Posted on 01/09/2008 6:07:14 PM PST by NormsRevenge
Gov. Arnold Schwarzenegger on Thursday comes face to face with a massive budget deficit that could prove to be his toughest test in office.
The $14 billion shortfall rivals the one he covered with loans and other fixes after the 2003 recall election, but this time he has far fewer options left to close the gap.
California is further in debt thanks to bonds the governor has championed, voters have cut off the option to borrow more, and Schwarzenegger has promised not to raise taxes.
As a result, Schwarzenegger is expected to announce cuts that will short classrooms, close some state parks and reduce health and welfare coverage for the state's poorest residents. He also has floated the idea of releasing tens of thousands of nonviolent inmates early and is expected to propose new property insurance fees to supplement state firefighting costs.
During his State of the State address Tuesday, Schwarzenegger confirmed his plan for across-the-board cuts, as well as his desire to resurrect a constitutional amendment to cap state spending.
Democrats countered by arguing for a combination of cuts and tax increases. The details of Schwarzenegger's planned budget cuts for the 2008-09 fiscal year, however, could be worse than they expect. On Tuesday, he warned the coming budget will be "difficult."
The governor might even propose spending less in the budget year that starts July 1 than the state is spending in the current fiscal year. If he does, it would be the first time since 2001 that the state would retract general fund spending, according to figures from the state Legislative Analyst's Office.
"It's the governor's day of reckoning," said Steve Maviglio, spokesman for Assembly Speaker Fabian Nunez, D-Los Angeles. "And it won't be pretty."
Schwarzenegger's renewed call for a constitutional spending limit reignited partisan rhetoric in the Capitol and threatened to repeat a budget struggle unseen since Schwarzenegger's last attempt to pass a spending cap in 2005.
Since then, Schwarzenegger has benefited from tax windfalls that have allowed him to ratchet up spending on education and other programs important to Democrats while continuing to balance the budget.
Republicans also might take issue with the governor's budget. The party typically views new fees - such as the firefighting surcharge he is expected to propose on homeowners' property insurance - as veiled attempts to increase taxes.
Such fees can be passed with a simple majority vote of the Democrat-controlled Legislature. Tax increases require a two-thirds majority and Republican support.
"We've been very clear: We will not raise taxes. Hardworking people are barely getting by, and they shouldn't be held responsible for the liberal-dominated Legislature," said Assembly Minority Leader Mike Villines, R-Clovis.
The budget Schwarzenegger releases Thursday will kick off a more complicated debate than usual.
Schwarzenegger will announce his spending plan for the budget year beginning in July, issue a fiscal emergency declaration for the current budget year and open debate on his proposed constitutional amendment to limit spending.
Essentially, three budget battles will begin.
Schwarzenegger's emergency declaration will be his first since voters gave the governor that power in 2004 by passing Proposition 58. The declaration triggers a special session and a constitutional mandate for the Legislature to address the current year's budget, either by cutting costs or increasing taxes within 45 days.
Schwarzenegger has said the state will fall $3.3 billion into the red by July if it does not cut spending.
The fiscal emergency likely means smaller checks by April for schools, colleges, prisons and aid programs for the poor, elderly and those who are out of work.
"The teachers are teaching, the bus drivers are driving, the students are in the classrooms. I don't know where the money comes from" for midyear cuts to education, said Scott Plotkin, executive director of the California School Boards Association.
The 45-day period during which the Legislature will debate what to do is strewn with political land mines.
Later this month, the state will receive revenue estimates that could show it's even worse off than Schwarzenegger forecasts.
The governor must introduce his proposed constitutional amendment by Feb. 1, right in the middle of that legislative debate.
And on Feb. 5, presidential primary voters will decide a measure that could change state lawmakers' term limits and upend the balance of power among those negotiating the spending cuts.
Once the cuts are made to this year's budget, Schwarzenegger might push to accelerate the negotiations over the 2008-09 spending plan if his administration fears the state could face a cash shortage by the summer.
During his State of the State address, Schwarzenegger placed much of the blame for the budget problems on formulas that increase spending automatically each year. He said such autopilot increases will boost spending by 7.3 percent in the coming year.
Independent budget analysts, however, said that figure seemed inflated, especially because the largest of the formulas - the one for education - would increase spending by about $1.1 billion, or 1 percent of the budget, in the coming year.
Jean Ross, executive director of the California Budget Project, which advocates for funding for the poor, noted that the state's nonpartisan legislative analyst has calculated that the fastest growing part of California's budget is not automatic spending formulas. Rather, it's debt service - the cost of paying off the bonds Schwarzenegger has pushed, primarily for state building projects.
"Sixty percent of his speech was about what we need to spend more money on, and the rest was about how we need to cut spending. There's a big disconnect there," Ross said. "I don't see how the governor reconciles the two: His biggest accomplishments have been when he's locked in spending, but he says the reason we're in this mess is because of locked-in spending."
Cut every department in state government by 5 percent. Do it again.
The very first thing he needs to do is get rid of ANY monies that go directly to illegal immigrants. Public schooling and what kids do with their time is a pretty complex issue, so I think for now that would have to be further explored, but not dealt with at this time. But any direct funding of any welfare etc needs to stop right now. The legislators etc all need to take a cut in pay as they combined with Gray Davis got us into this mess. That would be a darned good start.
Yep! Streamline this socialist California government!! Cut jobs and cut pay dramatically. This is what happens in businesses and California’s state government is a business.
Sure, tough choices. Which taxes to raise, which new programs to fund, how much more to borrow. Politicians don’t make tough choices, ever.
Apply proven management techniques to the public sector? Where do you get these crazy ideas....
With Illegal Invaders in just Los Angeles costing us 1 billion dollars a year, is it any wonder we are in trouble?
About five years ago, our company wanted to build a small facility in Stockton. After we got worked over by the Air Resources Board, the County Board, the city Board and the Neighborhood Board, we built the thing in Nevada.
>and Schwarzenegger has promised not to raise taxes.
>is expected to propose new property insurance fees to supplement state firefighting costs.
And the difference between the two above statements is?
Duh!
Our liberal governor has been proposing, approving and increasing taxes faster than his infamous predecessor. The Austrian and his sycophants claim no new taxes and no tax increases but their lies are as big as his legendary tax increases.
Correction, that is 1 billion dollars a year for illegal aliens in Los Angeles just for Welfare and Food Stamps. That does not include incarceration, school, crime and medical.
That’s what happens in ordinary businesses. But the California state government is unionized business, and as such it’s virtually impossible to cut jobs or pay.
Unionized businesses go bankrupt when times get hard enough.
Cut educating non-citizens!
Cut giving them Welfare!
Cut giving them medical aid!
The school districts here in California are incubators for waste fraud and abuse, I know ‘cause I used to work for them and saw all their mismanagement with my own eyes. Almost half the state budget goes to failing schools.
Why is the state gov’t NOT accountable for these things? They are the ones that screwed it up. Why should tax payers be made responsible by reaching deeper into their pockets? We already have high state taxes. This is all BULL CRAP.
Easy answer. Just raise taxes.
Here’s one they can get rid of. California’s own SSI program for illegals.
http://www.cdss.ca.gov/cdssweb/PG42.htm
Across the board cuts are not targeted enough. It is better to start with the low hanging fruit and then move to more blunt methods later. Here are my suggestions:
- Time limit every welfare program
- Lower income limits to the poverty level for benefits provided to those above the poverty level
- Eliminate every benefit to illegals except for those federally mandated.
- Start a court challenge for every federally mandated benefit for illegals
- Convert some jails into Arizona style outside jails. Consult with the Arizona sheriff about the details.
- Confiscate every vehicle in which illegals are involved in traffic violations
- Shut down the effort to make California an environmental Utopia. Shut down offices involved with enforcing CO2 limits.
- Read state employees the riot act over retiree benefits. Threaten massive layoffs unless retirement ages are raised to the normal social security retirement age.
- Double state employee contributions to retirement programs if the retirement age cannot be increased.
yep. As goes California so goes the country too in this respect.
Let’s hope that there is enough Republican left in Arnold so that he will come through and do the right thing.
AGREED! Cut all of their pay!
except for the Republican legislative staff
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.