Posted on 07/07/2005 8:28:04 AM PDT by NormsRevenge
City and county to feel pinch of irony in refund School districts await half-good budget news
SACRAMENTO – Gov. Arnold Schwarzenegger, who took office on a promise to control runaway spending, is learning the hard way that getting the state budget under control is not easy.
The Legislature is scheduled to vote today on a new budget Schwarzenegger negotiated with legislative leaders that increases general fund spending by 10.3 percent, to $90.1 billion.
The first budget that the governor signed last July increased general fund spending by 7 percent. The general fund pays for schools, higher education, health care, prisons and other programs
Spending keeps ratcheting up, outpacing increases in tax revenue from an improving economy, as the governor struggles to close a 5-year-old budget gap and schools complain that they are seriously underfunded.
"The spending formulas are making us spend more money, and so I think we have to solve the problem. And I think that it will be easier than to solve the budget each year," Schwarzenegger said as he announced the budget agreement Tuesday evening.
The governor wants to accomplish this goal without raising taxes, which he says would harm the economic recovery. He made that more difficult when he repealed a $4 billion increase in the vehicle license fee on his first day in office in November 2003.
The governor's finance director, Tom Campbell, has argued against a tax increase, saying last month that estimates of tax revenue have increased more than $11 billion since last year.
"Most people find it impossible to believe that our state is undertaxed," Campbell said.
General fund revenue estimated in the proposed budget for the new fiscal year that began last Friday is $84.5 billion, still well below the $90.1 billion spending plan.
The shortfall must be closed by borrowing and other means. And a gap of about $4.7 billion is expected to reopen in the budget for the fiscal year that begins next July. Many details on the new budget were still unavailable yesterday.
As a cushion, the state has $3.7 billion in unsold deficit bonds authorized last March by Proposition 57, which enabled the state to pay off a short-term debt with $10.3 billion in bonds and avoid a cash crisis.
But if the economy weakens or the chronic budget gap rolls on into following years, pressure could build for a tax increase, a possibility that the governor finds unsettling.
"We must draw the line when politicians once again push for budgets that guarantee deficits in the future and create the need for tax increases," Schwarzenegger said at a Capitol news conference June 21.
Democratic leaders had contemplated proposing a tax increase to boost education spending but dropped it, apparently fearing that a lengthy budget deadlock with Republicans could influence the vote on a spending limit initiative this fall.
The Republican governor has argued since January that his proposal for a spending limit, Proposition 76 on the Nov. 8 special election ballot, is needed to close the budget gap.
But only about a third of voters supported that proposal in a recent Field Poll, and powerful school groups are certain to oppose the initiative, which would change the Proposition 98 school-funding guarantee.
In the face of such opposition, the governor hopes to negotiate a bipartisan compromise on a spending control that the Legislature could place on the November ballot. This would allow him to urge voters to support the compromise rather than his initiative.
The governor had angered school groups last year when they said he reneged on a budget agreement. As a result, he was the target of a well-financed TV ad campaign accusing him of breaking the deal. Analysts say the TV blitz contributed to his sharp decline in the polls.
Schools are by far the largest single item in the state budget, getting about 40 percent of the proposed general fund, and they are often the biggest bone of contention in budget battles.
School groups agreed to unprecedented legislation suspending the Proposition 98 guarantee last year, a $2 billion cut in school funding that helped Schwarzenegger balance the budget without a tax increase.
In January, the school groups angrily accused the governor of breaking a promise to give schools their regular Proposition 98 share of any revenue unexpected when the budget was signed last July.
As an improving economy boosted tax revenue, the groups said in January that they were owed more than $2 billion, an amount that increased to $3 billion when revenue forecasts were revised in May. That would double the education increase in the budget deal.
Schwarzenegger contended that his budget, little changed by Tuesday's agreement, provides a $3 billion increase in kindergarten-through-community college funding and fully funds the Proposition 98 guarantee.
But a news release from the governor's office saying the proposed budget provides $10,000 per student was declared "misleading" yesterday by Superintendent of Public Instruction Jack O'Connell.
"In fact, this budget does not represent a significant increase in funding for our students," O'Connell said in a statement. "It barely keeps our schools afloat at a time when many districts face serious budget shortfalls."
O'Connell said the $10,000 per-student figure includes federal and local funding, not state funding only. A Schwarzenegger spokesman said the method of calculation has been routinely used in past years.
Despite the 10.3 percent increase in general fund spending, the backers of the proposed $117.5 billion budget (which includes $23.4 billion in special funds and $4 billion in bond funds) say it is fairly tight.
The budget pays off a $1.2 billion debt to local government a year early, reducing the gap in the next budget as Republicans requested.
It also gives $1.3 billion from the sales tax on gasoline to roads and transportation as required under Proposition 42. The Legislature and governor suspended the measure in the past two years and used that money to help balance the general fund.
Although Schwarzenegger proposed deeper cuts, the budget freezes CalWORKS welfare payments for two years and delays a cost-of-living increase for the aged, blind and disabled for the first three months of two fiscal years.
While the state saves $650 million over two years, the scheduled increases would have meant $1,074 to a typical CalWORKS family of three and $600 to each recipient of aid to the aged, blind and disabled over that period, according to the Western Center on Law and Poverty.
The budget does not include Schwarzenegger's request for more than 40 new positions on the gambling commission, which would have doubled the staff to deal with a backlog of work on new agreements. Powerful gambling tribes opposed the expansion.
"We have to take a look at all of our responsibilities and ... our resources and reprioritize," said Anna Carr, the commission's spokeswoman.
17 % rise in General Fund spending in last and this year's proposed budgets. Wow.
Enjoy the ride, California.
I hope the Golden Goo$e tasted good, cuz there ain't none left.
I hope no one is surprised...
"Vote 4 McClintock or Pay the Con$equence$"
Kelly, 2003
Semper Fi,
Kelly
When compounded, it's actually 18 percent! And the current year is worse than last year. This is a serious disappointment for those of us who wished Schwarzenegger well.
Well, we knew Arnold favored abortion and perversion, but some people thought he would run a tight budget.
Instead, he took out another huge bond issue, raised spending 17% in two years, and relied on a favorable economy under President Bush to keep above water for a while longer. When he leaves office things will be in even worse shape than they were under Gray Davis.
And by the way, what has he done to fix California's energy problems, which will return with a vengeance as soon as we get another hot summer? What has he done to lift the burden of environmental regulation? What has he done to lower taxes, other than the hated car tax?
What has he done to campaign for President Bush and his initiatives?
As far as I can see, he will be remembered for one major accomplishment: Presiding over a $3 billion dollar a year giveaway to the medical research corporations for fetal stem cell research, at a time when every dollar of spending needs to be watched. Good work, Arnie! $3 billion a year for medically useless baby killing!
At the end of each fiscal year, all depts in schools are directed to spend all the money that they have left in their budgets of the funding for the next year will be decreased. This accounts for a lot of waste.
estimates of tax revenue have increased more than $11 billion since last year.
I could live with that in my budget. So should California. Hard for them to increase taxes with that much more coming in over the year before.
School groups agreed to unprecedented legislation suspending the Proposition 98 guarantee last year, a $2 billion cut in school funding that helped Schwarzenegger balance the budget without a tax increase
If they can cut $2b, why not $6b? The schools waste more money then Imelda Marcus.
It also gives $1.3 billion from the sales tax on gasoline to roads and transportation as required under Proposition 42. The Legislature and governor suspended the measure in the past two years and used that money to help balance the general fund.
WHAT??
We have to have a proposition to use GAS TAX for roads and transportation? Gas tax money should only be used for things related to driving. Period.
Does anyone know where to find how much is brought in from the sales tax on gasoline? What with the obscene prices for gas, the %7.5 or what ever percentage per gallon must be bringing in money by the buckets full.
(I won't even mention the fact that the sales tax is collected on the 38 cents of tax per gallon. Taxing us on taxes already included should be against the law.)
The budget does not include Schwarzenegger's request for more than 40 new positions on the gambling commission, which would have doubled the staff to deal with a backlog of work on new agreements. Powerful gambling tribes opposed the expansion.
More waste of money. The only thing the Greedy Indians (as opposed to the reasonable responsible Indians like AIA) and I agree on about casinos. The more red tape on the casino thingy the better.
The expenditure for the Stem Cell Research at 3 billion will cost 6 billion with interest. What a waste of money.
(Denny Crane: "Sometimes you can only look for answers from God and failing that... and Fox News".)
I doubt it Arnold. We're all pretty dissatisfied with your [lack of] performance.
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