Gov. Arnold Schwarzenegger discussed his revised state budget proposal in Sacramento on Thursday. He called for laying off thousands of state employees and slashing billions from education if voters reject the budget-related measures on next week's special election ballot.
(Rich Pedroncelli/AP)Photos (1 of 1)
Down to the wire on California’s budget crisis
As voters face ballot measures, critics say Governor Schwarzenegger is using scare tactics.
By Daniel B. Wood | Staff writer/ May 16, 2009 edition
Los Angeles
This state’s largest newspaper has dubbed the two plans “grim and grimmer.”
Unveiled by Gov. Arnold Schwarzenegger on Thursday, the proposals are meant to address the state’s budget crisis, which has grown by $21.3 billion since a bill was signed in February, closing a $42.5 billion gap – the largest state budget gap in American history.
With six initiatives on a special election ballot for Tuesday – all designed to deal with the state’s chronic economic problems – one of Governor Schwarzenegger’s plans is to deal with what the state’s deficit will be if the measures don’t pass ($21.3 billion). The other is for what happens if they do pass (a $15.4 billion deficit).
Five of the measures seem destined to fail, several state polls show. They include, among other ideas, altering the state lottery, extending recent tax increases, and diverting money from voter-approved programs. They account for $6 billion of the deal Schwarzenegger and lawmakers reached in February.
“This is the harsh reality of what we face,” Schwarzenegger told a Capitol news conference. “Sacramento is not Washington…. We can’t spend what we don’t have.” The state’s annual income-tax collections have fallen for the first time since 1938.
“Obviously, the situation is unprecedented, and the state can’t print money to take care of the deficit,” says Robert Stern, president of the Center for Governmental Studies in Los Angeles.
In both plans, Schwarzenegger has to borrow $6 billion, cut K-12 education by $3 billion, lay off 5,000 of the state’s 235,000 workers, cut funding to hospitals, and possibly reduce eligibility for healthcare programs – if he can get federal permission.
He also will be eliminating several boards and commissions, consolidating others, and selling several state landmarks, including San Quentin prison and the Los Angeles Coliseum and Sports Arena.
But just by mentioning all this, only five days before the vote, Schwarzenegger is being accused by critics of trying to scare voters into approving the initiatives. In 2004, four Schwarzenegger-backed initiatives all failed, dealing the governor a severe political blow, and many think another, similar setback will weaken him significantly.
“Releasing these numbers one week before the election is an obvious attempt to scare voters into voting for these failing measures,” says Mike Roth of the “No on 1A” campaign.
There has also been a barrage of TV ads around the state, with one firefighter mentioning that 23,000 firefighters could be cut, and another ad saying, “we could lose 43,000 teachers, see class sizes increase, and more schools close.” The cuts from education will be $5 billion if the measures fail, forcing a possible seven-day reduction in the school year, on top of billions the state cut in February.
But Barbara O’Connor, director of the Institute for the Study of Politics and Media, at California State University, Sacramento, doesn’t fault Schwarzenegger and instead says the public may not really understand the choices.
“I don’t think [voters] have a magnitude check of what these cuts will look like if the propositions don’t pass, and that’s the need for the fear appeal,” she says.
Though state officials say the education cuts could be mitigated by federal stimulus funds, Kevin Gordon, president of School Innovations and Advocacy, says the US government may not allow California to simply replace its own funds. That would violate “the spirit of what leaders in Washington, D.C. intended,” he said.
“If voters fail to approve the propositions, our schools will undergo another round of massive cuts – further unraveling public education in this state and hurting our kids,” said David Sanchez, president of the California Teachers Association, in a statement.
The state also would ask the federal government to assume responsibility for an undetermined number of the 19,000 illegal immigrants held in state prisons. Ultimately, that would result in most of those prisoners being deported, according to state Finance Director Mike Genest.
The second of the two plans involves borrowing $7.5 billion from financially strapped local governments and a vastly depleted investment market. Some 225,000 children could lose healthcare coverage.
Schwarzenegger also proposes raising $1.8 billion by approving an oil lease off Santa Barbara County, a project recently rejected by the State Lands Commission. The lease would allow the first oil-drilling project off the state’s coast in 40 years.
Lands Commissioner and State Controller John Chiang objects to the proposal because he feels it would open the door to offshore oil leases, which haven’t been approved since the Santa Barbara oil spill of 1969.
Schwarzenegger said new taxes are “out of the question.” Nevertheless, if voters reject his budget package Tuesday, he will be seeking some higher fees.
Comments
2. Sherry Blair | 05.16.09
It’s really odd now in California. We have been acutely aware of the rise of the Obama administration with its bottom up philosophy and now we are wondering why the money still goes from the top down. Here in California, we thought some of the jobs we were going to lose would be saved by a bailout, at least that was the way it was sold. It seems that the money hasn’t reached us yet and may not reach us in time. Here in my county of Alameda, there is a tax increase on the ballot just to keep emergency services going. The state and city are thinking of ways to take money from each other and we here at the bottom are apparently going to pay up or go without. Personally, I’m tired of bailing out everyone else. I think I’ll bailout.
3. Zack Attack | 05.16.09
If california would leglaize industrial hemp the state of california could genereate almost 100 millions dollars on a simple 1$ per transaction tax and a 2$ per oz shipping tax, this would also generate thousands of new jobs and open up a potential trillion dollar market. To see the facts of about industrial hemp and why it is illegal visit these websites.
http://www.houstonianonline.com/home/index.cfm?event=displayArticle&ustory_id=3b9c80cd-b5a8-4cad-8164-92b89d4a734a
http://www.jesus-is-savior.com/Evils%20in%20Government/amazing_facts_about_hemp.htm
Stop living in fear of the government, we built it and we are in control.
4. Brittancus | 05.16.09
The invasion of illegal immigrants into the state of California, has much to do with the monolithic budget meltdown. Learn the truth from City councilor Andronovich stated that $ 11. billion can be attributed to every illegal alien, who breaks into America, get a free lunch on the taxpayers in Los Angeles county. My concern and thousands of other citizens and legal residents is how many—ILLEGAL ALIENS—are voting in elections, when no governmental ID is needed to prove immigration status. Simply recognize that California is a—SANCTUARY STATE—and by removing millions of illegal immigrants and their families will assist on balancing the budget.
So vote—NO–on all propositions as you are supporting parasite businesses that hire illegal cheap labor. The Liberal Assembly in Sacramento has allowed foreign labor to settle here and now the Piper must be paid. Taxpayers are unknowingly paying billions of dollars in State benefits to underwrite education, health care, housing and other benefits and now has the highest taxes in the nation? If we don’t draw the line now–the politicians will keep drawing more and more blood from us, in the form of raised taxes. Demand a permanent E-Verify workplace extraction tool now. Learn more at NUMBERSUSA, JUDICIALWATCH.
5. Hilary Smith | 05.16.09
I can’t believe the lengths we are going to just to avoid taxing the rich. Tax the rich for the greater good already! If we tax the wealthy in order to provide civilized public services, businesses will not leave the state. Welfare-state policies will attract quality socially-minded workers which will keep labor costs down and that will encourage business to stay. The argument that more taxes will result in an exodus of business is the same argument used throughout the South where public services are a complete joke, business taxes are low and economies have been faltering for decades.
6. WakeUpAmerica | 05.16.09
I say we let California file for Bankruptcy and let it go into the hands of a conservator. This would force these unions to reopen negotiations.
7. John Smith | 05.17.09
Yes, I agree… Bankruptcy. No new taxes. Tax the rich and they will move out of the state. They already are. You need to be responsible with money, the state is NOT!
8. Red Andy | 05.17.09
The true could set you free. $14 billion spend with illegals in 2004, by state numbers. calculate inflation x 5 years and here is the $21 billion shortfall. However the last real man in USA was the Duke. Maybe reverent Wright is right.What happened to the people of this country? I forgot “GLOBALIZATION without ORGANIZATION”
9. Phil | 05.17.09
We need to increase the gasoline tax and sales tax. It is fair. It will be good for the environment. It will solve our budget problem. It makes sense. Cuts must be started in our extensive welfare system. It is corrupted, inefficient and filled with people who should not be on welfare. This makes it worst for people who really need the help. Stiffer penalties and jail time for welfare fraud is needed. Taxing the rich does not work, Hilary Smith. The luxury taxes of the 80’s were a dismal failure. It was responsible for large job losses and the collapse of many small businesses.
10. dlang | 05.17.09
please just vote no there are loop holes in this loop hole again the gov and lawmakers just doesnt get it vote NO
11. unlending | 05.17.09
WakeUpAmerica- that wont happen. it obvious that the federal government would force all the “rich states’ to pay for the welfare states. after all fare is fair.
12. unlending | 05.17.09
Joe - How did California get into this mess? easy. spend what you dont have. borrow & promise to make payments using income you wont get. and continue to spend more on what you want not what you need. it so easy…anyone can do it!
13. David N | 05.17.09
I love the simple solutions that people propose. One person says that if we just legalize hemp and tax it, why will make $100 million. Well, I do not know if that is true, but $100 million is just a drop in the bucket with a budge the size of California. The other solution is to tax that infinite source of painless money, the rich. However, the rich are already paying a disproportionate amount of taxes anyway. And, they along with the semi-rich (the middle class and the upper middle class) are taking measures to avoid paying taxes. This includes tax avoidance behavior including making less money and/or moving out of the state. They are, of course, being replaced by those who consume state benefits.
Unfortunately, the only real solution is to spend less money. But, this means fighting the unions, telling people they have to live with less, or even (gasp) find a job, and maybe telling a government employee to find a private sector job.
14. lh | 05.18.09
Tax the rich?? That is exactly what is happening. The top 25% of taxpayers are paying 90% of the taxes for the rest of us. Increase their taxes and even more will leave California. We need lower corporate and personal taxes. We need business friendly policies. We can not tax ourselves our of this.
15. ailey | 05.18.09
Isn’t it interesting that we are laying off only 5000 employees when we have 235,000 state employees but we are going to cut children’s health, teachers, and firefighters in large numbers?
Not to mention that every independent analysis says California unionized employees (state, local, school district ad nauseum) are highly overpaid when pension and benefits are factored in?
16. Mishra | 05.19.09
It is the union parasite that is eating away the state fund. Democrats are in bed with these union bosses. Pensions are the number one culprit, state employees get 70% of their salaries as pension. Why do they deserve so much? We tax payers don’t have that kind of pension. I say dissolve these unions and save california. Sales tax 9.75 is ridiculous.
17. Bonnie | 05.19.09
The State of California at the State-level has approximately $59.83 billion of the taxpayer’s money it is not using, i. e. surpluses equal to $1,695 for every man, woman and child in California or $6,779 for a family of 4. This does not include all the additional surpluses that exist in the school districts, cities, or counties in California.
http://www.cafrman.com
18. gallatin | 05.19.09
“Soak the rich” policies are a subsidy from California to Nevada, Tennessee, and all the other states who recognize that, if you punish assets, they’ll go somewhere that won’t punish them. We can’t push everyone who can create jobs or buy products out of the state and have any kind of economy.
California’s in this position because the Assembly kept on looking at business as a target and “the rich” (which seems to also include “the middle class”) as the piggy bank for its vote-buying and pork barrel schemes.
Enough. California needs to be pay-as-you-go. If bankruptcy’s the only way to achieve that, bring it on.
19. Bob Vargas | 05.20.09
Let us try using common since to this budget crisis. All the CA measures are failing except for 1F Elected Official Salaries. Of course the voters rejected them because Californians are losing their jobs, healthcare, pensions, retirement income, retirement, etc. We voted yes on 1F because the Elected Officials are getting paid well for doing a poor job. This should be proof to all Elected Officials that there has to be a balance between high income earners & low income earners. You can see for yourself during these economical crisis that the American people will not and cannot do any unnecessary spending. I am sure you know that the American people do not want budget cuts in high return investments like, education, health care, energy, police force, fire fighters, etc. So what is the answer. I am sure that there are huge number of Californians that have extremely high incomes, that would be willing to pay more taxes in order to balance the budget, help their fellow Americans out, help their government out, & help themselves out. Also get rid of waste, abuse, and fraud.
20. Patricia McCall | 05.20.09
This is a bunch of BS. The government employees don’t use that much money. Yah know this is just observation but, we have went into a deficit ever since we started this war where in and it seems that the USA really has went down hill ever since. Lets focus on USA and stop putting our money/taxes toward more war, were going broke! This is supposed to be one nation under God, by the people and, for the people. We the people need to stand firm and say, no more money spent on war, were going into dept. Stop blaming California state employees who work hard for California! But, if you have to get rid of somebody, get rid of higher state office people like, Directors and Chiefs and, keep the workers who actually work!
21. Patricia | 05.20.09
If it was just a state deficity only, then, why are there bankruptcys and forclosures of homes throughout the USA.?
22. Chris | 06.17.09
The people in charge of the budget really have no power to do their jobs. Voters consistently approve spending initiatives and turn down anything that smells like a potential tax. But, the reality is that the state workers have no power to change or overturn anything we voters approve as spending measures. They’re obligated to fit whatever we approve into their bursting budget. We wonder why CA always has a budget problem, and why no governor can fix it. State officials simply have no power to do their jobs to control the budget by curtailing spending. Thus, now we’re trying to cut core services in order to provide for less important initiatives. But with the current system the state has an obligation to fulfill all approved spending iniatives pass on the bills. Well, I think the system ha too much democracy. Those in charge of the budget simply need to be given the power to do their jobs and decide to cut out what we can do with out, it’s a crisis afterall.
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1. Joe | 05.16.09
How did California get into this mess. What will happen if the bills are not paid? Is it true that when state employes go th cash or deposit their checks that the state will bounce these checks? The truth is, California has to balance its budget no matter how much pain it causes. The result of not paying their bills could be devestating for California, the United States and America in general. If the rest of the world looses confidence in America, it won’t be long before the rest of the world comes in for the kill. Good bye American dominance. Welcome to Global world government.