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State
Budget
STATE BUDGET
NEWS (2/13/08)
The Legislature is about to end its 45-day special session to
revisit the 07-08 state budget. Budget staff in both houses
report that their respective bosses are trying to strike a
deal on the whole package of current year cuts with the
Republican Caucus and that some sort of agreement could be
reached by the end of the week. So far, however, budget
hearings have yet to result in hard decisions and lawmakers
may not complete their work on the current deficit within the
45-day special session, further delaying tough negotiations
over next year's $14.5 billion deficit.
The Legislature's budget subcommittees have been holding
hearings for weeks and it is a difficult task to get a
simultaneous grasp of this year's and next year's budget cuts
and projected shortfalls.
We have been told that budget cuts to departments under the
Resources Agency will not be dealt with until the end of
budget negotiations for next year's budget. There are a number
of fees being considered for resources departments, including
a proposal similar to AB 2838 (2006 - Pavley), which was
sponsored by CalCoast and several allies. That bill, and its
predecessor, (SB 658 20005 - Kuehl) would have given coastal
counties the option of imposing a fee on motor vehicle
registrations to mitigate for the impacts of motor vehicles on
coastal resources. It now appears that Legislative Counsel is
of the opinion that the Constitution requires any fees raised
on vehicular registrations be used for transportation or air
quality programs. This is a significant road block to proposals
state park advocates and others were considering to make up
for budget cuts proposed by the governor. Cuts in
environmental protection programs are 11% of the proposed
budget cuts for 08-09.
BUDGET LINKS:
08-09 Budget: http://gov.ca.gov/issue/state-budget/
Budget Summary
for Environmental Programs:
http://gov.ca.gov/issue/specifics/2008-09-budget-environment
Legislative Analyst’s Website: http://www.lao.ca.gov
Speaking of the budget ...
"Two Steps Back: Should California Cut Its Way to a
Balanced Budget?"
The California Budget Project's annual chartbook, "Two
Steps Back: Should California Cut Its Way to a Balanced
Budget?," examines how Governor Schwarzenegger proposes
to balance the 2008-09 budget and assesses what the proposed
budget means for California. In addition, "Two Steps
Back" analyzes the impact of recent economic and
demographic trends on the Governor's Proposed Budget. http://cbp.org/pdfs/2008/080201chartbook.pdf
Outside of the Capitol, the meltdown in the economy is having
real impacts on everyone, including local governments, which
are being forced to make hard choices just to remain solvent.
Last week, the city of Sacramento announced it may lay off at
least 16 employees in a first wave of cutbacks aimed at
solving a $55 million budget deficit projected for next year.
Sacramento County faces a $16.4 million deficit this year,
which could grow to $60 million in the budget year that begins
July 1.
All across the state, communities will likely have to make
hard choices about law enforcement, health care, basic
municipal services and programs for the poor, elderly and
destitute. This will be a year of harsh government spending
cuts, and, unless the Legislature finally deals with the
structural imbalance in the state's budget process, it could
be the first of many.
CalCoast is trying to develop a state-funded marine debris
program for coastal cities and counties and one of the sources
of funding we were looking at was the surplus in bottle bill
deposits collected by the Department of Conservation. The
article below reveals that the governor has his eyes in the
same pot of money to fund programs called for in AB 32, which
was signed by the governor last fall. We will be advocating
against this misuse of bottle bill funds:
"Recycling fund may be tapped to help enforce greenhouse
laws"
The Schwarzenegger administration wants to take $32 million in
the form of a loan from the state's recycling fund and use it
to hire dozens of air quality specialists at the state Air
Resources Board, the enforcement arm of the carbon emissions
law. The plan, which needs legislative approval, would take
effect with the new budget year on July 1. http://www.calcoast.org/news/cpr0080131.html
A more appropriate approach to fund AB 32 programs would be
for the air boards across the state to impose fees on
polluters as was intended by the legislation:
"Proposal would bill major Bay polluters"
After years of voluntary measures, the fees, proposed this
week by the Bay Area Air Quality Management District, set a
precedent as the first time that businesses and government
agencies would face financial consequences for contributing to
global warming. If successful, the fees could be copied all
over the state and country, perhaps ultimately at much higher
prices.
http://www.calcoast.org/news/cpr0080209.html
To read the proposed fee rule, go to http://www.baaqmd.gov/pln/ruledev/workshops.htm.
OPINION
"Budget will test post-partisan governing in
California"
The question is whether the governor and the Legislature can
seize the moment and take a fresh look at the long-term,
structural budget issues that have been ignored for the sake
of political expediency.
http://www.calcoast.org/news/cpr0080203.html
OPINION
"Governor's Fire Tax Plan is Unfair, Unnecessary"
Governor Schwarzenegger recently proposed that every
California home owner and business owner pay a new 1.25
percent tax on their property insurance - a $125 million tax
increase - to pay for what he says will be improved
firefighting efforts statewide, but many of us believe that it
will largely go to backfill cuts the administration has
proposed at CALFIRE. http://www.calcoast.org/news/cpr0080131b.html
STATE BUDGET (1/31/08)
The Legislature is in special session until late February
working and struggling with the governor's 10%
across-the-board budget cuts. Some of the most controversial
cuts were made to State Parks. Tuesday, it was revealed by the
director of State Parks in testimony during a Senate Budget
Committee hearing that, in closing some parks, the state will
actually lose $4 million. The cuts total $13.3 million, so the
lost revenue from closing certain parks is roughly one-third
of the cuts. Add the potential loss of revenue to local
governments due to a reduction in lifeguard services at some
of the state's busiest beaches and the cuts to state parks
makes even less sense.
The LAO's office has recommended an increase in state park
fees that would generate $25 million. During Tuesday's budget
hearing, the LAO's office testified that State Parks currently
collects $2.80 per visitor - the same amount per visitor the
agency collected ten years ago. And the Governor added to the
controversy by stating that he made the cuts to state parks
"to rattle the cage" at the Capitol.
Parks plan intended to 'rattle the cage'
Gov. Arnold Schwarzenegger said Wednesday he proposed closing
48 state parks to "rattle the cage" at the Capitol
but fully expects lawmakers to come forward with alternatives
- including higher fees - to keep parks open. http://www.calcoast.org/news/coast1000055.html
"Governor's bid to close parks stirs broad
dissent"
SACRAMENTO - State lawmakers have quickly learned that sparing
treasured parks from painful budget cuts will be no picnic.
Alternatives from raising fees to shifting revenues to
counting on volunteers are riddled with obstacles. http://www.calcoast.org/news/coast1000069.html
"State beaches may have reduced lifeguard
services"
SANTA CRUZ - The governor's proposal only eliminates lifeguard
positions in three counties: Santa Cruz, Orange and San Diego.
Of those, Santa Cruz is the only area that may face a 100
percent reduction in seasonal guards; the Southern California
counties would have to cut to half of their seasonal
lifeguards. http://www.calcoast.org/news/coast1000058.html
State Senate President Pro Tem Don Perata said he
will not push his $6.8 billion initiative to fund water
recycling, conservation and environmental cleanup this year
because of the state's budget crisis. The initiative has been
the subject of negotiations between the Governor and
Legislature during the Extraordinary Session on Water convened
by Schwarzenegger late last year to address the statewide
water supply crisis.
"Rejection of fire levy plan urged"
SACRAMENTO -- -- State Insurance Commissioner Steve Poizner on
Friday urged lawmakers not to approve a fee proposed by Gov.
Arnold Schwarzenegger to raise $125 million for fire
protection, calling the surcharge unconstitutional, unfair to
many property owners and bad public policy.
http://www.calcoast.org/news/cpr100102.html
DAN WALTERS
"Tax breaks are costly, but popular"
Democrats such as Assembly Speaker Fabian Núñez sidestep
questions about raising personal or corporate income taxes or
sales taxes. Instead they say such things as this statement
from Núñez: "Revenue sources from closing tax loopholes
and credits must be on the table." But Núñez et al. are
very vague when it comes to specifics.
http://www.calcoast.org/news/cpr100095.html
GEORGE SKELTON
"Gov. has power to cut spending if he wants to do
it"
SACRAMENTO - Listening to Gov. Arnold Schwarzenegger, the role
of California's governor was strictly ceremonial, like being
the British queen. Pageantry but no power, especially over the
purse.
http://www.calcoast.org/news/cpr100096.html
STATE BUDGET (1/30/08)
Above, we discuss drastic budget cuts proposed for State
Parks. Page 109 of the budget has a map showing which parks
are slated to close and where reductions in lifeguard services
are proposed: http://www.ebudget.ca.gov/pdf/BudgetSummary/FullBudgetSummary.pdf
(Source: KPBS)
Yesterday, the governor told the Sacramento Bee that he
expects state lawmakers to find some way to keep the parks
open, possibly by raising fees.
For more information on this issue, log onto the California
State Parks Foundation website. The Foundation's press release
concerning the budget cuts is posted at: http://www.calparks.org/press/2008/california-state-parks-foundation-stateme
nt-on-state-park-closures-in-governor-s-fy08-09-budget.html
STATE BUDGET (1/16/08)
During his State of the State address last Tuesday, Governor
Schwarzenegger vowed not to raise taxes in the face of a $14.5
billion deficit – then two days later released a “scorched
earth” budget proposal that would impose fees on property
insurance (raising $125 million to backfill for a 10% cut from
the state’s general fund for fire-fighting services ) and an
$11 increase in the vehicle registration fee to replace money
cut from the CHP and DMV (this is in addition to a
registration fee increase approved by the governor last year
to fund research into alternative fuels). The governor has
also proposed borrowing $40 million for various projects,
including $10 billion for water projects. Senate leader Don
Perata (D-Oakland) said he may only be interested in a new
water bond.
The Governor issued a proclamation last week declaring a
fiscal emergency and calling a special session of the
Legislature to deal with a $3.3 billion budget gap for 07-08.
During the special session, which the governor declared last
week, the governor will propose cutting $30 million set aside
in the 07-08 budget for deferred maintenance at state parks
and another $1 million for personnel, including lifeguards. To
save $13.3 million in 08-09, the governor has proposed closing
48 state parks, some of which are state beaches, while
lifeguard services at state beaches in Orange, San Diego, and
Santa Cruz Counties will be reduced to a minimum of 50
percent. Democrats in the Capitol have suggested that user
fees may have to increased to keep state parks and beaches
open.
The state park cuts, especially as they affect California’s
beaches, are counterintuitive: numerous studies have shown
that California's beaches play an important role in its
economy. King and Potepan (1997) estimated that the total
direct impact of beach-related spending in the state was $10.3
billion. Add indirect (multiplier) effects as well as direct
effects and the total is much higher: $27 billion. More
recently, King and Symes examined the loss in spending to the
state if its beaches disappeared. This report examined beach
visitors’ propensity to go out of state—and out of the
country—if beach tourism was no longer available in
California. The report estimated a loss of $5.5 billion to
California Gross State Product if the state’s beaches were
closed or in disrepair.
Total budget cuts for CalEPA amount to $242 million ($1.6
million from the current budget) and 16.5 personnel years.
Cuts for the Resources Agency amount to $945 million ($4.2
million from the current budget) and 296.5 positions. A $2.6
million cut to DFG eliminates 38 game warden positions.
Reductions at the State Water Board will limit the state’s
ability to monitor ocean water quality. A $1.2 million cut has
been proposed for the Coastal Commission and the Department of
Toxic Substances, which cleans up dangerous spills on
highways, is facing a $3.8 million cut. Overall, the budget
includes $1.8 billion ($85.3 million General Fund and $1.7
billion other funds) for the California Environmental
Protection Agency (CalEPA) and $13.1 billion, which is roughly
2% of the entire budget.
To avoid future budget crises, the governor is proposing a
constitutional amendment that would impose a spending cap. The
governor said he wants to end the "binge and purge"
nature of the budget process by automatically reducing
expenditures when tax revenues increase more slowly than
average. When revenues were flush, his proposal would put
extra money aside for the future. A controversial part of the
plan would give the governor unilateral power to make program
cuts when the state budget falls out of balance. The proposal
mirrors similar plans that were rejected in 2004 by state
legislators and the next year by voters.
The governor pointed to the state's "autopilot"
spending - funding guaranteed by legal formulas and state
contracts - which his aides said accounts for 87% of the
general fund budget, as the root of the state’s budget woes.
But Democrats in the Legislature, some of the state’s most
widely-read political pundits and even the state’s
non-partisan Legislative Analyst are calling for “revenue
enhancements” to restore or expand state programs. Some say
for starters, the sales tax should be extended to services and
the car tax should be returned to the level it was before the
governor cut it upon taking office.
Monday, the Legislative Analyst said that the Governor's
proposals for closing a $14.5-billion budget gap fail to
properly prioritize how the state should spend its money, use
questionable accounting methods and would seriously disrupt
the operations of schools and community colleges. The
Legislative Analyst was especially critical of the governor's
plan to spare almost no agency or program in calling for state
spending to be cut immediately by 10%. She also said the
proposed budget cuts too deeply into state services, and she
called on the Legislature to offset some of the governor's
suggested reductions by raising fees and taxes or by scaling
back existing tax breaks. Soon after Hill released her report,
a major bond rating agency put the state on notice that it was
at risk of a downgrade. Hill was also critical of the
governor’s proposed constitutional amendment to put a cap on
spending which, she described as a “power grab.”
Critics of the deep cuts in the new budget are dismissing the
plan as a ruse to stir up demand for a tax hike so the
governor can break his pledge not to go that route during his
tenure. Warning to all: even funding that was approved in the
current budget isn't safe from being redirected, so keep a
close eye on your favorite programs. The Governor and
legislators will be looking for money wherever they can find
it - and it might be yours that suddenly goes missing.
"State's budget crisis curtails legislators'
agendas"
California's lopsided budget has squashed legislative
ambitions this year and made it unlikely that lawmakers will
be able to do much more than drag spending and revenue back
into balance.
http://www.calcoast.org/news/cpr100086.html
"Can't blame economy for deficit, critics argue"
SACRAMENTO -- While the state's latest fiscal crisis can be
blamed partly on an economic downturn, political experts say
there is a far more complex history of policy failures and
political mistakes by state leaders that is partly to blame. http://www.calcoast.org/news/cpr100087.html
DAN WALTERS
"Walking on eggshells about taxes"
Assembly Speaker Fabian Núñez performed a neat verbal trick
the other day in response to Gov. Arnold Schwarzenegger's vow
to make deep spending cuts to close a massive deficit in the
state budget.
http://www.calcoast.org/news/cpr100088.html
DANIEL WEINTRAUB
"Budget plan is a strategy to get attention"
It's difficult to believe that Schwarzenegger is serious about
the proposal he put on the table last week. He knows that the
Democrats who control the Legislature will not vote for the
cuts he is proposing. What, then, is his strategy?
Schwarzenegger appears to be trying to get the attention of
the public and to his Republican colleagues in the
Legislature.
http://www.calcoast.org/news/cpr100090.html
DAN WALTERS
"Governor's new stab at reform
Were politics a rational process, the virtue of setting aside
extra tax revenue during prosperous years to cushion the
impact of income dips would be self-evident. http://www.calcoast.org/news/cpr100085.html
"Gov. urges insurance assessment to fund
firefighting"
SACRAMENTO - Gov. Arnold Schwarzenegger will propose hiking
the cost of insurance for millions of California homes and
businesses in the budget he unveils Thursday, with the money
to be used for firefighting efforts.
http://www.calcoast.org/news/cpr100084.html
STATE BUDGET
(12/17/07)
The Governor is scheduled to submit his budget plan to the
Legislature on January 10, but in the face of a rapidly
growing deficit - estimated to be $10 million by the LAO last
month, but estimated to be $14 billion now - he called a
"fiscal emergency" last Friday, and proposed sharp
cuts in the current budget - deeper than the 10% across the
board cuts that were called for last month.
The Legislature will be in "special session" after
the holidays and, since a fiscal emergency has been declared,
legislators will be barred from acting on other bills if the
budget crisis isn't dealt with within the first 45 days.
For almost ten years, CalCoast has been advocating for the
Legislature to make the difficult decisions that would result
in structural changes to California's budget process. Once
again, however, the Legislature will be locked in its usual
battle between lawmakers who support spending cuts and those
who believe the only sound response to the current mess is to
raise fees and taxes. This has been a recurring theme for than
a decade because, despite task forces and phone book-sized
reports, the executive branch and legislators cannot wrap
their hands around the structural changes needed to overhaul
the roller-coaster tax system and make it less vulnerable to
economic booms and busts.
Some say for starters, the sales tax should be extended to
services and the car tax should be returned to the level it
was for decades. Where to go from there is anyone's guess, but
even funding that was approved in the current budget isn't
safe from being plucked away, so keep a close eye on your
favorite programs. The Governor and legislators will be
looking for money wherever they can find it - and it might be
yours.
Here are some takes on the current situation:
"Budget battle heats up"
Republican Gov. Arnold Schwarzenegger
plans to seek across-the-board budget cuts to solve an
estimated $14 billion deficit, but Democratic Assembly Speaker
Fabian Núñez said Thursday the state should now consider tax
hikes. http://www.calcoast.org/news/cpr100078.html
"State's budget shortfall widens"
SACRAMENTO -- Gov. Arnold Schwarzenegger told social service
advocates Tuesday that the state's anticipated budget
shortfall -- already feared to be the worst since he took
office -- has widened to $14 billion, according to people at
the meetings. http://www.calcoast.org/news/cpr100076.html
UNION-TRIBUNE EDITORIAL
"Seeing red"
State budget crisis even worse than reported So now we are
told the state faces a budget deficit of $14 billion. Gov.
Arnold Schwarzenegger is moving to declare a fiscal emergency
and has ordered all agencies to prepare for cuts of 10
percent. The news could hardly get much worse, right? For
three reasons, that's wrong. http://www.calcoast.org/news/cpr100079.html
"Lawmakers told to fix budget now"
SACRAMENTO -- Saying spending is poised to grow more than 50%
faster than revenues, the state's chief budget analyst called
on lawmakers Wednesday to immediately begin cutting government
programs or raising taxes to address a budget shortfall that
has ballooned to $10 billion. http://www.calcoast.org/news/cpr00000101.html
"Gov. finds himself in a bigger budget bind"
SACRAMENTO - As he prepares the budget blueprint that he will
release in January, the governor is in a bind. There isn't as
much red ink this time, or an emergency cash shortage -- at
least not yet. But deals he made to keep the state afloat
earlier in his tenure now hamper his ability to take on a
rapidly swelling deficit that early projections show will hit
at least $10 billion.
http://www.calcoast.org/news/cpr00000103.html
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