State budget deal likely just a temporary fix
| Tuesday, Jul 21 2009 06:35 PM
Last Updated Tuesday, Jul 21 2009 06:45 PM
LOCAL IMPACTS
KERN COUNTY GOVERNMENT
General Kern County budget
* Loss of $28.8 million in property taxes and Williamson Act money.
* Loss of an estimated $13 million in gas tax money
Department of Human Services
* State would eliminate CalWORKS funding for the children of 4,100 adults. That money provides housing, food and clothes for 11,000 Kern County children.
"We are going to see a real increase in homelessness and crime," said Director Pat Cheadle. "Most people will do things they would never do to feed their children."
Aging and Adult Services
* Reduction in In-Home Supportive Services for non-critical clients.
* Would end services to between 400 and 500 seniors who need help around the house such as cleaning, cooking and errand running.
Mental Health Services
* Cut $3 million.
* Possibly require layoffs.
Source: Agency directors
CITY GOVERNMENT
City officials figure Bakersfield could see a $13.8 million hit this fiscal year, which started July 1, and another $4.8 million next fiscal year. (The city's operating budget is about $368 million.)
Here's the breakdown:
* $6.5 million of property tax revenues, to be repaid by the state in three years.
* $4.8 million of gas taxes -- with no repayment to the city expected -- to be repeated next fiscal year.
* $2.5 million in redevelopment funds with no repayment expected.
Bakersfield City Manager Alan Tandy called the grabs "massive amounts of money" that will worsen the city's existing service cutbacks due to shrinking revenues.
Whether Bakersfield will join a possible lawsuit against the state, which Los Angeles County supervisors approved Tuesday, is up to the city council, Tandy said, though city staff believes the snagging of gas tax and redevelopment funds is "clearly illegal."
HIGHER EDUCATION
Cal State Bakersfield President Horace Mitchell spoke to The Californian minutes after leaving a meeting of the CSU Board of Trustees in Long Beach on Tuesday.
With $584 million in cuts system wide and a $13.5 million cut approved for the Bakersfield campus, CSU trustees initiated a four-point strategy:
* Raise annual student fees by $672 for full-time undergraduate students. This 20 percent increase comes on the heels of a 10 percent increase approved in May.
* Staff furloughs approved by the board in all labor groups, although the faculty has not yet finished voting on whether they can live with such a measure.
If furloughs are taken twice a month -- a 10 percent cut in pay for most employees -- the CSU system would expect to save about $275 million this fiscal year, Mitchell said.
If the faculty do not approve furloughs, the contract will call for layoffs.
* Additional reductions in on-campus spending: this may include reductions in groundskeeping, student services and temporary instructors.
* Enrollment will be reduced by nearly 10 percent, or about 40,000 students, over the next two years.
HIGH SCHOOLS
Dennis Scott, associate superintendent for business at the Kern High School District, said officials have known for months that massive cuts are coming, so preparation has been under way. Here's the basics:
* State funding cuts for the combined 2008-2009 and 1009-2010 school years stands at about $50 million district wide. Some federal stimulus dollars are expected to provide one-time assistance.
* The KHSD will begin this school year with 190 fewer teachers, counselors and administrators -- and 117 fewer classified employees. Student enrollment is expected to remain fairly steady this year.
* If state revenues do not improve significantly -- and Scott has little reason to believe they will -- he anticipates additional and quite severe cuts in the 2010-2011 school year.
* This is not good for kids," Scott said. "That's what I care about."
Mark Fulmer, assistant superintendent of financial services for the Kern County Superintendent of Schools, said all Kern County educators are anticipating deep and painful cuts from the state, so he doesn't expect any of Kern's dozens of school districts to be caught off-guard when more details from the budget deal emerge.
* "I think we are already seeing the impact," he said. Layoffs, program cuts and class-size increases are the most visible impacts, he said. "Most districts have braced for this."
* Both Fulmer and Scott said it will be important to watch how the state cuts are distributed -- whether they come primarily in revenue limit funding or in categorical programs. The former is the primary state funding process, while the latter is supplemental funding often tied to specific programs.
Both men used the term "shell game" to describe the state's pattern of education funding that has been anything but straightforward.
ALSO...
Healthy Families
Since July 17, there has been a freeze on new enrollment in Healthy Families, a low-cost health insurance program for children in families that make too much money to qualify for Medi-Cal but too little to afford private coverage, said Jan Hefner, director of the Children's Health Initiative of Kern County.
She said that was estimated to keep 350,000 new children statewide -- including 10,500 in Kern County -- out of the program a year and save California $80.5 million.
Also under that action, the state was to disenroll 220,000 children statewide -- including 6,200 in Kern -- starting in March 2010.
It was unclear how the state would implement the additional cuts contained in the new budget plan, Hefner said. It could expand the disenrollment and start it earlier, or roll back eligibility.
It is also looking at reducing administrative costs and the rates paid to providers for some of the savings, she said.
California's deal to close its $26 billion budget gap may do what Gov. Arnold Schwarzenegger had hoped to avoid: kicking the state's problems down the road.
Despite deep cuts to education and social programs, the deal struck late Monday is filled with assumptions and accounting gimmicks. Combined with a persistent recession, it is likely to lead to yet another multibillion-dollar deficit in the next fiscal year.
"Frankly, we may not be done yet," said Senate leader Darrell Steinberg, D-Sacramento. "We pray for better economic news sooner rather than later."
Meanwhile, Kern County's lawmakers were still waiting to be fully briefed on the package Tuesday but had plenty to say about what they did and didn't like.
Senate Majority Leader Dean Florez, D-Shafter, predicted the 20 or so bills that make up the package will pass, but by varying margins.
Voting was expected Thursday.
BEST THEY COULD DO
The plan cuts $15 billion from government by slashing spending on schools, universities, health care, welfare and in-home support for the disabled and frail.
But it does not entirely rewrite the social contract between California and its citizens, as some had feared. Schwarzenegger's original proposal called for eliminating welfare and health care for 930,000 low-income children.
Schwarzenegger and lawmakers said it was the best they could do, with tax revenue evaporating and Republicans refusing to raise taxes.
Yet the agreement seems to run counter to Schwarzenegger's mantra in recent months to avoid "kicking the can down the alley."
Some $11 billion of the deficit will be closed by taking some $4 billion from local governments, shifting funds from other government accounts and playing a variety of accounting tricks.
The deal speeds up the state's collection of 2010 personal income and corporate taxes to bring in revenue earlier than anticipated. Taxpayers essentially would be giving the state an interest-free loan until they claim the money on tax returns.
One gimmick defers state employees' paychecks by one day for a savings -- on paper -- of $1.2 billion. Instead of being issued on June 30, 2010, the paychecks would be issued July 1, the start of the 2010-11 fiscal year.
About $2 billion in property tax revenue that will be borrowed from local governments will have to be repaid with interest in three years.
The plan also assumes the state can sell off part of the State Compensation Insurance Fund, which the administration values at $1 billion.
Some experts said the severity of the recession and GOP opposition to any tax hikes, including increases on tobacco sales and oil drilling, tied the hands of the governor and lawmakers.
In the end, they were left with few choices, said Bruce Cain, director of the University of California Washington Center in Washington, D.C.
"Given the political circumstances that you weren't going to get any concessions out of the Republicans, this was the best you could do," he said. "I don't fault the Legislature for what they did."
KERN LAWMAKERS WEIGH IN
Here was the take of Kern's state lawmakers:
* State Sen. Roy Ashburn, R-Bakersfield, was happy to see the cuts totaled a "big number" and that the deal "appeared to" include key welfare reforms.
Those reforms include extra background checks on people receiving and giving care under the In-Home Supportive Services program plus tougher sanctions on people who don't meet work requirements and stay on welfare too long under CalWORKS.
"We are finally doing what we should have done 10 years ago," Ashburn said of the proposed welfare-to-work changes.
It's great for Kern, he said, that the oil severance tax died and Williamson Act funding didn't -- though it's still cut.
He pointed out local governments agreed to give up some types of funds in an emergency and "it's hard to argue this is not an emergency."
Ashburn seemed to have little sympathy for Kern County given it has cried all year about its poor finances but then discovered a few weeks ago the county's general fund had $36 million more than expected at the end of the fiscal year on June 30.
"There isn't a lot of credibility over there," Ashburn said.
Ashburn said he's been working on a provision to soften the blow to local government but he didn't know if it made it into the package. That is, extending the lives of redevelopment agencies and letting those agencies borrow against the money that would be generated in those extra years.
* Florez said the good news for Kern is that the package contains no new taxes and preserves some Williamson Act funding but slashes social programs on which many residents rely.
He said the hit on local government would not so bad because banks probably would loan cities and counties the money they stand to temporarily lose and the state would cover their borrowing costs.
Florez acknowledged the deal is based on assumptions that could prove untrue but added that happens all the time and government adjusts.
"I foresee another economic downturn and us having to cut more," Florez said. "That's a natural part of the budget process."
* Assemblywoman Jean Fuller, R-Bakersfield, said she was "encouraged" by the absence of any tax increases, the inclusion of off-shore oil drilling, the keeping open of state parks and the cutting of some state commissions.
She was "troubled" by the taking of money from local governments and such accounting maneuvers as delaying payments until the next fiscal year.
* Assemblyman Danny Gilmore, R-Hanford, said he didn't want to comment on the deal because he hadn't been fully briefed.
MORE BUDGET DETAILS
While lawmakers preserved the state's core social service programs -- public education, and health care for children and the poor -- those services will experience deep cuts that are expected be in place for several years as the recession erodes tax receipts.
Medi-Cal, the state's health program for the poor, will be cut by $1.3 billion. Welfare, in-home support services and a health care program for low-income children also would suffer.
The budget cuts $6 billion to K-12 schools and community colleges, along with nearly $3 billion from the California State University and University of California systems.
The education cuts have forced one of the country's largest university systems to impose employee furloughs, raise student fees and limit the number of freshmen. Cuts to public school funding have led to increased class sizes, teacher layoffs and elimination of sport, music and art programs.
Schools haven't yet felt the full effect of the state's cuts because of federal stimulus money, said Renee Hendrick, executive director for business services at the Orange County Department of Education. But she said the cuts will be devastating once the federal money runs out.
"I think you're going to see larger class size, reduction in arts and music programs," said Hendrick, president-elect of the California Association of School Business Officials. "I don't think we've seen the full magnitude of the cuts yet."
California lawmakers are expected to vote Thursday on the new budget.
If Schwarzenegger signs it into law, the budget-balancing deal is almost certain to draw legal challenges. Public employee unions upset over furlough days have already threatened to sue, as have local governments that do not want to relinquish their tax money.
At least one state vendor said the state's budget impasse has done so much damage that it will take California months to recover.
"It's like the reverse economic stimulus package for California," said Gloria Freeman, who owns Saff USA Inc., based 25 miles northeast of the state capital.
The Associated Press and Californian government team leader Christine Bedell contributed to this report.
