A Day Late and $27.8 Billion Short

Some things never change. Sacramento's fiscal dysfunction continued yesterday:

The state of California is projecting a $27.8 billion budget shortfall over the next 19 months. In the weeks following the November 4th election, the state legislature and Governor Schwarzenegger's office have been scrambling to try to close the spending gap in before the new legislators are seated.

Yesterday was the last chance for the current State Assembly and State Senate to figure out a budget fix, but they failed to muster the 67-percent supermajority needed to pass the budget changes. The Sacramento Bee had an article on the legislature's failed attempt at responsible governance:

The California Legislature's outgoing class debated, complained and pointed fingers of blame Tuesday - but in the end, it did nothing about the state's massive budget gap.

A last-gasp effort to ease a projected $27.8 billion shortfall over 19 months ended with a whimper as the Assembly, voting largely along party lines, killed a $17 billion Democratic package of tax hikes and budget cuts. The Senate also rejected the package.

...."Of course I'm disappointed," Assembly Speaker Karen Bass said after the Assembly session. "I was hoping that in the last few days of the session that my (GOP) colleagues would have taken a very courageous vote."

But Assembly Republican leader Mike Villines said the proposal voted upon Tuesday was pushed by Democrats and lacked any state spending cap, economic stimulus or adequate long-term cuts.

"All we're saying is, if we're going to solve the problem, let's do the whole problem," Villines said.

Tuesday's Assembly session lasted nearly three hours, but the outcome was never in doubt - and the two bills voted upon lacked the necessary supermajority by 13 and 14 votes, respectively.

The Sacramento Bee's Capitol Alert had a breakdown of the proposed fixes. If they had passed, the state would still have had a projected $10 billion deficit to contend with. Here is the mix of tax increases and budget cuts in the failed proposal:

Revenues

Vehicle license fee: $1.4 billion in current year, $4.3 billion in 2009-10
State lawmakers will take up hiking the Vehicle License Fee - better known as the car tax - from .66 percent to 2 percent of a car's value. That would reverse one of Gov. Arnold Schwarzenegger's first acts as governor when he repealed a previous tripling of the car tax.

Freeze tax schedules: $1.4 billion in current year, $1 billion in 2009-10
In each year, tax tables are "indexed," meaning the range in which a person is taxed at a particular tax rate is supposed to rise with inflation. For 2008, the tax tables would be frozen at the 2007. What would that mean? If your income remained the same, your taxes would remain the same, instead of seeing a small tax cut. If your income rose at the pace of inflation, your tax bill would rise as well, instead of remaining flat.

Cuts

K-12 Education: roughly $4 billion, including the current year and 2009-10
The state's biggest expenditure would take the biggest hit in the budget outlined by Assembly Democrats.

Community colleges: $200 million over two years

University of California and California State University: $264 million over two years

Personnel: $657 million over two years
How this cut would be distributed - layoffs, furloughs, salary freezes - would be determined by various agencies and bargaining units. Cuts of $240 million in the current year and $417 million in 2009-10.

SSI/SSP grants: $600 million over two years
Would take back scheduled federal increases for cost-of-living for low-income aged, blind and disabled scheduled for 2009.

CalWORKS: $100 million from cost of living suspension.
Cost-of-living adjustment (COLA) would be suspended for the state's welfare program.

Regional centers: $112 million over two years from cuts to regional centers.
There would also be a 3 percent cut to regional centers across the state, saving $40 million in the current year and $72 million in 2009-10.

Transit: $312 million over two years.
Cuts of $156 million in each of the next two years.

Judiciary: $35 million in cuts

Local public safety programs: $250 million in the current year and $500 million in 2009-10
The cuts come by eliminating funding for local law enforcement programs, though some of the funding (roughly $500 million over the two years) would be restored through a new $12 fee on car registration.

Williamson Act: $35 million cut
Would eliminate state funds that currently go to counties for this program to preserve agricultural lands.

Budgetary problems, on a much larger scale, will confront the incoming Obama administration, and all of those state and national woes inevitably cascade down onto the local level. Billions, trillions....where does all that money go anyway? As usual, The Onion has all the answers:


In The Know: Should The Government Stop Dumping Money Into A Giant Hole?