This is the Worst Possible Budget Deal But It Needs to Pass

imageCalifornia

Given the fact that this is the bicycle capital of the world, I risk a lot by saying this, but the priorities of people are a bit off in this country. Originally the state legislature was going to meet at 9 am this morning to vote on the budget agreement.

However there is one problem. Tomorrow in Davis there will be the Amgen Bike Tour. In Sacramento that will be today from 1 pm to 4 pm. There will be 100,000 people in downtown Sacramento today. Not of course to watch the budget vote, but to watch Lance Armstrong. As a result, the State Legislature will be pushing off their vote on the budget to 5 pm on Valentine’s Day Evening. If you’re keeping score at home bike racing > Budget > Love and Marriage.

Now that we’re clear on our priorities, let us lay out the stakes as if you do not know it. The most immediate stake is that there will be 20,000 state workers laid off their jobs if the budget does not pass. I am certain that some people reading this thinks this is a good thing, I would strongly suggest they put themselves in the shoes of those who make a modest income to begin with and will suddenly not know where their next paycheck is coming from.

That is just the immediate impact. The state is literally out of money. So right now, as we learned from Yolo County’s Assistant Administrator Pat Leary on Wednesday, the County is not receiving its normally $5 million in monthly payments from the state in order to carry out its state mandated functions. Those are all of the social service functions the county provides. The county is still performing them, but they are taking the money from an emergency joint fund that is shared money from the cities and other jurisdictions in this county. They have to pay the money back with interest. They will get the money back probably but again, they will lose the interest. This is on top of the $22.5 million deficit the county is facing next fiscal year.

At some point, the state will not only be issuing IOUs to state employees, but to jurisdictions themselves. That means that at some point schools, counties, and municipal governments will have to operate without any state money. That will be an interesting challenge.

The bottom line, and I have spoken to a lot of people about this. There will come a point when the state starts defaulting on its obligations and those entities will basically have to shut down. If that happens, the entire state could come crashing down and then the state’s economy will go from on the brink of disaster as it stands now to over the cliff. This is not an exaggeration.

Let’s be honest up front–nobody is going to like this deal. No one. It’s a bad deal. It’s a horrible deal. And it is one that we have to sign because if we do not, things get so much worse. I cannot tell you how many different people have said this same thing in their own words.

On Wednesday, Senate Republican Leader Dave Cogdill called this deal the best they were going to get.

“My deal, one more time, has always been that I would try my best to get it to a position where I felt it was as good as I could get and I was willing to release my members. That’s where I am. So I’m not guaranteeing any votes; it’s up to them (his members) to make that decision… But I’ve negotiated it to the point where I think it doesn’t get any better…”

He did say he was turning them loose to allow them to vote if that’s their decision.

In fact, the Senate leader himself would not commit to supporting the package saying:

“We’re waiting to see all the language and all of that so I’m not ready to commit who the votes will be at this point.”

The question is whether or not they have the votes and one-by-one Republicans announced that they were not voting for it. Until there were just three Republicans who had not announced that they were not voting for it, but they also hadn’t announced that they were not voting for it.

This is what Shane Goldmacher from the Sacramento Bee said:

“The field of potential Republican votes for the budget compromise in the Senate — widely viewed as the most challenging caucus to corral support — has narrowed so significantly that only three members have yet to throw cold water on the tentative deal.

That happens to be the bare minimum of Republican votes needed to pass the $40 billion-plus budget plan.

Those three are Senate Republican leader Dave Cogdill, Sen. Dave Cox of Fair Oaks and Sen. Roy Ashburn of Bakersfield.”

Here’s the Senate Republican Caucus’ Morning release:

“What They Are Saying About the Bipartisan Budget Solution…

“…what lawmakers and voters must understand is that the choice is not between this budget and some theoretical better deal; it is between this budget and fiscal meltdown.”

— Los Angeles Times editorial, February 13, 2009

“… there is one overpowering, compelling reason that legislators should approve it: It is the best possible deal that we can imagine out of a dismal reality – economic and political – that has left California government at the brink of insolvency.”

— San Francisco Chronicle editorial, February 13, 2009

“…the tentative budget deal being worked out by the governor and legislative leaders is probably the best we can get. Perhaps the only positive thing about the proposed deal is that its spreads the pain fairly evenly.”

— Fresno Bee editorial, February, 13, 2009

“Given the scope of the state deficit, any budget compromise will contain ugly and unpopular components. But further delays are an even worse option.”

— Modesto Bee editorial, February 13, 2009)

“When Republicans unveiled their budget draft back in December, they put forward their wish list of government changes they wanted as part of any budget agreement. And though details are still coming into focus on the tentative budget deal, it looks as if Republicans made progress in nearly all of the areas they wanted changed.”

— Capitol Weekly article, “Republicans win concessions in budget plan,” February 12, 2009)

“While this budget contains a painful mix of cuts and tax increases that nobody loves, the cost of inaction is much, much greater. Every day we wait to pass a budget means further economic devastation, the loss of thousands more jobs, and the shuttering of small businesses up and down the state.”

— Jim Earp, Executive Director of the California Alliance for Jobs, press release, February 12, 2009

“If we don’t pass this budget now the pain will only get worse and the budget hole will only get deeper. It took courage for the Governor and our legislative leaders to make these hard decisions but they stepped up to the plate and addressed their responsibilities.”

— Danny Curtin, Director of the California Conference of Carpenters, press release, February 12, 2009″

So do we have the votes? Find out tonight.

What’s in the bill?

A mix of spending cuts, tax increases, and borrowing. $15.8 billion in spending cuts, $14.3 billion in tax increases, and borrowing of $10.9 billion some of which will require voter approval.

How bad are the cuts? $5.646 billion from education this year. Another $2.955 billion next year. Higher education will get a 10% cut across the board. In other words, it’s really bad. We do not know to what extent this includes budget flexibility. It looks like Class Size Reduction remains however.

The Los Angeles Times declared business the big winner in the budget plan. While we are having to pay more taxes, there is $1 billion in corporate tax breaks.

“About $1 billion in corporate tax breaks — directed mostly at multi-state and multinational companies — is tucked into the proposal. Opponents say the breaks will do nothing to create jobs, and the Legislature has rejected such moves repeatedly in the past. But now, to secure enough Republican votes to pass a budget that would raise taxes on everyone else, the Legislature is poised to write them into law with no public hearings at a time when the state treasury is almost out of cash.”

Some of this was contingent upon the federal stimulus giving at least some money to California. Some of that borrowing is coming from stimulus money. We will have to see how that plays out.

The bottom line, this is again an awful budget. Horrible things will happen as the result of it. But if it does not pass, it is going to affect everyone’s life in profound ways that you cannot imagine.

—David M. Greenwald reporting

About The Author

David Greenwald is the founder, editor, and executive director of the Davis Vanguard. He founded the Vanguard in 2006. David Greenwald moved to Davis in 1996 to attend Graduate School at UC Davis in Political Science. He lives in South Davis with his wife Cecilia Escamilla Greenwald and three children.

Related posts

21 Comments

  1. Tired of Blog Boys C

    Cabron. Not only is your blog boy stuff insipid, but you're factually askew.Read all his blogs this week, all original material. You're going to criticize him for quoting from secondary sources on a statewide issue? Wow, you're petty.

  2. Circling the Dollar

    So the Rx for our beloved State is to tax and spend ourselves into prosperity, the Laffer Curve be damned! How has spending yourself into prosperity worked out for each of you individually?

  3. Anonymous

    We should pass a proposition requiring the legislature to focus on ONE thing – the budget. No new laws and no new programs, just the budget. If they get it done on time they get paid and if not they do not get paid.

  4. Anonymous

    The legislators are not going to balance the budget and benefit anyone but themselves and those who might hire them after their terms expire. If anyone wants anything to improve their lives, that person has to understand the budget and how the money is distributed. we should read the budget and try to find some way to benefit from it. No one is going to do that for us.

  5. Anonymous

    Ok Mr name-caller… you insist on trying to act as if you are above it all, so why do you comment on this blog at all? I am sick of your nasty stupid comments. I agree: insipid, weak, petty and dim.I hereby dub thee: …Comment Boy…. Please go back to your MMORPG where you belong. Clearly you do not have the acumen to be relevant here.

  6. Anonymous

    I always have to leave this quote around when we start talking stimulus and welfare aid. I could be more original, but when it's said this well, why?:…You cannot legislate the poor into freedom by legislating the wealthy out of freedom. What one person receives without working for, another person must work for without receiving. The government cannot give to anybody anything that the government does not first take from somebody else. When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that my dear friend, is about the end of any nation. You cannot multiply wealth by dividing it…. — Dr. (Rev.) Adrian Rogers

  7. Anonymous

    The government cannot give to anybody anything that the government does not first take from somebody else.Right – only in this case they are taking from somebody in the future. That is how we paid for the war in Iraq and that is how we plan to stimulate the economy.

  8. David

    …That is how we paid for the war in Iraq and that is how we plan to stimulate the economy….Deficit spending does not stimulate an economy. Never has, never will. More debt failed Bush and it will fail Obama. Keynes is still dead. Tell me when in history an economy was ever sparked by deficits? (If you think debt got our economy off the floor in 1942, go back and look at the numbers. It failed then, too.) What will you Obamanists say a year from now when the economy is not stimulated and unemployment is much worse? Mark my words: unemployment will rise to 10%, because of the Obama plan, which is really just more of the Bush plan. Will you prescribe more of the same ineffective medicine? Japan tried this game for 10 years and failed each time.

  9. David M. Greenwald

    David: I would suggest that the way the budget is currently, the goal is to balance the budget and pay the state's obligations. Somewhere else is there going to have to be stimulus–that's not the goal with this budget.

  10. Vanguard Reader

    For my own edification, I looked at the last several articles on the Vanguard.Feb 13: Woodland Taser LawsuitPrimary source: Court filingsDJUSD Budget SituationPrimary source: FAQ from DistrictFeb 12: District Meeting for All EmployeesPrimary Source: ReporterFeb 11: Davis General PlanPrimary Source: ReporterFeb 10: Distict Opposes Self-QualificationPrimary Source: Bruce Colby/ Int with DTAFeb 9: DTA Response to Budget CutsPrimary Source: DTA Radio Int with VanguardFeb 8: Still Don't Have a BudgetPrimary Source: Commentary from ReporterFeb 7: Grandiose GesturesPrimary Source: Various–small commentary on Enterprise, mainly from reporter and district documentsFeb 6: General PlanPrimary Source: City of Davis Staff ReportFeb 5: Limits of Open GovernmentPrimary Source: Commentary from reporterFeb 4: UCD Officer Claims ViolationPrimary Source: Court FilingsFeb 3: Read My Lips No New TaxesPrimary Source: Commentary from reporterFeb 2: UCD Officer Files SuitPrimary Source: Court FilingsFeb 1: Enterprise's Poor Coverage on B St ProjectPrimary Source: Critique of Enterprise article versus actual council actionsBottom line: while the Vanguard may occasionally utilize other newspaper coverage, for the most part, the vanguard is actually doing original reporting. Thus the charges by …Blog Boy… are baseless.

  11. Anonymous

    ……………Its a good thing for Blog Boy that all those major newspapers gave him a lot of quotes for his article …………….Its called cut and paste on the Blog Program , I believe its called cheating .Anyway have a nice valentine's night .

  12. Anonymous

    …I always have to leave this quote around when we start talking stimulus and welfare aid. I could be more original, but when it's said this well, why?:…You cannot legislate the poor into freedom by legislating the wealthy out of freedom. What one person receives without working for, another person must work for without receiving. The government cannot give to anybody anything that the government does not first take from somebody else. When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that my dear friend, is about the end of any nation. You cannot multiply wealth by dividing it…. — Dr. (Rev.) Adrian Rogers…So is there a democracy that has failed because some extreme described by Dr./Rev. Rogers? If so, which one?…Deficit spending does not stimulate an economy. Never has, never will. More debt failed Bush and it will fail Obama. Keynes is still dead. Tell me when in history an economy was ever sparked by deficits? (If you think debt got our economy off the floor in 1942, go back and look at the numbers. It failed then, too.) What will you Obamanists say a year from now when the economy is not stimulated and unemployment is much worse? Mark my words: unemployment will rise to 10%, because of the Obama plan, which is really just more of the Bush plan. Will you prescribe more of the same ineffective medicine? Japan tried this game for 10 years and failed each time….So what would you propose instead? Things went pretty well with Clinton. Did something actually go right with his Presidency? Would that be a model to check out?

Leave a Reply

X Close

Newsletter Sign-Up

X Close

Monthly Subscriber Sign-Up

Enter the maximum amount you want to pay each month
$ USD
Sign up for