In the interest of getting into out to readers quickly, I will throw this information from the Governor’s Offce without comment for now…
STATE BUDGET MAY REVISION 2009-10:
TWO BUDGET SCENARIOS
FACED WITH TWO POTENTIAL DEFICIT NUMBERS THE GOVERNOR IS PREPARED TO TACKLE BOTH
“Californians have a right to know the truth about the problems our state is facing and the steps we would have to take to solve our deficit.” (Gov. Arnold Schwarzenegger, 5/14/09)
The global recession has caused California’s revenues to continue their plummet, leaving our state with a $15.4 billion shortfall that could get worse in a matter of days. If the $5.8 billion in February budget solutions are rejected on the May 19 ballot, our budget deficit will increase to $21.3 billion – forcing unprecedented actions that will affect every Californian.
Today, the Governor is releasing two May Revision proposals because he believes the people deserve to know what steps must be taken to balance our budget in both scenarios. While both will be painful, if Propositions 1A-1F fail, California will be faced with a worst-case scenario that will force more severe cuts, borrowing from local governments and the release of undocumented immigrant inmates.
SCENARIO NUMBER 1: May 19 Ballot Propositions Pass And California Faces A $15.4 Billion Problem
Regardless of the May 19 election, California has a multi-billion budget deficit that must be addressed with difficult but necessary actions that the Governor is pained, but prepared, to take.
In addition to government efficiency measures, reducing the state workforce and selling state assets, the Governor is proposing a mix of cuts, borrowing and other options to close a certain $15.4 billion deficit. Some examples include:
• California will borrow up to $6 billion through a Revenue Anticipation Warrant (RAW): The RAW will help avoid deeper cuts to vital state programs and services.
• Health and Human Services makes up the second largest part of California’s General Fund, meaning the state must find savings in social, developmental and health care services. Examples include: reducing funding for Healthy Families, rolling back the rate increase for Family Planning Services and reducing Medi-Cal payments to private hospitals by 10 percent.
• When California’s revenues fall, so does the formula for education spending, translating to a $3 billion reduction in education spending. This could mean a school year shortened by five days.
• Delay all repairs to the State Capitol for one year.
SCENARIO NUMBER 2: May 19 Ballot Propositions Fail And California Faces A $21.3 Billion Problem
If the Propositions fail, an additional $5.8 billion will be tacked on to the current budget deficit – forcing far more severe cuts on top of those proposed in scenario 1. A $21.3 billion budget deficit is a worst-case scenario for California and would leave the Governor no choice but to make deeper cuts and take unprecedented actions.
A $21.3 billion deficit would force even deeper cuts to state programs and services. Some examples include:
• Education funding would be cut by an additional $2.3 billion. A $5.4 billion cut could force schools to shorten the school year by 7.5 days, increase class sizes and layoff teachers to absorb the reduced funding levels.
• Outreach funding for UC and CSU would be fully eliminated.
• Funding for public health and social service programs would be cut even further. These cuts would cut off approximately 225,000 children from the Healthy Families Program and entirely eliminate funding for Substance Abuse Treatment and Crime Prevention and HIV Education and Prevention.
Even those cuts wouldn’t be enough to fill an additional $5.8 billion gap and California would be forced to take further action. Some examples include:
• Borrow $2 billion from local governments. The Governor has fought to protect the coffers of local governments throughout his administration, but a $21.3 billion budget deficit leaves the Governor no choice.
• Release thousands of undocumented immigrant inmates. With an additional $5.8 billion problem, the Governor would be forced to release thousands of undocumented immigrant inmates directly into federal custody.
The Governor knows these cuts affect real lives, but the numbers don’t lie and this is the reality of the crisis California faces. State government can only spend what it has, and no matter what scenario, we have less. It is the government’s responsibility to make the tough decisions to keep California solvent and functioning no matter what the budget problem.
While the deep spending cuts are necessary to avoid a cash crisis, the Governor knows that every Californian is sacrificing and cutting back, so he is taking action to ensure government does the same.