What State Budget Deficit?

Katy Grimes: Isn’t California supposed to be overwhelmed right now with an historical budget deficit of $25.4 billion dollars? The word “deficit” usually means that it’s time to make substantial budget cuts.

Yet last week Caltrans representatives asked an Assembly budget subcommittee for additional state money to hire more employees and buy more cars, and many other budget-expanding goodies.

Today, the same Assembly budget subcommittee was presented with more even requests for additional state funds. The state controller’s office, the insurance commissioner, and several other state agencies, sought the Legislature’s approval to hire more state employees.

Several of the state agency requests were prompted by federal government mandates, including the American Recovery and Reinvestment Act of 2009, also known as “stimulus funds.” In order for California agencies to receive ARRA funds, the federal government attached many strings to the funds, including the expansion of just about every state agency which receives the money.

Newly elected Insurance Commissioner Dave Jones, asked for 10 additional positions in his department in order to even begin an audit mandated by the Legislature, to review all insurance company rate increase filings. Jones was insistent that he needed the extra positions in order to accomplish the audits.

The controller’s office requested permission to hire six additional employees in order to satisfy auditing requirements for the Women, Infants and Children program (WIC). The USDA which oversees the WIC program doubled the audit requirements.

There were many other agency requests, as you can see from the very long and convoluted agenda.

It appears to be business as usual at the state, regardless of the supposedly staggering deficit and unrelenting budget-cut talk by the Governor.

Legislators have continued to pass bills expanding reporting requirements and adding mandates on state agencies, in what appears to be justification of additional expansion and hiring, by making more busy work for state employees. And the federal government’s ersatz stimulus plan appears only to be stimulating other government agencies.

There may be a budget deficit, but it doesn’t appear that the people running state government know this.

JAN. 31, 2011

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  1. Dave Jones
    Dave Jones 15 February, 2011, 23:58

    Ms. Grimes:

    The California Department of Insurance is not funded by the state general fund. There are no general fund dollars used to fund the Department of Insurance. The operations of the Department of Insurance do not contribute to the general fund budget deficit.

    Dave Jones
    Insurance Commissioner
    California Department of Insurance

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