CalCoast News

In closing state budget gap, vast sums are off limits

Voters have passed initiatives that lock in billions to novel social and recreational programs. Meanwhile, basic services are threatened

By Evan Halper
Los Angeles Times
February 19, 2008

SACRAMENTO -- -- The state is about to pump half a billion dollars into teaching children to roll sushi, juggle pins and master new dance forms, even as spending cuts threaten to erode instruction in reading, math and other fundamentals.

That's because the sum scheduled to be spent on such after-school enrichment next year is off-limits for anything else. State law dictates that cooking classes continue even if some calculus courses could be canceled.

In good economic times, voters have passed ballot initiatives that devoted billions of dollars to novel social and recreational programs, such as the after-school initiative championed by Arnold Schwarzenegger in 2002, before he was governor. It is intended to keep youths off the streets by offering them extracurricular activity -- like cooking, juggling and dance -- as well as tutoring and volunteer opportunities.

Such measures lock spending into the state Constitution, forcing lawmakers, many of whom endorsed the propositions, to keep funding them despite a lack of cash for some essential services.

"Are these really the programs we want to keep funding?" said John Matsusaka, president of the Initiative and Referendum Institute at USC.

One example of locked-in spending involves state parks. California has hundreds of millions of dollars set aside to bankroll new museums and recreational facilities -- the result of a provision tucked into a water and parks bond measure placed on the ballot by environmental activists in 2006.

The money cannot be used to keep open some of California's most cherished state parks, which would be shuttered under the governor's latest proposed budget in an effort to close a $14.5-billion budget gap. So a new "oceanarium" in Fresno could be built with state dollars even as the governor tries to shut recreational areas used by thousands of hikers, including Will Rogers Historic State Park in Pacific Palisades and Montaña de Oro State Park in San Luis Obispo County.

"It's a different pot of money," said Roy Stearns, spokesman for the California Department of Parks and Recreation. The spending voters signed off on, he said, can be used only for "development and acquisition."

In another area, mental health providers will be receiving more than $1.5 billion in new annual money. But they are unable to use those funds to avoid having to turn away patients at overcrowded clinics where core services are provided.

The money is generated by a tax that voters approved in 2004 on people earning more than $1 million a year to establish "innovative and integrated service plans" for the mentally ill. That includes finding and helping some of the sickest patients and providing them with intensive care, which can include treatment by more than a dozen clinicians.

"It is hard to explain to county supervisors," said Patricia Ryan, executive director of the California Mental Health Directors Assn., "why we are cutting staff and services at the same time we are asking them to approve a contract for entirely new programs."

She said clinic directors find themselves scouring the streets to find patients for the new program as they simultaneously face staff layoffs and overcrowding in their core programs, which are suffering from years of cutbacks.

State Sen. Darrell Steinberg (D-Sacramento), who promoted the initiative, said the $1.5 billion would not have been available for core services because there were not enough votes in the Legislature to pass the type of tax hike that generated the funds.

"I recognized that going to the ballot to fund important priorities is not preferred," said Steinberg, who will become the Senate leader later this year. "But I saw a situation that cried out for extraordinary action and went for it."

Some lawmakers say Sacramento should not have to choose between one program and another and should instead be raising taxes to pay for them all.

Balancing the budget "is going to take a longer conversation simply than what [funds] can we take from this service and put into that service," Assembly Speaker Fabian Nuñez (D-Los Angeles) said at a recent news conference. "I don't support eviscerating any of the programs on the table. . . . We owe it to the people of California to look seriously at the entire tax structure."

Nuñez argues that the Legislature should consider new levies on oil companies as well as other new taxes and an end to tax breaks on luxury vacation homes.

He and other Democrats have made such proposals in years past. The governor and GOP lawmakers have blocked them each time and are vowing to do so again.

Sen. Dave Cox (R-Fair Oaks) said a tax hike would be unconscionable because much state money is misused. He cited the California Children and Families Act, which has generated billions of dollars for early childhood development through a 50-cent cigarette tax that voters approved in 1988.

Some of the money is spent on healthcare. Some of it funds activities that Republicans and other critics say should not be a priority in lean times; those include diversity festivals and marketing campaigns run by public relations firms.

Cox, who would like to see the law repealed, said that more than $2 billion of the money -- nearly four years' worth of funding for the program -- hasn't been spent.

"This is more than $2 billion sitting on the sidelines," Cox said. "It is not helping kids today. It is not buying health insurance today."

Noting that 200,000 California children eligible for subsidized health insurance have not been signed up for it, Cox wants lawmakers to place on the ballot a measure to redirect the unspent money toward enrolling children in the state's Healthy Families medical insurance program.

Carol Baker, a spokeswoman for First Five LA, which is responsible for distributing the tobacco-tax money in Los Angeles County, says Cox is oversimplifying the program's finances. She said the money is being distributed gradually through a "long-term strategic and financial process."

"The best way to do that is build and plan these programs," she said. "That doesn't happen overnight. . . . This is something that has to be built over a multiyear period."

Baker also said tobacco-tax proceeds are on the decline as fewer Californians smoke, and program officials are trying to create a healthy reserve for the future.

Proposals to recapture such money have proved unpopular in the Legislature. In any case, the deadline for balancing the 2008-09 budget will arrive months before lawmakers would be able to get any repeal measures on the ballot.

The governor, however, proposes making a one-time trim of about 10% -- less than $60 million -- from after-school programs next year, if voters oblige.

But aspiring chefs need not panic. Such a cut might not diminish after-school offerings. Schwarzenegger says the state can get enough money largely by taking back funds from classes that are undersubscribed.

evan.halper@latimes.com