New state budget plan may carry hard choices

San Francisco Chronicle ^ | 5/12/8 | Matthew Yi

[SmithL]

Sacramento -- With the state's fiscal crisis worsening, there will likely be no good news when Gov. Arnold Schwarzenegger unveils a revised version of his budget proposal on Wednesday.

Schwarzenegger warned last month that California's looming budget deficit could be as high as $20 billion, a staggering figure that represents about one-fifth of the state's annual general-fund spending.

Efforts to close the gap are expected to result in cutting popular programs as well as generating more revenues by increasing taxes or fees. And with budget negotiations likely to drag on through the summer, this story probably won't have a happy ending for the actor-turned-governor or the 38 million Californians, experts say.

"If this was a Schwarzenegger movie, there would be some secret weapon or escape hatch, but unfortunately this is Schwarzenegger reality, not a movie," said John Pitney Jr., a political science professor at Claremont McKenna College. "He's going to lose political capital no matter what he does."

The governor already has been on a losing streak. He trumpeted 2007 as the year of health care reform, but a plan that he brokered with Assembly Speaker Fabian Núñez, D-Los Angeles, failed to gain approval by a Senate committee.

Schwarzenegger declared 2008 would be the year of education, but with state's revenues tanking, the governor has proposed cutting nearly $5 billion in K-12 and higher education for the new fiscal year that begins July 1.

More recently, the governor has been criticized on many fronts after his budget proposal in January included across-the-board cuts that would result in suspending the state's education funding obligations, closing state parks and releasing early tens of thousands prisoners.

[RC2]

When a state puts most of its money into illegals, what do you expect?

[Eric in the Ozarks]

Arnie could take a lesson from Rockytop.

[Smokin' Joe]

So open up offshore oil exploration and get a cut for the state coffers. Sheesh.

[mpreston]

I wonder how much this post impacts the budget shortfall?

Growing Deficits Threaten Pensions-Accounting Tactics Conceal a Crisis For Public Workers

http://www.freerepublic.com/focus/f-news/2014762/posts

. . . This gap is growing more yawning with the years. It has already presented taxpayers with a whopping bill that is eating up a vast portion of government budgets at the cost of other services. In Montgomery County, for instance, pension and retiree health care costs are already higher than the combined budgets for the departments of transportation and health and human services. . . .

What percent of the budget is now flowing to pensions plans?

[Myrddin]

The government employee unions, like the auto workers unions, have negotiated sweet deals for their members over the years. The same defective thought process drove both of them. The difference is that when a commercial company makes that kind of error, it goes bankrupt and out of business. Government doesn't go out of business. The taxpayers will be shouldering the burden whether or not the defective entity (government) deserves to go bankrupt as a consequence of stupid management and greedy unions.

[Jack Black]

Vallejo’s Bankruptcy Highlights Need for Transparency in Government

By Peter Scheer
Executive Director
California First Amendment Coalition

The city of Vallejo has taken the extraordinary step of filing for federal bankruptcy protection. While the financial distress of this San Francisco suburb (population 117,000) is especially acute, its fiscal problems are fundamentally the same as those facing many California cities and counties—and, indeed, the state itself.

To the familiar litany of causes—falling sales tax revenue, the home mortgage crisis leading to collapsing home prices and lower real estate taxes—there needs to be added one more: Too much government secrecy.

Vallejo is broke, and other cities and counties may be close behind, because their personnel costs—salary and benefits for current employees and retirees—are higher than they can afford. While decisions at the state level are partly to blame, ultimate responsibility for the mismatch of revenue and expenses rests with local elected officials who, meeting in secret, have managed to avoid public discussion of the true cost and fiscal impact of the pay deals that they have approved.

If no one is watching, it’s easy for public officials to give generous pay and benefit increases without having a clue how to pay for them. That’s not so easy to do in a public session, where voters demand to know how much taxes will have to be raised, and how much other expenses cut, in order to make good on the promised increases in compensation. Such resistance is called political accountability, and it obviously depends on public access to the meetings in which elected representatives make their decisions.

Although in theory legislative bodies in California must operate in the “sunshine,” the Brown Act, the state’s open-meetings law, carves out a huge exception for negotiations with public employee unions. The combined effect of this exception, and separate provisions of the labor code, is to close the door, pull down the shades and turn off the lights on virtually all decisions relating to employee compensation and other terms of union contracts (”collective bargaining agreements”).

Negotiating positions are determined in secret, negotiations themselves are conducted in secret, and negotiated contracts are ratified in secret. By the time the public gets to see the compensation provisions of a new union contract, it is already a done deal—indeed, any effort to change the terms likely would be a breach of the contract.

This cozy arrangement is very much in the unions’ interest, since transparency would risk public opposition, and very much in politicians’ interest, since they get to be generous with public funds without having to be responsible for them. Only one party is screwed: the public.

Vallejo’s resort to bankruptcy court is a catastrophe, not least because it reflects the total collapse of the city’s political process and the surrender of its sovereignty to an unelected federal judge. If filing for bankruptcy doesn’t humiliate city officials, it’s hard to imagine what would.

For all its problems, however, bankruptcy proceedings at least will be conducted in public, all legal and factual documents in the case will be open to the public, and the people of Vallejo will have their first real opportunity to understand the true costs of city employees’ pay and benefits, as well as the options for bringing costs in line with revenues.

For unions, bankruptcy court is a potentially costly defeat. The judge has the power not only to protect the city from its creditors, but also to void the union contract and, in that way, force city employees to accept a pay package in keeping with the city’s capacity to pay.

The union has none of the leverage with the judge that it had with Vallejo’s elected officials. It can’t lobby the judge or give him campaign contributions, obviously. Having overplayed its hand, the union now finds itself in the uncomfortable position of having to justify, in a public forum, its claims to the city’s limited, and declining, resources.

Vallejo is the first California municipality to declare bankruptcy in the current economic downturn; others are likely to follow, unfortunately. These debacles are sure to have repercussions in Sacramento, as legislators consider measures to prevent cities from reaching the financial abyss into which Vallejo has fallen.

Of all the steps they could take, the most important would be to end the secrecy surrounding public employee contract negotiations.

Peter Scheer, a lawyer and journalist, is executive director of the California First Amendment Coalition (CFAC). CFAC is a non-profit public interest organization dedicated to enhancing rights to freedom of speech and open government through information and educational services, strategic litigation, and lobbying.

[Myrddin]

For unions, bankruptcy court is a potentially costly defeat. The judge has the power not only to protect the city from its creditors, but also to void the union contract and, in that way, force city employees to accept a pay package in keeping with the city’s capacity to pay.

That is the best news in your post. The unions and politicians in San Diego engaged in similar behavior. Lots of posh benefits for employees and retirees, but the city never fully funded them. As politicians do, they spent every penny they could. In time, the failure to fund the retirement funds and inability to cover the more public expenditures came to light. Criminal convictions, resignations and a suicide were the consequences to the city council. It's going to be a long road to any sense of fiscal responsibility in that city.

[jrp]

The public employee unions have done a masterful PR job in San Diego - they are massively overpaid and yet have managed to convince much of the public of just the opposite.

[Jack Black]

I agree. It’s great news. There is a nuclear option to use against greedy self serving unions.