Budget Balanced in California by Senate
Cited: Associated Press
At the end of July, California State Senate finally approved a plan to close its $26 billion budget deficit after weeks of fiscal gloom there is a glimmer of hope. This budget was a complex package of 31 bills had been debated by the Assembly who was struggling to secure enough votes to pass several other measures. If any of the measures failed, it could have jeopardized the entire deal that would have sunk California further into fiscal chaos.
California Senate image caption: State Senator George Runner, R-Lancaster, leans against one of the columns in the Senate chamber as he listens to the debate over one of the state budget measures at the Capitol in Sacramento, Calif., Friday, July 24, 2009. Lawmakers worked overnight voting on a package of bills worked out between Gov. Arnold Schwarzenegger and Legislative leaders to resolve the state’s $26.3 billion budget deficit. (AP Photo/Rich Pedroncelli)
Senators started their session Thursday evening and worked through the early-morning hours today to get enough votes to pass the more controversial measures, including three that took or borrowed billions of dollars from cities and counties. Senate leader Darrell Steinberg, D-Sacramento, said lawmakers could take pride in dealing with difficult budget decisions during an unprecedented economic collapse.
“And California is still standing,” he said moments after the final vote. The compromise plan before the 80-member Assembly and 40-member state Senate was announced by Gov. Arnold Schwarzenegger and the Democratic and Republican leaders of each house. It eliminates nearly 60 percent of the deficit with spending cuts to core state services such as education, state parks and prisons.
The rest is reached by one-time raids on local government funding and accounting maneuvers, such as deferring state employee paychecks by one day for a savings on paper of $1.2 billion. Both legislative houses quickly passed a key bill with cuts to higher education, college grants, health programs, welfare, in-home supportive services and state prisons. But measures aimed at filling the rest of the deficit proved more difficult. Some required two-thirds approval, meaning they needed support from a handful of Republicans, the minority party in each house.
Legislative leaders have acknowledged the solution is imperfect and cuts deeply into basic programs, including education, prisons, health care and welfare. But they say it is vital to address the state’s cash-flow crisis. California’s budget shortfall represents nearly 30 percent of its $92 billion general fund. The revision under consideration would bring total spending down to about $88 billion, returning spending to 2005 levels.
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The nation’s most populous state has been hammered by the national recession, leading to a steep plunge in income, sales, property and capital gains taxes. The cash crisis and the lack of a balanced budget have forced the state to issue IOUs to thousands of state contractors and vendors. Closing the shortfall is expected to allow the state to obtain short-term loans, eventually ending the need for IOUs.
The rapid decline in tax revenue and Republicans’ insistence on no tax increases left the state with few options.
The attempt to take or borrow nearly $5 billion from cities and counties over two years was proving to be one of the most difficult issues. Several big-city mayors criticized the raids and said at least 130 local governments have agreed to sue the state to block the transfer of some money.
Under the budget package, the state would borrow $2 billion from local governments’ property tax revenue and repay it with interest within 
three years. It would take another $1 billion in redevelopment money and $1 billion in local transportation funds.
“We want to share in the sacrifice, but we’re not going to allow this proposal and this budget to be balanced on the backs of our cities, particularly in the way that it has,” Los Angeles Mayor Antonio Villaraigosa said.
Facing withering criticism from counties and cities, the legislative leaders agreed to alter part of the plan, committing to repay the transportation money over 10 years rather than take it outright.
“Some of my counties, where they have rural roads, this money is all they have,” said Sen. Lois Wolk, a Democrat from Davis who opposed the raid on transportation money, which passed with the bare majority needed.
One provision authorizing an expansion of oil drilling off the coast in exchange for royalties was criticized by many as the Democratic lawmakers. The lawmakers believe this will invite legal challenges because it is nothing more than an end run around the public-review process. Reforms to welfare and social service programs were included in the budget package that Republicans do believe will save the state money in the years ahead.
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My Take: I have one question for the state of California, what happened? When former Pres. Ronald Reagan was governor, I remember a news broadcasts that stated California was no longer in the red with their budget. I know that was a while ago but what happened in the interim?
I guess those lawmakers got a little bit spend crazy over last few years. That is typical of those lawmakers, they decide they need a pay raise or a new desk they just signed papers and go for it. As you can guess, I don’t have much of a good opinion of many politicians. As a rumor goes, the first thing they do when they start their new annual session is to vote for pay raise. This seems a little crazy because they are now asking city, county and state employees take pay cut.
Then again, they work so hard to earn their pay raise, you know? Not! The ones who should get the pay raises are the police officers, firefighters and teachers. Police officers and firefighters put their lives on the line every day they go to work and some teachers as well. That’s my opinion anyway!
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