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Of false dilemmas and hostage-taking

By Josh Richman
Friday, January 8th, 2010 at 4:24 pm in Arnold Schwarzenegger, Schwarzenegger, state budget.

The oil-for-parks plan I wrote about earlier doesn’t seem to be the only, or biggest, false dilemma Gov. Arnold Schwarzenegger is setting up in his state budget proposal.

The governor’s plan relies on collecting $6.9 billion more in federal tax dollars, what he calls California’s “fair share” owed the state for faulty reimbursement formulas and federal mandates. He says California gets back only 78 cents on every tax dollar it sends to Washington, D.C. – a far lower rate than many states – and deserves much more considering its costs as an economic engine and a border state.

If the federal government won’t ante up, the governor says, he can entirely eliminate the CalWORKS welfare program, the IHSS program, and the Healthy Families low-cost medical insurance program for children, while freezing Cal Grants for higher education, eliminating funding for University of California and California State University enrollment growth and cutting state worker salaries by another 5 percent, among other measures – a wholesale shredding of the state’s social safety net and educational system.

But many governors before and including Schwarzenegger have tried and failed to reformulate the federal government’s support of California; to put all responsibility for this now on California’s Congressional delegation, especially in a time of national economic crisis, is passing the thus-far-unachievable buck. Remember when Arnold pledged to be “The Collectinator” way back in 2003, upon meeting with a President of his own party while the national economy was in far better shape? At the time, he was talking about $50 billion.

Bruce Cain, who directs the University of California, Berkeley’s Institute of Governmental Studies and UC’s Washington Center, might’ve said it best when I talked to him in late 2006 as San Francisco’s Nancy Pelosi was preparing to take over as Speaker of the House and named two Bay Area lawmakers to the powerful Appropriations Committee. Most federal spending is set by formula and isn’t easily changed, even by a change of leadership, he had said, so California wasn’t much more likely to get a significantly bigger slice of the budget pie now than it was before.

“You can’t expect to go from 79 cents on the dollar to 99 cents on the dollar because of this. You’re probably talking about maybe changing things by a couple of pennies,” Cain said at the time.

Other governors of both parties managed to better protect education, health and social services without the federal fix than Schwarzenegger has. Is he admitting his own failure? Is he merely creating a pretext for these draconian cuts he fully expects to make later in his final year in office, already knowing full well that the federal pot at the end of the rainbow isn’t likely to materialize?

Or is this a show of action-movie bravado, holding a gun to the head of California’s poor, elderly, disabled and students and hoping Congress will blink? And if it’s this, then isn’t it something the action-movie villain does, not the hero?

UPDATE @ 5:46 P.M.: I just spoke with Mary Beth Sullivan, executive director of the California Institute for Federal Policy Research, who agreed with Cain’s 2006 sentiments.

“Once you get into tweaking the formulas, you’re into whose ox gets gored,” she said – that is, reformulating to California’s benefit requires reformulating to some other state or states’ detriment, so it’s usually a slow, hard process with few returns. “All other governors tried it too…. It’s a laudable purpose because quite frankly if he gets it up to 80 cents on the dollar, that’s something, but is it realistic to think he can do it? I don’t think so.”

Congress might pass another stimulus bill with direct help for California and other budget-stricken states, she said, but like the first stimulus bill, that’ll be one-time funding, not a permanent reformulation. Beyond that, Congress is likely to start focusing on the national budget deficit, a process that might not be pretty for any of the states. So, she said, the best California should be hoping for is another one-time influx and maybe some tweaking around the edges.

That said, U.S. Sen. Barbara Boxer insists the American Recovery and Reinvestment Act already has made Gov. Arnold Schwarzenegger’s data obsolete.

Boxer’s office put out a report today estimating that Recovery Act money, coupled with the fall in Californians’ federal tax revenues due to the struggling economy, made it so that California received $1.45 for every $1 in federal tax dollars it sent to Washington in Fiscal 2009; Schwarzenegger’s 78-cents-on-the-dollar figure is based on data from 2005, which economically speaking was a different world entirely.

I pointed out that ARRA funding is one-time-only, not a reformulation that supports California going forward. Boxer’s staff acknowledged this, but also noted ARRA funding is still pouring into California during this budget crisis; they ballparked that the state has received about $18 billion so far, and there’s another $37 billion still in the pipeline.

The overall message from Boxer’s camp: Congress and the Obama Administration have been helping California – and other states – a lot, but can’t be expected to cure all of Sacramento’s ills.

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  • Elwood

    “Other governors of both parties managed to better protect education, health and social services without the federal fix than Schwarzenegger has.”

    Well, whoop de doo!

    Were they dealing with the great recession? I don’t think so.

  • Ralph Hoffmann

    Kids without cars need buses to get to school. Cutting Transportation to fund Education makes no sense!