California’s budget hell-week

June 14, 2012

By Katy Grimes

With the big constitutional budget vote tomorrow in the Legislature, the usual budget games  have not let anyone down this year. Only this time, far fewer lawmakers have a hand in the process. And, despite too many denials of game playing, gimmicks and last minute bills provided to legislators, that’s exactly what has happened. It’s business as usual in the state Legislature, which seems to abhor business the most, and understands it the least.

Putting off the dirty work of the budget

California’s legislators have all year to work on and pass a legitimate budget. But every year the bulk of the budget is jammed through the Legislature in less than 10 days, during what feels like hell week. Legislators feet are held to the fire until they acquiesce or blister, and vote to pass the fraudulent budget.

This year, budget talks have been done without the usual group of party leadership, and instead is is a party of three, consisting of Gov. Jerry Brown, Assembly Speaker John Perez, and Sen. Pres. pro Tem Darrell Steinberg–all Democrats.

Perez and Steinberg claim they are not fighting with the governor, but their budgets and the Governor’s budget vary too much for them not to be fighting.

But the fight should be over the gross disinformation campaign being waged on these “structural balanced” budgets–it is shameless.

Friday, June 15 is the constitutional deadline to adopt the 2012-13 budget. Steinberg and Perez announced yesterday that they will meet the deadline, and do it with a balanced budget. But California has not had a legitimate, balanced budget in many years.  The hyperbole is bunk and always has been.

And, despite claims by budget committee chairmen that the budget process is as transparent as possible, Assembly members received what many say is the most important bill of the session, this evening at 9:55 p.m., and have to to vote on at 12:00 noon tomorrow.  And, it is only available on a state computer.  This is government transparency at it’s best.

“As the budget moved through the process, Democrats  argued that their majority vote budget is balanced with $8.6 billioni in tax increases and $8 billion in cuts,” California Budget Fact Check wrote today.

The California Budget Fact Check analysis found that:

“Less than $1.1 billion of the items characterized as “cuts” are true permanent spending reductions.  Almost $400 million of the permanent cuts are a continuation of policies from last year’s spending level which means less than $700 million are new permanent cuts.  The majority of the so-called “cuts” are funding shifts, deferrals and the delays in program increases.”

Documents used in the budget committee on Tuesday claimed that the budget “framework” would include $8 billion in spending reductions.

Assemblywoman Shannon Grove, R-Bakersfield, commented that “framework” must be the word of the week, since she had heard it used so many times in budget hearings by legislative colleagues. She asked for the hard copies of the budget documents, with facts, real numbers and data, instead of “framework.”

But her request was ignored.

“However, upon closer inspection, the vast majority of the so-called “cuts” are actually deferrals, fund shifts and efforts to maintain current spending levels,” California Budget Fact Check reported.

The devil is in the details:

Examples of deferrals, fund shifts and other gimmicks the Governor characterizes as “cuts” include:

  •   $1.7 billion shift of Redevelopment Agency assets (An increase of $250 million above Governor’s proposal)
  •   $540 million fund shift of trial court reserves
  •   $342 million fund shift of mortgage settlement proceeds (The Senate had adopted $393 million, but the spreadsheet indicates $50 million more than Governor’s original proposal)
  •   $663 million deferral of Medi-Cal provider payments
  •   $830 million to defer/repeal state mandates
  •   $500 million from new cap and trade
  •   $300 million loan from Motor Vehicle funds
  •   $385.2 million in weight fees to offset transportation debt service costs

Examples of the continuation of prior funding reductions and delayed rate increases characterized as “cuts” include:

  •   $327 million from the continuation of the single allocation reduction.  This reduction began in 2009-10 and has been extended each year.  It is not a new reduction in spending.
  •   $87 million from Delaying the Skilled Nursing Rate increase until 2013-14. (This rate increase was scheduled for 2012-13 budget.)

$58.9 million from continuing an existing 3.6% reduction in service hours in the In Home Supportive Services (IHSS) program.  This proposal means that the IHSS program will see no programmatic reduction this year.

One of the best explanations of budget tricks is how California Budget Fact Check proves that deferrals not spending cuts.

“Since 2009, the state budget has increasingly relied on deferrals to “cut” spending.  A deferral is when a program expenditure is paid at a later date.  The program expenditure occurs in the budget year and the state simply pays for it the next fiscal year.  The budget presented on Tuesday includes $663 million in provider payments, which will be paid in 2013-14 even though the program expenditures will occur in 2012-13.”

Read the rest here:

A bad budget is hell, but a dishonest budget is a lie perpetrated on the people.

Fortunately, the bewitching hour is upon California as Standard and Poors is currently threatening to downgrade California’s credit, if lawmakers don’t balance the budget without gimmicks.

Because California is nearly one-eighth of the entire country’s gross domestic product, but also totals 30 percent of the debt carried by all 50 states, and pays up to 12 percent on short-term variable borrowing at junk bond levels, instead of the 5 percent the state used to pay, it appears that California lawmakers have just about run out of paying old credit cards with new ones. We really are so out of kilter, that Wall Street fears that if our debt grows any more, the rest of the country will be impacted, and not in a god way.

Bad old  Wall Street bankers are forcing California lawmakers to clean up the state’s financial mess in order to prevent a catastrophic economic tsunami. The question is, will they do it, or just run another fake?


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