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The buzz on Jerry Brown’s May budget revision

By Josh Richman
Monday, May 16th, 2011 at 2:21 pm in Bill Lockyer, Bob Dutton, California State Senate, Darrell Steinberg, Jerry Brown, John Chiang, Mark Leno, state budget, Tom Harman, Tom Torlakson.

From state Senate Republican Leader Bob Dutton, R-Rancho Cucamonga, and state Senate Budget Vice Chair Bob Huff, R-Diamond Bar:

Bob Dutton“Senate Republicans believe Governor Brown is moving in the right direction by making education and law enforcement funding a top priority. We also applaud the governor for embracing Republican proposals of paying down state debt and providing some job-creation incentives.

“But the May Revise goes too far on taxes and not far enough on reforms.

“Rather than curbing government spending, the governor’s revised budget still sets the state on a course of excessive spending growth in the future – spending that relies on tax increases.

“With $6.6 billion in new revenues, Republicans are right – we don’t need, and it’s ridiculous to ask voters for, five years of new taxes.

“Clearly the California economy is trying to recover, which makes it critical that the state budget include reforms that Senate Republicans have been seeking from day one – a hard spending cap, pension reform and business-regulation relief.

“The Senate Republicans’ long-terms solutions provide the stability small businesses need to grow and create jobs.”

From State Senate Budget Committee Chairman Senator Mark Leno, D-San Francisco:

Mark Leno“The revised budget proposal Governor Brown released today makes use of the state’s unexpected improved revenues in a fiscally responsible way and addresses California’s structural deficit so that we do not dig the hole any deeper. While our cash forecasts are encouraging, we are far from resolving the long-term deficit problem, and must not fall into the trap of utilizing one-time solutions, borrowing and deferments that would only aggravate the problem. This revised budget is an honest and balanced spending plan that extends current revenues to stimulate the economy, secure jobs and protect public investments in K-12 education, universities, public safety and social programs. I am committed to working with Governor Brown, my colleagues in the Legislature and the people of California to help our state recover and flourish once again.”

From Assembly Republican Leader Connie Conway, R-Tulare:

Connie Conway“In our ‘Roadmap to a No Tax Increase Budget,’ Assembly Republicans showed that we can protect funding for the classroom and law enforcement without raising taxes. We call upon the Governor to stop trying to raise people’s taxes and start working across party lines on a no-tax increase budget compromise. Protecting our core priorities, reforming state government and bringing back private sector jobs – without raising taxes — must continue to be our focus as we work to get California back on track.”

From state Treasurer Bill Lockyer:

“The Governor deserves credit for not succumbing to expediency and remaining focused on California’s longer-term fiscal future. The plan reflects an understanding that, despite welcome revenue increases, the State still faces significant budget shortfalls not just in the next fiscal year, but in subsequent years. It closes those ongoing deficits with a balanced approach that solidifies California’s fiscal foundation without short-circuiting the state’s economic recovery.

“The plan’s effect on our ability to borrow $10 billion to meet the State’s cash-flow needs remains unclear. If full implementation of the Governor’s FY 2011/12 plan remains contingent on voter approval of taxes, my office will not be able to complete a cash-flow borrowing transaction unless the final adopted budget includes real, inescapable, quickly-implemented spending cuts that would be triggered if voters reject the taxes.”

Lots more, after the jump…

From Assembly Budget Committee Vice Chair Jim Nielsen, R-Gerber:

“The news that our budget deficit continues to shrink and that California continues to take in unexpected tax revenue is further proof that we don’t need to impose tens of billions in higher taxes on overburdened taxpayers to balance the budget and protect core priorities. Governor Brown today took a baby step forward by eliminating one year of his proposed tax increases, but he still proposes more than $50 billion in higher taxes on Californians to fund bigger government with no serious reform. I cannot approve of a budget which holds to the dangerous realignment plan that will put our citizens at risk and which increases the size of government by 31 percent over the next three years.”

From California Labor Federation Executive Secretary-Treasurer Art Pulaski:

“With the release of the May revision of the state budget today, the governor provided a pathway to free California from the perpetual budget crises that have plagued our state in recent years. Legislators must act immediately to adopt the governor’s balanced proposal to prevent additional devastating cuts to schools, public safety and other essential services.

“As a state, we can’t afford to allow politics as usual to stand in the way of making the tough choices needed to move forward. It must be priority No. 1 to prevent more cuts that will flat-line our economic recovery just as it finally begins to show signs of life. An all-cuts budget flatly ignores the values Californians share. Elected leaders in the Assembly and Senate need to display the political courage that Californians demand of them to solve this crisis directly, free of gimmicks.

“While we support the governor’s balanced approach of spending cuts and extending existing revenues, it’s disappointing that the he’s altered his common-sense proposal to eliminate the costly and ineffective enterprise zone tax credits. These and other handouts to large corporations bleed the state of hundreds of millions of taxpayer dollars every year that could be used to fund higher education and real job-creating programs. While it’s a positive sign that the governor’s addressing some of the worst abuses of the program, more needs to be done. The governor and legislature must continue to push for its outright elimination.

“The time for inaction and political posturing is over. California families demand real leadership to solve this crisis. Working people urge the legislature to swiftly pass the governor’s responsible proposal to extend existing taxes so that our state can get back on the road to recovery.”

From Service Employees International Union California Executive Director David Kieffer:

“Today, Governor Brown outlined the starkly different choices California faces at this crossroads and why we need a balanced approach to solving the budget.
“Gov. Brown and the Democrats in the legislature have already made more than $13 billion in painful cuts to services Californians rely on for their health, safety, and our shared prosperity. Not a single Republican showed the courage to vote to support the Governor’s even-handed approach. Now it’s time to ensure that the solution is truly balanced by maintaining existing revenues.

“Across California, the voters we talk to say it’s time for the legislature to do its job and pass a budget that maintains current revenues; a simple vote is all the constitution requires. What we don’t need is an unnecessary and costly election that will only continue the state’s economic uncertainty.

“We must address the structural deficit with real solutions this year; we cannot afford another year of delays and borrowing. It’s time for every legislator, including those of the minority party, to tell the truth and treat voters with respect: no more gimmicks, no more fudging, and no more fairy tales. Though revenues are higher than expected, there is no way to close a $13 billion gap without maintaining existing revenues. If our legislators fail to deal with that reality, our schools and public safety agencies will be forced to assume the worst and lay off thousands more teachers, police officers, paramedics, and firefighters.”

From Californians for Retirement Security Chairman Dave Low:

“Although pension payments represent just 3 percent of state spending, we will continue to work with the Governor and lawmakers and support changes in the pension system that stop abuse. We can find common ground. But we will fight tooth and nail against any measures that gut retirement security for firefighters, teachers, school employees, police and other public employees.”

From Health Access California Executive Director Anthony Wright:

“After $6 billion of cuts to health and human services, the new budget proposal requires extending current tax rates in order to prevent further ugly cuts to seniors, families, and the health system on which we all rely.

“A metaphorical budget bomb goes off in six weeks unless California extends existing tax levels. Allowing revenues to expire on June 30th will blow a new, big budget hole of billions of dollars, causing much steeper cuts in health, education, and other vital services.

“The budget has already booked severe cuts, including caps on Medi-Cal doctor visits, significantly increased premiums and co-payments for low-income families, and drastic cuts to Medi-Cal providers and adult day health centers.”

From California Foundation for Independent Living Centers Executive Director Teresa Favuzzi:

“Governor Brown’s May Revision puts forth the bare minimum revenues necessary to get California through the immediate crisis while preventing more devastating cuts to support for people with disabilities.

“A budget that doesn’t maintain current revenues would gut the most basic public infrastructure that supports people with disabilities, even after years of cumulative cuts have already disproportionately targeted services that promote independent living, maintain our health, and sustain basic necessities such as food and rent. An all-cuts approach represents a startling reversal of California’s progress toward implementation of the landmark Olmstead decision far before its promise of support for community living was fully realized.

“California’s disability community knows there is yet still a better way: We know that California is an abundant state with the resources to support our children’s path to success, to offer opportunity to those seeking work, and to make real every person’s right to live independently in their community. We know a state as innovative as California can see that community support for people with disabilities is far more cost-effective in the long-run than a broken and costly system of institutionalization.

“While we recognize the extraordinary fiscal pressures on the state and applaud Gov. Brown for continuing to pursue an approach that maintains the bare minimum support services people with disabilities have worked hard to secure, the Governor’s plan leaves many sensible revenue alternatives on the table. Rather than continuing cuts that do more harm, we encourage the governor and legislative leaders to carefully consider oil severance, alcohol and other tax reforms which can be done without damaging our economic recovery.”

From California Association for Adult Day Services Executive Director Lydia Missaelides:

“Sadly, in attempting to balance the state budget, California has gone morally bankrupt.

“Virtually every Californian has a family member or friend who has faced the tough task of caring for an elderly parent with chronic disabling medical needs – stroke, head injury, Alzheimer’s disease, Parkinson’s disease – that can physically, mentally and financially exhaust a family. Many depend on Adult Day Health Care (ADHC) to provide the medical care and therapy that these fragile seniors and disabled adults need to be able to live at home in their own communities and out of expensive nursing homes and crowded hospital emergency rooms.

“In March, the lawmakers approved a significantly reduced appropriation of $85 million for a redesigned ADHC, funding that is included in the Legislature’s budget bill – a bill that has yet to be signed by the Governor. In his May Revise, Gov. Brown acknowledges the March vote to eliminate ADHC as a Medi-Cal Optional Benefit and appropriates $25 million for short-term transition services, an action that gives California the distinction of being the only state in the country with no Medicaid adult day health care program. Once an innovative leader, California is heading backwards at a time when this cost efficient model of care is needed more than ever to manage medical care for an aging population.

“Now is the time for lawmakers to fulfill their promise to keep ADHC center doors open and protect the health and safety of the state’s most vulnerable, chronically ill adults – the 37,000 Medi-Cal beneficiaries who depend on ADHCs for community-based coordinated, cost-efficient, quality medical care.

“The only avenue left to keep the program alive is to ensure the passage of AB 96 by Assemblymember Bob Blumenfield, which would authorize the state to seek federal approval to start a new waiver program that would take over the current ADHC Medi-Cal model, bringing in matching federal dollars, and provide sufficient funding for a redesigned program

“With a $15 billion deficit there are no good choices, but the Governor and lawmakers are fooling themselves if they think the state will save money with ADHC centers eliminated as a Medi-Cal benefit. They suggest moving the 37,000 patients into other existing programs; however, those programs do not offer the comprehensive, community-based medical services that ADHC provides. For example:

    – In Home Supportive Services provides personal care and domestic services but is not qualified to provide the ongoing medical care – skilled nursing and therapies – that ADHC patients require.
    – Nursing homes, at five times the cost to taxpayers, are not the answer. Furthermore, there are not enough available beds to accommodate the huge influx of patients when the network of ADHC centers shut down.
    – Family caregivers rarely have the medical and psychological expertise to provide for their loved one who needs medical supervision and nursing care due to their fragile physical and mental health conditions. Additionally, without ADHC, family caregivers who work will be forced to quit their jobs to provide the around-the-clock care these medically fragile seniors and disabled adults require.”

UPDATE @ 3:10 P.M.: From state Senate President Pro Tem Darrell Steinberg, D-Sacramento:

“The Governor has laid out the only credible framework for achieving a long-term resolution to California’s budget challenges. It will achieve the necessary balance between deep and difficult cuts, and the revenue needed to ensure that the cuts to education, public safety and other vital services are no deeper than they have to be.

“In the Senate, we are going to convene our budget subcommittees, we are going to analyze this quickly, and we are going to expedite our continued discussions and negotiations with those Senate Republicans who are willing to be part of the solution. Our goal is to get to our floor well before June 15 and get this done.

“I think the key difference between what the Governor proposes and what the Republicans put out late last week is that we are focused on a long-term solution to California’s budget. We’re not interested in gimmicks, papering-over the deficit, or hoping we just get through the year and then praying for an even faster economic recovery. The numbers don’t lie. The revenue increase over the last several weeks is good news, but it doesn’t change the fundamental nature of the challenge we face. So let’s finish our work.”

From state Senator Tom Harman, R-Huntington Beach:

“Thankfully, California’s revenues are picking up so the Governor is able to fully fund schools and start paying down debt. Both are very high priorities to my Republican colleagues and me.

“I continue to disagree with the Governor’s reliance on taxes and am disappointed – not surprised though – that we are not hearing any discussion of the reforms some of my colleagues and I have advocated in meetings with the Governor. By not addressing structural reforms and relying on more taxes, he is just delaying the real work of balancing the budget – like his predecessor. That is something Governor Brown promised he would not do.

“Higher taxes won’t help California, but they could cause businesses to leave and take their jobs with them. Just as California’s economy is starting to recover, more taxes would be devastating. We have to shrink the size of government to achieve long-term budget solutions, and that means making some tough choices and tightening our belts.”

From State Superintendent of Public Instruction Tom Torlakson:

“The $3 billion increase in education funding proposed by the Governor is welcome news to schools across the state where students are eager to learn; parents are engaged; and teachers, administrators, and school employees are working day and night to help our students achieve.

“Providing schools the resources they need is our shared responsibility, and the Governor’s proposal — after $18 billion in cuts over the last three years — offers us a chance to begin to meet it.

“The May Revision also foreshadows the stark choices we face if Republicans and Democrats cannot reach agreement on a long-term solution to the financial emergency in California’s schools.

“The alternative to the Governor’s plan is to impose devastating additional cuts that our schools cannot afford — further crowding classrooms, laying off even more teachers, and shortening a school year that is already one of the shortest in the industrialized world.

“I also look forward to working with the Governor and the Legislature to recognize the importance of completing work on the data systems we need to meet federal mandates and promote student achievement.

“World-class public schools and universities were the economic engines that for decades fueled California’s success. I urge the Legislature to quickly embrace the Governor’s plan to invest in our classrooms and our future.”

UPDATE @ 4:08 P.M.: From state Controller John Chiang:

“The test of a budget’s soundness involves looking at its sustainability, honesty, and whether it positions California for lasting economic prosperity. While the particulars will be ironed out in the days ahead, I commend Governor Brown for presenting a plan that appears to avoid one-time gimmicks, begins reigning in the State’s borrowing, and offers fundamental and cost-effective reforms for the delivery of local and state services.

“Once we receive the necessary data from the Department of Finance, my office will update the State’s cash outlook based on a variety of likely scenarios.”

From California Medical Association President Dr. James Hinsdale:

“We applaud the governor for putting forth a balanced, honest approach to closing the current budget shortfall and addressing our long-term structural deficit. This is generally the kind of approach we need to stave off even more devastating cuts down the road and to finally pull California out of its perennial budget crisis. Given the high stakes, we now encourage the Legislature to move quickly and decisively in considering this proposal and meeting its obligation to pass a budget on time and in balance – with bipartisan support.

“While we understand the need for creative solutions to balance the state’s budget and are willing to work with the governor and Legislature to achieve them, we are concerned that this proposal would simply dump our most vulnerable population into a system with no capacity to serve them. We simply cannot expand coverage without increasing the network of physicians to serve these new patients.

“This proposal, coupled with the 10 percent provider rate cuts, the cap on provider visits and mandatory co-pays for Medi-Cal patients proposed in January, doesn’t add up and we fear is doomed to fail.

“We cannot continue to balance our budget by decimating our medical delivery system and have any expectation that we will be able to successfully implement federal health care reform in future years.”

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  • rew

    It look to me like Brown needs to get another budget director, being off 6.6 billion in your projections is not a small mistake. You’ve got all these people being laid off due to budget cuts and now you here we had the money all along to keep jobs, or at least some of them. Frankly I don’t see how laying off more goverment workers will help economic recovery, the private sector is starting to create jobs, but this positive uptick is being negated by public layoffs. We need to keep people working, jobs will get us out of economic doldrums, not layoffs.

  • Pablo

    As part of the “grand compromise” Brown and the GOP propose big reductions in state employee pensions and a spending cap. Yes, real grand. So public sector workers will take a double hit: a loss of pension benefits while paying more taxes. So much for the myth of the powerful public employee unions we keep hearing about. For all their backing of Gov Brown and the Democrats, he wants to impose an unfair two-tier pension scheme and reduce benefits for state workers. That’s not a compromise. A compromise would be the republicans agreeing to raise taxes on folks with incomes over $250,000, really raising taxes on the super rich, closing tax loopholes that allow corporations to pay no taxes, and changing Prop 13 to allow corporate property to be taxed at a fair rate. Why isn’t Brown pushing for the upper class to compromise and sacrifice instead of ‘balancing the budget on the backs of workers’ as his incompetent predecessor was accused of doing?

  • Pablo

    Why can’t the LA Times find at least one political or labor leader who will counter the cutters with a call for taxing the rich? Those leaders are out there, in the Green Party and the Peace and Freedom Party, and their voices need to be heard now more than ever. The Democrat-Republican plan does nothing to improve conditions for the poor, the homeless, the unemployed, seniors, or children with no health care. Tax the rich and their corporations.

  • Elwood

    “Frankly I don’t see how laying off more goverment workers will help economic recovery, the private sector is starting to create jobs, but this positive uptick is being negated by public layoffs. We need to keep people working, jobs will get us out of economic doldrums, not layoffs.”

    For the simple minded, let me explain the difference between public and private employment. Government workers are paid by your and my tax dollars. Private sector employees are paid from profits of business.

    And let us now sing one more chorus of:

    Steal from the rich,

    Give to the poor,

    etc.

  • John W

    Re: #1

    Short-term, the public sector layoffs are definitely a significant drag on the economy at a time when we are trying to get more traction. Unlike a business, where a layoff equals pure cost savings to to the company(less one-time costs for any severance pay), the net savings from a government layoff are far less, since they also result in lower tax revenue to the government, payment of unemployment benefits, and less spending in the economy. Long-term, if the layoffs are intelligent restructuring of government functions (a huge if), they should benefit the economy in numerous ways.

  • rew

    Reply to #5, I buy your argument. You don’t want to waste goverment money with dumb spending on needless jobs. But you do need to keep people working somehow – if you can , if they aren’t working you have to pay thier unemployment, food stamps, pay for thier health care and so forth. Work is critical, it’s so important to our society that people have a job, jobs bring dignity to peoples lives, not just money

  • Elwood

    Re: #5

    Please explain how the layoff of a private sector worker does not result in “lower tax revenue to the government, payment of unemployment benefits, and less spending in the economy”.

  • John W

    Re: #7 Elwood, I think you missed my point. I’m not arguing against laying off government employees, but simply pointing out that, in the short run, the government does not save as much money from laying off employees as a company would. A company laying off people to improve the bottom line doesn’t care if its business decision results in lower tax revenue to the government. Not the company’s problem. Hence, in terms of the company’s goals, laying off a $50k employee results in as much as $50k profit improvement. Of course, if the employee is a salesperson, and the layoff results in the loss of $500k in sales production, that would be a dumb business decision. My point was that, if the government lays off a $50k employee to help balance a budget, it will not result in the same net cost savings that a company would achieve. The government will lose the income tax that employee would have paid, lose sales tax revenue when the employee cuts back on spending, and lose the multiplier effect due to the reduced spending. If the employee is involved in generating revenue to the government — tax collections, traffic tickets etc., that’s another possible offset to the savings from not paying the salary anymore. Unemployment benefits indirectly impact a company too, since those benefits are paid with unemployment insurance taxes (FUI and SUI) paid by the employer. However, those taxes have already been paid, so it doesn’t reduce net savings from laying off the employee.

  • Elwood

    Re: #8

    Pretty strained.

    You don’t mention the benefit to the taxpayer of having one less government drone on his/her payroll.

  • John W

    Re #9

    Who’s arguing? Of course there are intangible, indirect benefits to eliminating unnecessary positions, functions etc. That doesn’t change the validity of my observations. If you want to call everybody who holds a government job or loses one a “drone,” go for it.

  • Elwood