions are as follows:
• Transportation – Approved the governor’s proposal to take $986 million from local streets and roads funding for transportation-related bond debt retirement, and loaned$135 million in highway money to the General Fund. Rejected an LAO proposal to partially suspend Proposition 42 funds and redirect $1.152 billion to the General Fund.
• Revenues and Taxes – Approved a new program to go after tax cheats through the Financial Records Match project. Approved the governor’s proposal to increase the June quarterly estimated personal and corporate tax payments from 30 to 40 percent for a revenue acceleration of $610 million. Approved the governor’s proposal to increase withholding from personal income tax by 10 percent, starting October 2009, for a revenue acceleration of $1.7 billion.
• Resources – Approved the LAO’s proposal to reduce Marine Life Protection Act funding from the General Fund and backfilled it with funds from Proposition 84.
• General Government – Approved the governor’s proposal for cash solutions allowing the Pooled Money Investment Board to invest in federally insured Negotiable Order of Withdrawal accounts.

Our goal is to close the budget items early next week in order to put a budget on the floor shortly thereafter. However, I continue to be stunned by the governor’s failure to work with the Legislature to solve this historic budget crisis. Both parties represented on the Conference Committee are united in their determination to craft a budget plan in a deliberative, transparent way. All of us are frustrated with the governor. It is ironic how the governor has brought the Legislature together.

Without any heads up, in the middle of our deliberations today, we received considerable new details affecting the governor’s proposal to borrow nearly $2 billion in Proposition 1A funds affecting every local government in California. This occurred literally minutes before this particular item came up in the committee. While I was prepared to reject the governor’s initial proposal, the new details deserve consideration. But this simply delays our ability to conclude the committee’s business.

The governor’s tardiness makes it nearly impossible to complete our business in a timely and responsible manner. He has threatened to shut down the state unless he gets his way. At the same time, he has removed the State Controller’s ability to protect the state from this shut down. This is showmanship, not statesmanship.

For further information about Conference Committee agendas and summations of our actions, please visit the Assembly Budget Committee website at http://www.asm.ca.gov/budget and click the “Conference Agenda” tab.

Next 10 Updates its Annual “Budget Challenge”

2009-06-12T13:22:00.000-07:00

Next 10 has been providing this do-it-yourself tool on their website for 5 years where you can solve the state’s budget problem. It allows you to pick the options for cuts, revenues, and borrowing. Follow the link below and try for yourself.

http://next10.org/challenge

Governor Threatens to Terminate California

2009-06-11T20:27:00.000-07:00

Changing the subject never makes the real problem go away. Unfortunately for California, the governor has reduced our fiscal crisis to a theater of the absurd. If the governor doesn’t change course, it’s the people who will lose.

At any moment, I am convinced that the voice of Rod Serling will announce that the State of California is caught “in the Twilight Zone.” That is where the governor is leading us.

If there were ever a time when the governor and the Legislature need to work together, it’s right now. How else can we quickly and responsibly solve our state’s budget crisis?

Instead, the governor is making things worse with late, half-baked budget proposals. The governor has had 4 different May Revision budget proposals, the final details of which he finally managed to get to the Legislature late at night two days ago. That particular proposal affects the financial well being of every city and county in California.

Then, today, the governor initiated a high-stakes game of chicken with the Legislature. He challenged us to adopt his proposals or he’s prepared to shut down the state. On top of this bizarre behavior, he sent a letter to the State Controller stating that he refuses to issue a Revenue Anticipation Warrant (RAW) to “paper over our current budget shortfall.” Well, the Legislature objected to having a RAW within our budget plan months ago. So glad you could join us, governor!

The Legislature is committed to having a budget this month. In fact, Conference Committee will conclude its business early next week and have a budget put on the floor. And, we’ll do that despite the governor’s antics.

The Human Cost of Cuts – Linnea’s Story

2009-06-10T19:17:00.000-07:00

People with HIV or AIDS and their providers rallied at the State Capitol today to oppose the governor’s proposed budget cuts to a variety or programs which literally keep people alive. During the public comment period of Conference Committee, people told us about the importance of these programs in their daily lives. The testimony below from a brave 24 year old woman born with HIV was especially poignant.

Conference Committee Actions on Human Services and Public Safety

2009-06-10T19:05:00.001-07:00

Day 13 of Conference Committee completed our initial actions on the budget relating to human services and began our actions relating to public safety.

Most of the governor’s proposals in the human services budget are crying out for alternatives. Consequently, many items remain open in this area of the Conference Committee agenda. Eliminating the Multipurpose Senior Services Program, the Linkages Program, and adult day health care have huge human costs. But the conferees did reject the governor’s proposal to eliminate CalWORKS. That is a line that California cannot cross.

In public safety, we took many actions affecting our state’s court system. As a lawyer of over twenty years, I firmly believe in the importance of maintaining a fair, open, and efficient judicial system. That is why the governor’s proposal to cut General Fund support for our trial courts by 10 percent– about $168 million – must be handled with great care. The conferees approved this proposal today but with the commitment to continue working on implementation issues to assure the functioning of our courts.

Other actions adopted by Conference Committee today relating to public safety include:
• Approving the governor’s proposal to charge local law enforcement agencies lab fees for forensic services for a budget savings of $20 million;
• Approving the LAO’s proposal to cut the Bureau for Narcotics Enforcement at the Department of Justice by $20 million; and
• Rejecting the governor’s proposal to implement electronic court reporting.

The conference committee agendas for human services and public safety can be found online at the Assembly Budget Committee website at http://www.asm.ca.gov/budget under the “Conference Agenda” tab.

Help the Legislature Help You, Governor

2009-06-10T18:56:00.000-07:00

When the governor addressed a special joint session of the Legislature last week, he spoke with a cooperative tone and noted the urgency to take quick action on California’s budget challenges to avert a fiscal meltdown. But after this encouraging start, the governor’s follow up has been lackluster.

At that time, the governor said:
“I have faith in all of you [members of the Legislature]. I have faith in our ability to once again come together for the good of our state. Let’s move forward and put California back on the path to prosperity.”

But then, the governor upped the ante, saying he wants the Legislature to vote on a budget by June 15.

Unfortunately, the governor is not helping the Legislature meet the demands of his ambitious timetable. We have been frustrated in our efforts to get specifics from the governor about his budget proposals to close our $24 billion deficit.

For weeks we have been asking “Where’s the beef?” in Conference Committee. Budget decisions of this magnitude are not to be taken lightly or on faith. The devil is in the details and we are still asking for them. Just last night, we finally received the details about some of the governor’s big ticket budget proposals – such as taking nearly $2 billion from local government and saving $1 billion through getting flexibility from the feds in administering Medi-Cal. Yet, the June 15 deadline is only days away.

What has the governor been busy doing? Promoting the new $55,000 electric Hummer. The governor even wrote about it on Twitter..

As we bring closure to the Conference Committee process next week and attempt to meet the governor’s request for urgent action on the budget, I hope he will provide us with the information we need to succeed.

Conference Committee Actions on Health - Continued

2009-06-09T19:25:00.001-07:00

Day 12 of the Conference Committee completed our initial actions on the health budget. We also began on the budget relating to human services.

Some of the program eliminations and reductions proposed in the governor’s revised budget within health and human services will end up costing the state more in the long run and could endanger the lives of the most vulnerable people in the state. Consider these examples:
· Eliminating health care services for the poor will undermine the readiness of our emergency rooms across the state because more Californians will use them for medical care; and
· Restricting in-home supportive services eligibility from the current level of nearly 430,000 clients will increase California’s reliance on nursing home care at significantly higher cost.

As we move forward with making more decisions, the challenge is finding a way to make cuts that are not penny wise but pound foolish. Some cuts will result in a loss of matching federal dollars, which results in a larger economic impact of jobs and commerce lost in local communities. Many cuts disproportionately impact women, children and seniors in multiple ways. Conferees are grappling with these challenges as we try to find the cuts that result in the least amount of harm to individuals needing services and our state’s well being overall.

Here is a sample of the decisions made by the Conference Committee today. The impacts are a mixed bag of good and bad:
· Women’s Health – Approved $13.8 million for breast cancer early detection for uninsured Californians. Rejected the governor’s proposal to eliminate all $20.4 million in funding for domestic violence shelters in favor of a 20 percent reduction.
· Children’s Dental Care – Approved the governor’s proposal to save $2.9 million by suspending dental disease program, serving 300,000 school kids in 30 counties
· Mental Health – Approved governor’s proposal to eliminate mental health services other than federally required inpatient hospitalization and medication services for a savings of $113 million.

Overall, the Conference Committee has now taken actions which amount to approximately $800 million in cuts or budget savings within the health budget.

The conference committee agendas for health and human services can be found online at the Assembly Budget Committee website at http://www.asm.ca.gov/budget under the “Conference Agenda” tab.

Try Closing the Budget Gap

2009-06-09T12:45:00.001-07:00

All of us have ideas and priorities about how the state budget should work. Now you can put your views to work and see how you would close California’s $24 billion budget gap. The Los Angeles Times has created an interactive application which includes major proposals from the Governor and the Legislative Analyst’s Office as well as new revenue ideas often discussed. You can find the application at: http://www.latimes.com/news/local/la-statebudget-fl,0,95571.htmlstory.

Conference Committee Actions on Health

2009-06-08T18:37:00.000-07:00

Day 11 of the Conference Committee focused on programs and services within our health budget.

Who consumes state health program services in California? Everyone. I can’t think of a parent who hasn’t called a Poison Control Center hotline in an absolute panic. However, in overall dollar terms, most health programs and services are consumed by seniors, children, and the poor.

As we move forward to balance our state’s $24 billion budget deficit, we will need to make cuts to health programs since they – along with human services programs – comprise the second largest part of our budget. But we need to avoid those cuts that literally mean the difference between life and death. We also need to minimize the secondary impacts of cuts on our already broken health care system in California.

Scaling back or eliminating some of our state health programs occurs within the context of many Californians already living without other outlets for health care services. Over 6 million Californians, including over 800,000 children, are uninsured. This is more than any other state in the nation and more than the population of 38 states. Most of California’s uninsured work in full-time jobs.

Against this backdrop, the Conference Committee rejected some of the governor’s proposals. Consider these relating to women’s health:
· Eliminating the Breast and Cervical Cancer Treatment Program (BCCTP) for low-income women;
· Eliminating BCCTP and postpartum care for undocumented women; and
· Reducing reimbursement rates for family planning services, for which the federal government provides a 9 to 1 match.
We also rejected the governor’s proposal to eliminate the special dialysis program, which has been in place since the early 1970s.

The Conference Committee took many actions which amount to approximately $400 million in cuts or budget savings, which include:
· Prescription Drugs - $22.5 million by reducing Medi-Cal reimbursements to pharmacies to the lowest competitive rate that is routinely available to other drug plans or segments of the public. $1.5 million in savings through the therapeutic category review of anti-psychotic drugs dispensed through Medi-Cal. $1.25 million in savings through mandating HIV/AIDS and cancer drug rebate use.
· Technical Adjustments – $26.9 million in savings by accounting for eligibility changes within Medi-Cal. $6.6 million in savings by changing how California conforms to the federal Children’s Health Insurance Program Reauthorization Act of 2009.
· Unspecified Budget Reductions - $323 million cut from local assistance to Medi-Cal. $14.3 million cut to state operations of Medi-Cal.

We also raised the Quality Assurance Fee paid by nursing homes which will generate $18.3 million to offset General Fund support.

The conference committee agenda for health can be found online at the Assembly Budget Committee website at http://www.asm.ca.gov/budget under the “Conference Agenda” tab.

Conference Committee Actions on Higher Education and Child Care

2009-06-05T15:50:00.000-07:00

Day 10 of the Conference Committee focused on higher education and child care. We discussed items such as:
- $1.969 billion in cuts to the CSU/UC system;
- $935 million in cuts from community colleges;
- Eliminating funding for child care for people enrolled in CalWORKS; and
- Eliminating funding for student academic preparation programs.

We chose to not yet act on these proposals because the depth of the cuts we will have to absorb is shaped by the overall structure of the budget that we are putting together. Many of these programs proposed to be cut or eliminated make our society more inclusive and help disadvantaged communities have access to education. Do we want a state in which only the wealthy can go to college? That's not my vision of our collective future.

There was one proposal of the governor's that the Committee soundly rejected - to eliminate the CalGrant entitlements and new awards that helps hundreds of thousands of students go to college every year.

At the same time we are discussing cutting community colleges, we are seeing a fundamental, de facto shift in the role community colleges play. UC's and CSU's are turning away freshmen applicants who are qualified and in a more affluent time would have been admitted. The message being given to these students is: spend your first two years at a community college and then transfer to a UC or CSU as an upper division student. If we cut back access to community colleges, however, we turn away thousands of students who seek a college education. Thus, the committee is struggling with how to absorb cuts while still accommodating these students.

We also approved approximately 30 items relating to the budget, all with a unanimous vote. A sample of these actions includes:

-Technical budgeting adjustments to the CSU/UC system, accounting for the failure of initiatives on the May special election to pass, notably Proposition 1C (Lottery Securitization);

-Adding reimbursement authority to accept hundreds of millions of dollars in federal stimulus funds for higher education.

In other words, we acted on the items detailed pages 44-46 of the agenda. A full copy of today’s agenda is available on the Assembly Budget Committee website at http://asm.ca.gov/budget under the “Conference Agenda” tab.

SCHEDULE UPDATE:

Next week we will begin our discussion on the governor's proposal to eliminate CalWORKS and Health Families. The Committee will meet Monday at 2:00.

Conference Committee Actions on K-12 Education

2009-06-05T11:02:00.000-07:00

Day 9 of the Conference Committee focused on K-12 education. We discussed many items on our lengthy agenda which lists 24 pages of budget proposals currently under consideration, such as:
· Cutting nearly $3.5 billion in K-12 revenue limit funding;
· Eliminating special funds for student transportation;
· Suspending most K-14 education mandates; and
· Giving school districts the discretion to shorten the school year by 7.5 days.

What would these proposals mean? California drops towards the bottom of states in providing resources to education. Children in rural communities have a harder time getting to school because school busses may stop running. And, our schools have less time to educate students and put them on a path to succeed in our increasingly competitive global economy.

We also approved numerous items relating to the K-12 education budget, most with a unanimous vote. A sample of these actions includes:
· $2.7 million shifted from the Teacher Credentials Fund to the General Fund; and
· Making technical adjustments of federal funds in budget, such as:
· $1.13 million decrease from health and tobacco prevention education for students;
· $9.4 million in augmentations for local assistance to child nutrition programs; and
· $2.3 million increase to Safe and Drug Free Schools Program.

In other words, we acted on the items detailed on pages 12, and 20-30 of the agenda. A full copy of the agenda is available on the Assembly Budget Committee website at http://asm.ca.gov/budget under the “Conference Agenda” tab.

Conference Committee Actions on State Government Reorganization

2009-06-03T19:02:00.000-07:00

Day 8 of the Conference Committee brought the end of the public comment period and the beginning of our taking concrete actions to address California’s budget challenges. Today’s actions focused on the reorganization of state government.

Today’s agenda had six items. These items and the actions taken by the Conference Committee were as follows.

1. Adopt the Governor's proposed Control Section 13.25 to allow DOF to make necessary budget adjustments to reflect reorganizations and consolidations, with the intent of achieving $50 million in savings.
a. Adopt the Control Section and score the savings.
b. The Legislature has already allowed the Governor's IT Reorganization Plan to go into effect, but recognizing the savings from that plan have not been incorporated in the budget, the Committee will score savings associated with that plan as well.

**CONFERENCE ACTION: Passed 10-0.

2. Restructure the Integrated Waste Management Board:
a. Eliminate the Department of Conservation, and the Department of Toxics Control, and consolidate their functions into the Integrated Waste Management Board.
b. Restructure the Integrated Waste Management Board as the Integrated Waste Management and Recycling Board.
c. Reduce the Board's membership, make the Board part time, and reduce salaries to be in line with other part-time boards.

**CONFERENCE ACTION: Refer to policy committee, passed 10-0.

3. Restructure the Unemployment Insurance Appeals Board
a. Restructure the Unemployment Insurance Appeals Board to make it a part time board, streamline functioning, and reduce board member salaries to be in line with other part-time boards.

**CONFERENCE ACTION: Refer to policy committee, passed 10-0.

4. Request Policy Committee's review, in addition to the Integrated Waste Management Board and the Unemployment Insurance Appeals Board, all full-time salaried boards and consider making them part-time. These include:
a. Agricultural Labor Relations Board
b. Air Resource Control Board
c. Energy Resources Conservation and Development Commission
d. Fair Political Practice Commission (chair is full-time only)
e. Gambling Control Commission
f. Occupational Safety & Health Appeals Board
g. Board of Parole Hearings
h. Public Employment Relations Board
i. Public Utilities Commission
j. Water Resources Control Board
k. Workers’ Compensation Appeals Board

**CONFERENCE ACTION: Refer to policy committee, passed 10-0.

5. Eliminate Agency Level of State Government
a. Eliminate state agencies, including the State and Consumer Services Agency, Business, Transportation and Housing Agency, Health and Human Services Agency, Resources Agency, Environmental Protection Agency, and the Labor and Workforce Agency.
i. Move the Secretary and any other vital positions to the Governor's office and/or other existing state departments.
ii. Have LAO report back to the Conference Committee and appropriate policy committee's on what programs and functions (and associated positions) should be maintained, and what entity can best perform those functions, as well as which duplicative positions should be eliminated.
b. Office of the Secretary of Education
i. Eliminate the Office of the Secretary of Education and move the Secretary position to the Governor's office.
c. Office of Planning and Research
i. Eliminate the Governor's Office of Planning and Research (OPR)
ii. Move the Director of the Office of Planning and Research to the Governor's Office.
iii. Have LAO report back to the Conference Committee and appropriate policy committee's on what programs and functions (and any associated positions) should be maintained, and what entity can best perform those functions.

**CONFERENCE ACTION: Passed 10-0, with a request for input from the Legislative Analyst’s Office on implementation details.

6. Refer the remaining proposals made by the Governor and LAO to the appropriate Policy Committee's for review and request that they report back to the Conference Committee on any proposals that appear feasible and appropriate.

**CONFERENCE ACTION: Passed 10-0.

Public Comment Period Concludes for the Conference Committee

2009-06-03T19:01:00.000-07:00

No Conference Committee has ever devoted time to receiving public comment. This year, we took an historic step to open up the process and devoted some 30 hours of hearings to public comment about the governor’s May Revise budget proposals.

Many people – not professional lobbyists – made the trip to Sacramento to voice their concerns. Approximately 2,000 people provided written or verbal comments. Many others came just to witness the hearings. I was gratified by the diversity of people who took the initiative to get involved.

Some pundits called the public comment period a parade of pleas for mercy or a trail of tears. It is true that many individuals got emotional while testifying. But it is hard not to, considering some of the proposals the governor put on the table. Some individuals were jolted by the governor’s proposals to eliminate safety nets. These proposals impact the ability of millions – children, the disabled, seniors, and the poor – to survive. Other individuals were crushed with the prospect that their dreams of attending college were at risk because of the governor’s proposal to phase out CalGrants. Same goes for the dreams of those attending junior colleges who rely on Extended Opportunity Programs and Services (EOPS) that are facing cuts under the governor’s proposal.

This budget is about the people of California and the kind of state they want to call home. Public testimony humanized the budget process. It showed the impact of abstract cuts on the lives of Californians. Public comment also gave the public ownership in the budget process ahead. We received constructive input and ideas that will help us move forward with the difficult decisions that lay ahead.

The Governor’s State Budget Address to the Legislature

2009-06-02T19:49:00.000-07:00

The governor spoke to a special joint session of the Legislature today. I encourage you to read it. A copy is available at http://www.gov.ca.gov/press-release/12412/.

Overall, I could not help notice how he and I differ about what is at stake in the decisions that lay ahead.

The governor said:
“People come up to me all the time, pleading, ‘Governor, please don’t cut my program.’ They tell me how the cuts will affect them and their loved ones. I see the pain in their eyes and hear the fear in their voice. It’s an awful feeling. But we have no choice. Our wallet is empty. Our bank is closed. Our credit is dried up.”

When the governor went on to say that “we cannot make this budget just about cuts,” I was hoping to hear him talk about maintaining a minimum standard for the people of California. But he didn’t.

As the Chair of the Conference Committee, I have presided over numerous day-long hearings where the public has commented on the governor’s budget proposals – including the elimination of safety net programs at a time when the need is greatest. Consequently, I have developed a different perspective on the weight of the budget decisions we face.

One example of public testimony was especially poignant. A brave young woman – just 24 years old – came to tell the Conference Committee last Wednesday that she credits her survival to the state program that provides the expensive antiviral drugs she takes daily. With that HIV-prevention program facing the ax, she came to plead for life. Nearly in tears, she said, "If these cuts take place, you're not just cutting money from the program -- you're cutting my life. I choose to live. Please don't make me die. My choice is life."

Each budget cut has an impact, a human cost. And, under the governor’s budget proposals, many of these costs are paid by women, children, seniors, and the disabled.

Public Safety, Natural Resources, and the Budget

2009-06-02T15:26:00.000-07:00

Day 7 of the Conference Committee reviewed the Governor’s proposals affecting public safety and natural resources.

In public safety, the governor’s proposals primarily affect our state prisons system and our courts. Consider these proposals:
· $181 million in savings through commuting the sentences of undocumented immigrants in our state prison system and working with the federal government to deport them;
· $120.5 million in saving from releasing certain inmates one year early from prison and place them on house arrest with Global Positioning System monitoring for the remainder of their sentence;
· $99.9 million in savings by changing sentencing options for specific crimes that may be prosecuted either felonies or misdemeanors, making these offenses punishable by county jail and/or probation instead of state prison;
· $787.1 million in savings through eliminating funding for most rehabilitative services
· $168.6 million in cuts to our courts;
· $13 million in savings by phasing in electronic court reporting at a rate of 20% a year.

These cuts translate to real community impacts. The counties that sentence the most people to prison, subsequently resulting in state prison costs, are detailed in the map below which highlights these costs on a per capita basis.

Most members of the public attended today’s hearing to address what is perhaps the governor’s most provocative natural resources proposal calling for the closure of 221 state parks. This is about 80% of all state parks.

As was testified by members of the public, closing state parks would impact the vacation plans of millions who live in and visit our state. This would have an economic impact on our state. According to the California State Parks Foundation, each dollar invested in state parks generates $2.35 cents in revenue for the state’s general fund. The public also testified that closing parks would risk the safety of cultural housed artifacts within our historic parks and create a public safety problem across our state.

A full list of the parks that will close if this proposal is enacted is available at http://www.calparks.org/takeaction/closurelist.html.

Childcare, Education, and the Budget

2009-06-01T16:54:00.000-07:00

Day 6 of the Conference Committee reviewed the Governor’s proposals affecting child care, K-12 education, and higher education.

Consider these child care proposals:

· Eliminating funding for community care licensing; and

· Eliminating funding for child care for for poor families who are transitioning back into employment through the CalWORKS program.

The latter proposal conforms with the governor’s proposal to eliminate CalWORKS funding. With unemployment now at nearly 11%, the overlay of these two proposals would, if enacted, have enormous effects on California families struggling under the weight of our current economic recession.

These childcare proposals amount to throwing our state’s women and children overboard when our state and our economy are in crisis. This is reinforced by the governor’s proposals affecting education.

In overall dollar amounts, the proposed education cuts are the largest cuts that the governor has offered in his May Revise budget. Consider these proposals for the next 13 months, applicable to the end of the current fiscal year and the 2009-2010 budget, include:

· $5.2 billion in cuts from K-12 education;

· $3.1 billion in cuts to higher education, including phasing out CalGrants (Note: approximately $1.2 billion in cuts would be backfilled with federal funds); and

· $935 million in cuts from community colleges.

Californians have prioritized education spending above all other areas of the budget. This is why education spending is the largest single component of the budget. In recent years, state expenditures for K-12 and higher education combined have been nearly half of the state budget. And, K-12 education funding is the single largest area of spending. As the largest pot of budget funds, K-12 education becomes a target in the governor’s approach to balancing the budget predominantly through cuts. These cuts will not be felt equally in communities across California due to differing levels of enrollment.

Consider these charts highlighting K-12 enrollment and the top 20 counties receiving K-12 spending on a per capita basis. The top 5 counties for education expenditure – the counties of Modoc, Tulare, Merced, San Bernardino and Imperial – are also among the poorest counties in the state.

Budget Links Between the State and Local Governments

2009-05-28T17:11:00.000-07:00

Day 5 of Conference Committee reviewed the governor’s budget proposals affecting transportation and local government. But the controversy really centered on the governor’s proposal to borrow nearly $2 billion from local governments through the suspension of Proposition 1A.

The voters passed Proposition 1A in 2004 to limit the state’s ability to borrow local government funds to help balance the state’s budget. The initiative ensures local property tax and sales tax revenues remain with local government unless the governor declares a fiscal necessity and two-thirds of the Legislature concur.

The governor’s budget proposal allows the state to divert up to 8 percent of property tax revenues of cities, counties and special districts to schools. Under the terms of 1A, repayment would have to be made within three years with interest. The governor’s proposal also proposes legislation to authorize a joint powers authority to facilitate local government borrowing against the state's repayment promise.

A representative from the California State Association of Counties testified today that counties are already struggling to manage state and federally‐required programs and services. Counties assert that the suspension of Proposition 1A would exacerbate this serious problem. When coupled with the governor’s proposal to eliminate or substantially reduce many health and human services programs administered by counties, the impact of the governor’s proposals on local communities could be substantial. According to a recent study, every state dollar spent on CalWORKS grants – for example – generates $7.35 in total economic impact. This report is available online at http://www.cfpic.org/downloads/CFPIC_Beacon_report09.pdf.

Furthermore, according to the League of California Cities, 96 cities in California have declared a state of severe economic hardship and noted their opposition to the governor’s proposal. A listing of these cities is available at http://www.cacities.org/index.jsp?displaytype=11&zone=locc&section=&sub_sec=&tert=&story=27737.

Recognizing that the financial links between the state and local governments can be confusing, the non-partisan Legislative Analyst’s Office produced a chart summarizing the history of this complex relationship. It can be found at
http://www.lao.ca.gov/handouts/localgov/2008/major_milestones_032708.pdf.

Conference Committee Schedule, FY 2009-2010 Budget

2009-05-28T11:31:00.000-07:00

Below is the latest schedule for Conference Committee:

Thursday, May 28
9:30 a.m. – State Capitol Room 4203
Topic: Local Government and Transportation Public Comment

Friday, May 29
Will not be meeting today

Monday, June 1
9:30 a.m. – State Capitol Room 4203
Topic: Education/Higher Education/ Child Care and DevelopmentPublic Comment

Tuesday, June 2
9:30 a.m. – State Capitol Room 4203
Topic: Other IssuesPublic Comment/End of Public Comment Period

Wednesday, June 3
9:30 a.m. – State Capitol Room 4203
Topic: Consolidation and Reorganizations

Thursday, June 4
9:30 a.m. – State Capitol Room 4203
Topic: Education and Higher Education

Friday, June 5
9:30 a.m. – State Capitol Room 4203
Topic: Health

Impact of Governor’s Proposed Health and Human Services Cuts

2009-05-27T17:52:00.000-07:00

Day 4 of Budget Conference Committee reviewed the governor’s proposals to cut almost $5 billion in funding for programs benefiting our seniors, women and children, developmentally disabled, and the poor. In reaction to these cuts at today’s hearing, a member of the public testified that a society which is able but unwilling to provide for its most vulnerable citizens is a contemptible society.

Consider this partial list of the governor’s proposed cuts to health and humans services:

· Elimination of the CalWORKs program;
· Elimination of the Healthy Families Program;
· Eliminating certain Medi-Cal state-only programs;
· Elimination of community based services programs at the Department of Aging;
· Eliminate State funding for Community Care Licensing;
· Elimination of remaining General Fund for Maternal, Child, and Adolescent Health;
· Elimination of funding for community clinic programs, such as Rural Health Services and the Seasonal and Agricultural and Migratory work programs;
· Elimination of funding for drug treatment programs established by the voters through Proposition 36;
· Reducing in-home supportive services eligibility and care provider pay;
· Reducing funding for foster care rates; and
· Reducing SSI/SSP monthly payments benefiting the aged and disabled to the minimum allowed under federal law.

All of us know someone who will be affected by these cuts. This is not just a matter of balancing the state’s books. For some Californians, it is a matter of life and death.

A society in crisis should not throw women, children, and seniors overboard first.

Where are the effects of these cuts most likely to be felt in California? Consider these three maps, which provide a snapshot into the communities which rely the most on the health and human services budget.

Assembly Budget Committee Releases Report on Governor’s Revised May Revision

2009-05-27T15:35:00.001-07:00

The Assembly Budget Committee released a report today about the governor’s plan to cut an additional $5.5 billion within his May Revision Budget. The report summarizes the governor’s budget proposals released on May 14th as well as May 26th.

The report can be found on the Budget Committee’s Website at:
http://asm.ca.gov/acs/Committee/C4/Highlights%20May%2026th%20Revision%20Document.doc.

Also, for up to date Hearing Schedules and Agendas please visit the Budget Committee Website at:
http://asm.ca.gov/budget.

Governor’s Proposed Cuts Dismantle the New Deal

2009-05-26T17:00:00.000-07:00

Day 3 of Budget Conference Committee reviewed the governor’s proposals for $5.5 billion in additional cuts to our budget. This is not my vision for the Golden State.

To use the words of conservative leader Grover Norquist, this is what it looks like to “shrink government to the size it can be drowned in the bathtub.” Unfortunately, it’s the people who rely on government services who will feel the pain. So, we are not talking about “starving the beast.” We are talking about letting poor children suffer and die for lack of medical treatment. We are talking about letting our seniors rot alone in their homes for lack of attention. We are talking about accepting the undoing of our state and our collective future.

The following lists the governor’s proposed cuts released today by the Department of Finance.