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CA: AP NewsBreak: Plan tears up credit card, maintains school money
Bakersfield Californian ^ | 1/6/05 | Tom Chorneau & Jennifer Coleman - AP

Posted on 01/06/2005 1:56:40 PM PST by NormsRevenge

SACRAMENTO (AP) - A sweeping constitutional amendment proposed by Gov. Arnold Schwarzenegger would essentially tear up another of the state's big credit cards, limiting future Legislatures' ability to borrow from special accounts to pay general government expenses, the governor's finance director said Thursday.

Aimed primarily at two funds that have been raided repeatedly - schools and transportation - as well as other special funds, the proposal is the centerpiece of a reform package Schwarzenegger will send the Legislature during a special session that began Thursday.

If approved by lawmakers and the voters, the administration said those reforms will help fix the state's ongoing spending problems, Finance Director Tom Campbell said.

"There's no enforcement mechanism for the budget to balance," Campbell said. "What we are trying to do is address the biggest part of that."

Facing a deficit of more than $8 billion next year and an even higher shortfall in 2006-07, Schwarzenegger told a statewide audience in his State of the State speech Wednesday the state's system to pay for major services is broken.

While Schwarzenegger focused on flawed funding formulas started by previous administrations, his plan would also relieve him of commitments he made to fix last year's budget problems. Those include a commitment to repay schools $2 billion they would have received in the current budget year according to a formula, known as Proposition 98, that voters approved in 1988. The new proposal would slow the rate of repayment, meaning schools could receive far less than what the governor initially committed to.

Schwarzenegger's proposals also include a related constitutional change that would trigger across-the-board spending cuts if spending exceeds revenues.

As proposed, the cuts would be triggered only if the Legislature and the administration cannot agree on a budget plan 30 days past the start of a new fiscal year. Also, the across-the-board cuts would be imposed if, after a budget has been approved, spending would exceed forecast revenues and lawmakers and the administration cannot resolve the gap themselves.

Although Schwarzenegger said he wanted to change the formulas that drive much of the state's spending, his proposal would only change how the state repays the money it already owes each of the earmarked accounts.

In the 2006-07 budget year, the state will owe $8 billion to the major earmarked accounts for schools, transportation and other projects. The repayment formulas escalate the debt, much like a credit card balance, and is one of the main reasons state income can never catch up with spending, Campbell said.

Part of the proposed reform package would give the state 15 years to pay back the money owed. Then, by prohibiting lawmakers from using those moneys again, they would also be eliminating the payback problems.

In the case of schools, the Legislature is bound by Proposition 98, which set a minimum funding level for public schools and community colleges at approximately 40 percent of the state general fund.

The Legislature can vote to suspend Proposition 98, which it did last year. The administration's proposal would also prevent that from happening in the future.

Kevin Gordon, executive director of the California Association of School Business Officials, said school administrators are worried that across-the-board cuts ordered in the middle of a fiscal year could be worse than a temporary suspension of Proposition 98.

Currently, if the Legislature and governor suspend Proposition 98, the difference is deferred for several years but schools will eventually be repaid, he said.

"This is going to a model that says now we're going to cut you and never pay you back," Gordon said.

Those midyear cuts come when schools have already hired teachers, signed busing contracts and made other commitments they have to honor, he said.

The across-the-board cuts "won't be discretionary," he said. "It will be set in the Constitution and if the budget says there's an imbalance, cuts are automatic."

---

On the Net:

http://www.dof.ca.gov/

Gov.'s Department of Finance


TOPICS: Culture/Society; Government; Politics/Elections; US: California
KEYWORDS: calbudget; calgov2002; california; creditcard; maintains; money; prop98; school; tearsup
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1 posted on 01/06/2005 1:56:42 PM PST by NormsRevenge
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To: NormsRevenge

Watch the Dems cry that reserving funds for the schools is "hard hearted and mean spirited".

And that we should take money away from the schools "for the children".

Hypocrites.


2 posted on 01/06/2005 2:10:53 PM PST by PeterFinn (Liberals are a greater threat to the USA than are Islamofascists.)
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To: NormsRevenge; Carry_Okie; Amerigomag; SierraWasp; farmfriend; tubebender; heleny; DoughtyOne; ...
Wow... is this loaded. Let me see if I get this right.

While Schwarzenegger focused on flawed funding formulas started by previous administrations, his plan would also relieve him of commitments he made to fix last year's budget problems. Those include a commitment to repay schools $2 billion they would have received in the current budget year according to a formula, known as Proposition 98, that voters approved in 1988.

So far, so good.

The new proposal would slow the rate of repayment, meaning schools could receive far less than what the governor initially committed to.

More deferrals? A deferral would only reduce the near term amounts... doesn't yet say whether it would be less over time. Going back on his committment will surely ire some. Will they trust him again?

Although Schwarzenegger said he wanted to change the formulas that drive much of the state's spending, his proposal would only change how the state repays the money it already owes each of the earmarked accounts.

So... it reforms nothing but helps solve the repayment problems he created with his special inside deals during the 04-05 budget negotiations?

In the 2006-07 budget year, the state will owe $8 billion to the major earmarked accounts for schools, transportation and other projects. The repayment formulas escalate the debt, much like a credit card balance, and is one of the main reasons state income can never catch up with spending, Campbell said.

Amazing. I knew those inside deals stunk, just didn't know how much.

Part of the proposed reform package would give the state 15 years to pay back the money owed.

Reform? This isn't reform. It's a bailout of the problems created by last year's budget, masked by deferring yet more money into future years.

Then, by prohibiting lawmakers from using those moneys again, they would also be eliminating the payback problems.

Never say never. They always seem to find a way.

In the case of schools, the Legislature is bound by Proposition 98, which set a minimum funding level for public schools and community colleges at approximately 40 percent of the state general fund. The Legislature can vote to suspend Proposition 98, which it did last year. The administration's proposal would also prevent that from happening in the future.

So... this locks in Proposition 98 spending formulas and could never be suspended in the future? This does not seem like a good thing! The article doesn't say if the same is true for Transportation funds.

3 posted on 01/06/2005 4:52:40 PM PST by calcowgirl
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To: NormsRevenge

I think we're gonna need a calbudgetcrisis05 ping list soon, lol.


4 posted on 01/06/2005 4:55:32 PM PST by calcowgirl
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To: All
See also: CA: Education community awaiting hit in governor's budget plan
5 posted on 01/06/2005 4:58:30 PM PST by calcowgirl
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To: calcowgirl

Must you be so cynical and critical??? (grin)


6 posted on 01/06/2005 5:27:24 PM PST by SierraWasp (Moderates, are just too chicken to commit to any ideal!!! They prefer sophist sophistication...)
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To: SierraWasp

Does that mean I got it right?


7 posted on 01/06/2005 5:28:49 PM PST by calcowgirl
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To: calcowgirl

Purdy much!!!


8 posted on 01/06/2005 5:30:40 PM PST by SierraWasp (Moderates, are just too chicken to commit to any ideal!!! They prefer sophist sophistication...)
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To: calcowgirl

You get a Gold Star from me...


9 posted on 01/06/2005 5:59:17 PM PST by tubebender (If I had know I would live this long I would have taken better care of myself...)
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To: tubebender

Thanks!

I can't wait to hear this being pushed as "Reform". grrrrr...


10 posted on 01/06/2005 6:11:01 PM PST by calcowgirl
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To: calcowgirl

Let this be a warning to all those who believe the feds will pay back all the billions in IOUs that they've put into Social Security as they've raided the fund to buy votes over the years. This is exactly what will happen when the boomers try to collect in 10-15 years.


11 posted on 01/06/2005 6:15:18 PM PST by kittymyrib
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To: calcowgirl

"In the case of schools, the Legislature is bound by Proposition 98, which set a minimum funding level for public schools and community colleges at approximately 40 percent of the state general fund. The Legislature can vote to suspend Proposition 98, which it did last year. The administration's proposal would also prevent that from happening in the future"


Happy New Year CalcowGirl!
We need to get a FULL REPEAL of Prop 98 and educate people, that obviously, throwing money at schools is not the answer, it only prevents the state from being able to have any flexibility with their budget.

This time, with proper support and lots of ads to pre-empt the "for the children" excuses, it might even pass. Especially, if Arnold would throw his support behind it.

I think this would be a good conservative project. Maybe McClintock could spearhead it.

Get the signatures, get it on the ballot.


12 posted on 01/06/2005 7:54:45 PM PST by FairOpinion
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To: FairOpinion

>>We need to get a FULL REPEAL of Prop 98

Agree! And Happy New Year, back at ya.

How is that list coming? Still working on it?


13 posted on 01/06/2005 8:40:07 PM PST by calcowgirl
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To: calcowgirl

I have better things to do, I did a list of Arnold's accomplishments a while ago, but I don't know where it is, and even if I re-created it, nothing would satisfy the Arnold-haters, who are longing for Bustamecha. ;)


14 posted on 01/06/2005 9:25:31 PM PST by FairOpinion
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To: calcowgirl

Oh, and one more thing. My philosophy is; "It's better to light a candle, than curse the darkness".

Many peole would rather put out the candle and sit and cry in the darkness.


15 posted on 01/06/2005 9:27:52 PM PST by FairOpinion
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To: NormsRevenge; Carry_Okie; Amerigomag; SierraWasp; farmfriend; tubebender; heleny; DoughtyOne
I live in New York state which is worse than California. The population of New York state is between 19-20 million people yet the budget is about $100 billion dollars and growing! California's population is about 36 million people and its budget is about the same as New York's.

To me its always been a horse race between California and New York to see which state will crash and burn first.
16 posted on 01/06/2005 9:48:22 PM PST by Conservative Firster
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To: FairOpinion

So, you asked to compare lists when you had no intention of presenting one?
You encouraged others to spend the time documenting something when you had no intention of following through?
Hey... it was your game; you suggested it.

I appreciate dialogue regarding supported arguments.
I see that yours is absent, instead resorting to labeling others as "Arnold-haters".
How sad.


17 posted on 01/06/2005 10:08:30 PM PST by calcowgirl
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To: NormsRevenge

If Schwarzenegger could clear up the deficit & balance the budget, he would deserve to be President, native-born or not.


18 posted on 01/06/2005 10:17:24 PM PST by my_pointy_head_is_sharp
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To: calcowgirl

You misread my post. I said, I had a list, I was going to find it and post it, but I couldn't find it. I could recreate it, but that just takes too long -- after all Arnold does have quite a few accomplishments.

One of them, just comes to mind, bringing back the Christmas tree, to replace Davis' "Holiday Tree".

If Davis were gov, we would still have a Holiday Tree at the Sacramento Capitol.


19 posted on 01/06/2005 10:35:29 PM PST by FairOpinion
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To: FairOpinion; Carry_Okie
-- after all Arnold does have quite a few accomplishments.

One of them, just comes to mind, bringing back the Christmas tree, to replace Davis' "Holiday Tree".

Well that is most definitely notable. Perhaps C.O. wants to add it to his list as well.

20 posted on 01/06/2005 10:50:44 PM PST by calcowgirl
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