Study lobbies for more spending

JUNE 28, 2010

By LAURA SUCHESKI

A report released Thursday from the left-leaning California Budget Project spells bad news for low- and middle-income Californians. The report, titled “Making Ends Meet: How Much Does It Cost to Raise a Family in California?”, finds that millions of Californians are not making enough to cover the basic family budget, an alternative to the federal poverty line that is devised by the project to more accurately assess the reality of poverty in California, which has a much higher cost of living than other states.

The basic family budget “provides an estimate of the income needed to meet basic needs without assistance,” so it admits that some families who cannot meet the budget may qualify for and take advantage of available government programs. Expect Democratic legislators to use this new report as fodder for their claims that California’s government cannot afford any budget cutbacks and that higher taxes are the preferred method to close a gaping $19 billion budget gap.

While the California Budget Project purports to be a “fact-based, nonpartisan” organization with the goal of providing clear budget analyses for voter education, it doesn’t seem interested in balancing the budget.  The organization opposes a spending cap and the cutting of any social welfare programs.  When working out a budget deal this summer, it is important that state lawmakers “support the public systems and structures that working families rely on,” said CBP Executive Director Jean Ross. CBP also argues that the state government is not spending enough.  In a report released in March, it noted that General Fund spending was $21.5 billion below 2004 LAO predictions, the “truth” behind a “myth” that the government is too big.

But while its solutions to California’s budget problems are suspect, there’s little doubt that hard times continue for California families given a tough recession and high unemployment rates.

Researchers calculated the basic budget per county to get a picture of the variable costs of living amount counties. On statewide average, a single adult with no children would have to make $14.64 an hour and a total of $30,445 per year to meet all basic expenses.  A single parent needs to make $30.88 an hour and $64,239 per year.

The report notes the disproportionate effects of California’s February 2009 budget on low-income families.   A reduction in the dependent tax credit was reduced from $309 to $98 per dependent and personal income tax rates were increased by 0.25 of a percentage point. The state’s sales tax was raised by 1 percent and the Vehicle License Fee rate from 0.65 percent to 1.15 percent.

“We view [this report] as a tool that can be used to assess the impact of public policies… [W]e hope this information can be used to inform debates over our state budget,” said Ross, who at least admits that the purpose of the research is to steer state policies in a liberal direction.

By these measures, both the governor’s May Budget and the Democrats’ counter offers risk harming low- and middle-income families.   Senate Democrats propose to extend both the Personal Income Surcharge and the cut in the dependent tax credit, which contributed to a reduction in the taxable income threshold of about 30 percent for families with children.

Gov. Arnold Schwarzenegger’s plan reduces public services to low income families, which is of particular concern to the organization.  “Our findings clearly document the fact that child care is a significant expense.  It can be equal the cost that families pay for rent.”  The governor’s plan would entirely eliminate state funding for child care.

Of course, when the state continues to outspend its budget by $19 billion, something has to give. In California, education spending, debt service and pension obligations for state workers are senior obligations that get first dibs on the limited cash. Indeed, some progressives, such as Schwarzenegger pension adviser David Crane, argue that liberals ought to support pension reform because of the impact of budget cuts on social programs. But liberal organizations and politicians are more interested in finding new sources of revenues through fee and tax increases than in curbing existing government costs.