William Foster, Governor's Office
Legislative leaders are scheduled to meet with Governor Schwarzenegger today (Wednesday) to begin hashing out solutions to a giant budget shortfall…..one that got a little bigger last night when voters rejected propositions 1A through 1E.
A lot can change in a couple of months. It was just February that legislative leaders were crowing about their 40 billion dollar budget deal – one they hoped would hold for 18 months. Here was Assembly Speaker Karen Bass February 19th after the final all-night session:
“It’s my hope certainly that this will be the last budget vote that we take for a very long time.”
But the recession had other plans. Sales, income and property taxes are down. The department of Finance now puts the state’s budget shortfall at 21 billion dollars. That’s a big chunk of California’s 85 billion dollar general fund budget.
“The first message is to take the scissors and cut.”
Barbara O’Connor is a Professor of Communications at Sacramento State University. She says lawmakers saw this coming. They knew revenues were plummeting – and polls showed voters were likely to reject the six billion dollars in budget fixes in the special election.
“They’re going to have to cut a huge amount of the areas that they can cut and that means health and human services, education, corrections, where the big staff budget are and layoffs are going to come even in more numbers than we’ve seen so far.”
We know where Governor Schwarzenegger stands. He’s calling for billions in cuts to education and health care; billions in borrowing from local governments and Wall Street, a shorter school year, increased park fees and layoffs for thousands of state workers. He’s also calling for the transfer of illegal immigrant prisoners to federal custody. One thing he’s not calling for: New taxes. He made that clear when he rolled out his plan last week:
“To look for new revenues is out of the question. We have to solve this problem this way, which is through borrowing. These are drastic times and it takes drastic measures to solve those problems.”
When voters rejected most of the special election ballot measures, they also gave the extension of tax increases the thumbs down. Republican Senator George Runner says he hopes the legislature won’t take a slash and burn approach to punish voters for that decision….but will instead use the chance to make big changes:
“Are we going to go in there and say well, here’s the message, we gotta cut, cut cut, cut. Now, there’s no doubt, we gotta cut and we gotta make some adjustments, but are we going to ask the harder question which is, how can we get better value for the tax dollars that are being sent to Sacramento.”
Runner says that would include easing regulations on businesses to help create jobs. He says taking taxes off the table should make reaching a budget deal more manageable than in recent years when debates have stretched into late summer and fall. Democratic Senate Leader Darrel Steinberg said last week he’s also hopeful for a speedy solution – no matter what the outcome of the election:
“We will wake up on the 20-th and we will get to work. We will balance this budget. It will not be a long hot summer in Sacramento. We are going to do it relatively quickly.”
That’s certainly what State Controller John Chiang is hoping. California is expected to run out of cash and be unable to pay all of its bills this summer if lawmakers don’t act soon. Chaing says that would mean delayed payments to college students, vendors and programs that serve the poor and disabled.