• BREAKING NEWS ABC shows live and on-demand -- Download the WATCH ABC app!

Budget deal looms, but lawmakers dissatisfied

October 7, 2010 12:00:00 AM PDT
The longest budget impasse in California history may soon be over. After months of debate, state lawmakers are nearing a final vote on a new spending package. A budget agreement appears close. The proposal to close the $19 billion deficit focuses primarily on spending cuts and creative accounting. As the California Legislature works its way through a massive $87.5 billion budget plan held together partly with Band-Aids, almost everyone knows it will only temporarily end the state's financial woes.

Revenue projections appear to be too optimistic, such as $5 billion in federal aid that typically falls short every year. And many budget solutions are one-time fixes rather than permanent corrections.

"I'm very clear: This budget does not address California's structural imbalance, and I don't say that with any great pride," said state Sen. Darrell Steinberg (D-Sacramento), senate president.

So why approve this flimsy budget plan? Because California is embarrassingly approaching 100 days into the fiscal year with no state budget in place. Plus the state needs to do some borrowing soon for infrastructure projects and needs proof its good for the money.

"What bottom line is important is both our Treasurer and Controller have told us they think it's solid enough so they can go to Wall Street," said state Sen. Mark Leno (D-San Francisco).

In a few short months, lawmakers might have to go back and re-work the budget.

It could mean more cuts and/or more payment withholdings. People who depend on state funding, like Medi-Cal adult daycare provider Jim MacDonald, have had it with not knowing one day to the next if they'll get any money on any given month.

"We've already had the budget cuts that we've had and the budget impasses, and it's hard to really keep our doors open," said MacDonald. "It's getting to a point where I just don't want to do it anymore."

It's frustrating, too, for rank-and-file lawmakers who are not part of the leadership that negotiates the final budget compromise.

"Taxpayers should be upset. We need to get the job done," said state Assm. Jeff Miller (R-Corona). "That's what we need to get the job done. That's what we're elected to do, and we continue to fail step after step."

There are some measures in this budget that could help future leaders, but not immediate relief. If approved, it'll be harder to qualify for social programs, the rainy day fund will be boosted and the state's pension liability will be lower.

Public schools are facing deep cuts in the proposed budget, receiving $3 billion less than last year. More than half of that simply defers payments to schools for a year.

In the last few years, education has now been slashed by more than $18 billion.

"When you take a look at the disproportionality of the cuts over the last few years, it's just a startling disinvestment in education," said Kevin Gordon, a public schools lobbyist.

The latest deal was reached by Gov. Arnold Schwarzenegger and several top state lawmakers, and it assumes that the state will get an extra $2 billion from the federal government, and that the improving economy will bring in more tax revenue.

"I'm frustrated by the fact that this budget looks at trying to solve a problem without actually having to solve the problems," said Assm. Anthony Adams (R-Hesperia). "There are too many gimmicks in here. There's too much overestimation of revenues that are never going to come in."

Analysts are saying it does look like the proposal budget has the two-thirds majority needed to pass.

"It is the product of a two-thirds vote that you get the gimmicks and the fake, instead of the real," said Sen. Denise Ducheny (D-San Diego).

The state employee compensation will be cut by $1.5 billion, and the prison budget will also be slashed by $1 billion - most of that from inmate medical care.

Some of the biggest cuts target new state employees. SEIU, the largest union in the state government, has tentatively agreed to a new pension reform plan. The budget includes lower pension benefits for future state employees, as well as several nonpaid days off for current employees.

There are no new taxes or fees in the proposed budget, and UC and Cal State universities will get an extra $300 million. Welfare and child-care programs have also been spared.


Load Comments