BUDGET DEAL: Devastating Cuts for Education, the Poor, Health Care, and Local Governments

statecat.pngThis is going to sound a lot like what I said back in February, but it is so much worse in part because these cuts are top of what was cut back in February.  The budget is an all-cuts budget that cuts over 26 billion dollars from the budget.  There are no revenue enhancements here, only cuts.

Taking the brunt of the blow once again is education which has now had over 17 billion dollars in cuts in the last two budget deals.  That represents nearly one-third of the funding for education which is also the single largest line item on the budget.

Education lost $4.3 billion directly and another $1.7 billion in deferrals.  How will this impact us locally?  It is hard to say.  DJUSD seemed fairly confident they could ride through whatever summer revisions to the budget existed without further cuts, but in the next few years it may require additional cuts.

On the other hand, Democrats were able to avoid a suspension of Proposition 98 which would have devastated education further by changing the formula by which educational funding was allocated outside of this year.  In addition, the Democrats got an agreement to put around $9.5 billion back into the budget in future years.  Thus in the short term these cuts will be devastating to many school districts, in the longer term, money will end up going back into education.

Higher education also took a huge hit in the budget.  We have discussed at length the UC Furloughs and student fee hikes and we have the proposed CSU furloughs, fee hikes and cutbacks to enrollment.  Higher education took a $3 billion hit, just under one-third of their state revenue, though a small portion of their overall operating budget.

All told $9 billion of the $26 billion deal (over one-third) came out of education.

The measure of good news is that the CalGrants program for college students was spared, that means that poor students will still be able to get funding for their higher education.

The poor and health care plans took a hard hit.  CalWorks was spared total devastation but still took a $528 million hit.  Likewise home health aides and healthy families were also spared total devastation but took $226 million and  $124 million respectively.  Medi-Cal took a $1 billion hit.

Some of these hits will be magnified by cuts to county services and the huge deficits that counties face.

Prisons got off relatively unscathed taking just a $1.2 billion hit to their nearly $10 billion overall budget.

Stateworkers on the other hand have taken another huge hit and face three furlough days which represents about a 13.8% total pay cut.  This comes just a few months after Republicans killed an agreement between a portion of state workers and the Governor that would have limited their cut.  Now the workers are without a contract and threatening to strike and attempt to shutdown part of the state.

Local government took a huge hit with $2 billion in borrowing from local government, another $1 billion in money that would go to repair roads and $1.7 billion from redevelopment.  All told $4 billion being taken from cash-strapped local government.

What was not included in this bill is just as telling.  There were almost no revenues aside from shifting the amount of income tax withholding and increasing estimated tax payments for businesses and self-employed, schemes that are said to generate a total of $2.3 billion even though they do not actually increase taxes.

There are no new taxes here unless you count fee hikes to college students, pay cuts to state workers, and benefit cuts to millions who rely on state benefits new taxes.

Rejected was a $1.50 per pack tax on cigarettes.  Another item rejected was a $15 annual vehicle license fee hike.  And the big one that has been rejected is the 9.9% tax on oil extraction that would have given around $1 billion to higher education and could have offset some of the cuts there.

Commentary: Sorting Out the Winners and the Losers

As with any agreement, there are winners and losers in this fight.  The clear winners here include the Republicans and Governor Schwarzenneger who were able to pass a new budget without a single tax increase.  That is a huge victory for them and a testament to the power of the two-thirds vote and the ability of the Governor to block tax increases.

But they are not the only winners. 

Corporations and business were big winners as they did not have to face increased taxation.  Oil companies escaped without oil severance taxes that all of the major oil producing states have.  Tobacco escaped without another cigarette tax increase. 

The no new taxes line means that the entire impact of the budget cuts falls directly on middle and working class California and away from the wealthy and business community.  People can of course debate the wisdom of such policies, however, when one argues that the pain is shared in this budget deal, I find that a very difficult argument to sustain.  Again, tell me where businesses, corporations, and the wealthy were hit in this budget deal–I certainly do not see it.

While there is little doubt that law enforcement and prisons are not happy with the $1.2 billion in cuts to the prisons, that is the only cut they have sustained and they have largely escaped intact thanks in part to the power of CCPOA.  Word came out the a Group of California Police Chiefs has targeted a number of Democratic lawmakers on the early prison release plan and CCPOA was supportive of recalling the governor, though apparently not taking a strike vote.  The bottom line is that prisons and their $10 billion industry were spared the worst of the budget cuts and there have been no meaningful reforms to sentencing, parole, or other aspects of the criminal justice system.  We still house large amounts of people who are relatively not dangerous to society.

The losers here are easy to figure out and you can begin with Speaker Karen Bass and Senate President Pro Tem Darrell Steinberg who got completely out-maneuvered and rolled in this deal.  They will argue they got the best they could by preventing the elimination of CalWorks, CalGrants, the elimination of healthy families insurance for children, the avoidance of closures to the state parks, the prevention of the suspension of Prop 98, and the $9.5 billion commitment to put money back into education (essentially Prop 1B from May).  I would argue that they only got this on the margins.  They did not win one major fight other than to avoid worse carnage.  They ceded new taxes early and never were able to get them back on the table.  There was much more they could have done, but they simply were outplayed by the Governor and legislative Republicans.

Children might be the biggest loser in this budget deal.  You have the cuts to education and also the devastating cuts to various health care programs.

The poor avoided the elimination of several programs but ended up with cuts to health care and to CalWorks.  In addition, with the devastation of county governments and severe cutbacks in their services, it was not a good day for the poor.

Schools took the single biggest hit.  $6 billion from K-14 (including community colleges).  That is actually just the tip of the iceberg because it does not count the nearly $11 billion in cuts from February.  All told this year, about one-third of the educational budget was slashed in California.  Sure they will eventually put about half of that back, still a big loss for education.

Higher education loses about one-quarter of its state apportioned budget this go around.  The impact on students is devastating with another wave of 10 percent fee hikes in store for both UC and CSU students.  On top of that is the cutbacks to enrollment.  The one small feather is that CalGrants were spared complete elimination.  But this was not a good day for education in California.

Local government was big losers.  Prop 1A bent but did not completely break.  But we have followed what has happened to local and county government enough to know what has happened to them.  What happened yesterday was $4 billion in either cuts or diversions.  How this impacts our county and city budgets we do not know.

Finally state workers take it on the chin.  $1.3 billion which includes three furlough days and nearly a 15% pay cut.  The public seems to have little sympathy for workers who generally do not make a ton of money to begin with taking a huge pay cut.  But there it is.  As we mentioned earlier, there is still no contract and the threat of strike by the state workers, which could make things interesting.

All told this was a bad day for the California economy.  It was also reported that CalPERS lost $57 billion–that’s with a “b.”  The state’s bond ratings have taken a huge hit.  The state sits at 11.6% unemployment.  What will be the fall out from a massive $26 billion cut of money from the state’s economy?  That is the unforeseen impact of it all.  Will this plunge the state into a deeper recession or depression which it will not have the resources to get itself out of?  That question looms in the next few days.  What is clear is that this budget is better than no budget, but not much.

—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.

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35 Comments

  1. anon

    This spineless group of Democrats clearly had public support for some small increases in a variety of fees and taxes to mitigate the pain of draconian budget cuts. The ‘budget battle’ was theirs to lose, and they accomplished the feat with ease.

  2. chickens have come home to roost

    “Rejected was a $1.50 per pack tax on cigarettes. Another item rejected was a $15 annual vehicle license fee hike. And the big one that has been rejected is the 9.9% tax on oil extraction that would have given around $1 billion to higher education and could have offset some of the cuts there.”

    the 1.50 tax on cigarettes would punish smokers. the $15 fee would punish drivers (which is just about everyone) and the 9.9% oil extraction would be seen at the pump, also punishing just about everyone.

    This hurts the poor and middle class. I don’t see how additional taxes on these would “punish the wealthy.”

    the chickens have come home to roost.

  3. David M. Greenwald

    A couple of stories on the impact of cities…

    This is from the League of Cities site ([url]http://californiacitynews.typepad.com/californiacitynewsorg/2009/07/budget-deal.html[/url]):

    [quote]A budget deal was finally struck by the Big 5 Monday night. Assembly leader Karen Bass made the announcement, calling local governments “partners in pain.” No kidding. Initial reports out of the capitol peg the local government raid at $4.4 billion. It breaks out like this: $2.1 billion in Proposition 1A borrowing, $1.3 billion in redevelopment raids, and $1 billion in HUTA gas taxes.

    There’s also the indirect costs to locals. A $1.4 billion cut to prisons surely means inmate releases and administrative burdens on city and county public safety departments.

    Taken together, many local government insiders are predicting municipal bankruptcies and a bad moon rising in Cityland.[/quote]

    This is from Public CEO ([url]http://www.publicceo.com/index.php?option=com_content&view=article&id=417:budget-deal-condemned-by-cities-and-counties&catid=151:local-governments-publicceo-exclusive&Itemid=20[/url]):

    [quote]Almost as soon as a deal to close the state’s $25 billion shortfall was announced Monday evening, a call went out from local government to vote against the proposal when it comes to the Senate and Assembly floor on Thursday.

    “It is a Ponzi scheme that is fated to fall apart in the next few weeks and months,” said Chris McKenzie, executive director of the League of California Cities. He urged city leaders to call their legislators and ask them to vote against the measure.

    “Counties across the state must alert their legislative delegations that a vote for this budget that contains the array of destructive raids, cuts and borrowing is a vote for local government ruin,” said Paul McIntosh, executive director of the California State Association of Counties (CSAC).[/quote]

    The League is threatening a lawsuit if it goes through:

    [quote]The League’s McKenzie threatened lawsuits if the budget passes.

    “We think it is a house of cards predicated on numerous illegal components – stealing of local gas tax, redevelopment and transit funds – that are all unconstitutional and a property tax loan that the state will not be able to afford to repay and will cause deep cuts in city services, particularly public safety,” McKenzie said.

    “We continue to oppose it, will ask legislators to do so and will challenge one or more parts of it in court the day after it is signed.”[/quote]

  4. chickens have come home to roost

    The no new taxes line means that the entire impact of the budget cuts falls directly on middle and working class California and away from the wealthy and business community. People can of course debate the wisdom of such policies, however, when one argues that the pain is shared in this budget deal, I find that a very difficult argument to sustain. Again, tell me where businesses, corporations, and the wealthy were hit in this budget deal–I certainly do not see it.

    businesses and corporations were not hit because THEY CREATE JOBS! in this economy, the last thing you want to do is kill business- and the democrats know it. They don’t want more economic pain on their watch.

    increased taxing business/corporations is a jobs killer, which hurts the poor and middle class.

  5. Nancy

    I say let’s mount a huge campaign in Davis to call our State Legislature representatives (Assembly and Senate) and ask for a “NO” vote on this budget deal. It is “NO DEAL” for children, families, and cities. Look in the blue pages of your telephone book for their numbers or google their names for Sacramento or local office numbers. We need to start a rebellion.

  6. David M. Greenwald

    This budget will destroy the all Public Works Agencies in the State of California. Our budget was balanced. The HUTA funds are being stolen. I hope there are some Senators and Assembly members that understand what an outrage this is. They didn’t reduce our budget they took it all, not a trace left. Our Road crews, bridge tenders, snow plows,traffic light and street light crews will be gone. Who will they call if a tree falls across a county road or the traffic signals don’t work? It makes no sense. I think they took the money from us because we don’t have large unions and lobbyist stuffing money in their pockets. So who will suffer. They citizens of each and every county in California. Public Works Agencies are builders of communities. We build roads, bridges flood canals. We are the backbone of modern civilization. Too bad this is the end of the builders. God help us all.

  7. Thanks, Repugs

    Remember, the only reason we didn’t balance out the cuts with tax increases is because of the 2/3rds undemocratic majority vote requirement and a handful of Repugs. Work to get them out of office, and reduce the 2/3rd’s requirement.

  8. ink blot

    There was a statewide vote for the tax increases that the Democrats wanted just a few months ago. In my reading, the voters rejected that option. I know some of you have other ideas of what that vote meant. But apparently the Democratic legislators take my view on the meaning of the that vote. For what it’s worth (just a little) the comments I’ve seen at California political web sites indicate that people are fed up with state workers and their unions.

    Maybe the polls tell the legislators that the voters want cuts in spending? Anyone have any data on this?

  9. Worried

    The 15% cuts to state workers are so deep, that many cannot make their house payments. Foreclosure rates are on the increase by 15%. It is expected foreclosures will not peak until the middle of next year. This is particularly troubling to me. Foreclosures are heading us into a deep recession/depression.

    I would argue the real problem is at the national level. Obama is so busy handing out money like candy, but not making sure it goes where it most needs to be directed. Instead, the money is going to line the pockets of banks and companies like AIG, that got us into this mess in the first place. Or it will go to fund universal health care, that is not a wise move at this dire economic juncture. The Democrats, now in charge of the Presidency and Congress, are slinging money around and hoping it will stick to some solutions, as the country heads for an economic train wreck. Meanwhile the liberal media talks as if the worst of the recession is over! I’d like to invite the clueless media to our “sunny” state, and give them an earful about how we are faring as the dark clouds mass overhead.

    There is no question that furloughs and the like are just as much “taxes” as any other tax. However, even if the Governator had instituted the additional cigarette tax, the vehicle tax, and oil severance tax, there is no question in my mind it would not have been enough to stem the massive bleeding that is occurring to education and other services. The stimulus money needed to be spent more wisely, and filter down to the state and local level where it was needed.

    I also do not agree the Dems in CA were the losers here. The achievements cited above, such as saving valuable programs and preventing the closure of parks, were significant in light of the economic reality. The Democrats also wisely realized that to soak the wealthy and business would drive the wealthy/business out of the state/country, which would be counterproductive. It is a harsh reality of life that the wealthy always manage to come out on top in any economic recession scenario (even in socialistic and communistic societies).

    Seems to me it is high time for the public to start supporting what it truly cares about – green technology, local farmers, etc. as opposed to the debauched entertainment industry. We need to support business that contributes positively to the economy, and not support business that contributes negatively. If you don’t like the oil companies, then cut down on fuel consumption, push for a decent national energy policy, something we have lacked for years, and years (since gas lines in 1976).

  10. Colleen

    It is all ashame we got ourselves into this mess. Dishonesty has been increasing in our goverment for years, and seems to be topping off, but is not. Reckless spending has and still continues to go on. When will we learn? I sometimes wonder just how many in and out of goverment offices are doing drugs.
    The poor middle class are becoming no more. They have a uphill battle to stay above water. I have more empathy for them. They have gotten no help from our goverment. I am below poverty level, and could not stay in the middle class. Now I need goverment help, and get help, which I am grateful for. I am sorry I as well as many others have had to come to relying on help, which I believe the middle class have been giving more than their fair share to are exsistance.
    The cigarette tax should have passed. cigarette’s are not a neccessity. I see more and more people walking around with portable oxygen…gee I wonder why? Quiting is very possible. I quite smoking after 27 years of 2 1/2 pks a day with help from my creator: God. So can you. We continue making excuses for our downfalls always blaming someone, or something else. Lets stop, and grow up.

  11. chickens have come home to roost

    There is no question that furloughs and the like are just as much “taxes” as any other tax. However, even if the Governator had instituted the additional cigarette tax, the vehicle tax, and oil severance tax, there is no question in my mind it would not have been enough to stem the massive bleeding that is occurring to education and other services. The stimulus money needed to be spent more wisely, and filter down to the state and local level where it was needed.

    good point! I didn’t even think of that. yes, I agree. does the owner of this blog really think that a bunch of taxes on the wealthy would even do a dent?

    Second, not only would such a tax punish the businesses that create the jobs, but also discourage business from coming here. we need to encourage job creation.

  12. Frankly

    [quote]businesses and corporations were not hit because THEY CREATE JOBS! in this economy, the last thing you want to do is kill business- and the democrats know it. They don’t want more economic pain on their watch.

    increased taxing business/corporations is a jobs killer, which hurts the poor and middle class.
    [/quote]
    You are absolutely correct.

    The major contributor to our current fiscal mess has been the Democrat-controlled legislature and voters that refuse to hold them accountable. They got us into this mess, and David and others continue to sing the same disingenuous Republican blame game song (i.e., selfish Repubs are the winners, and caring Dems are the losers). For decades, California Democrats have been on a spending spree charging up every bit of credit they could find. Even during the good times they spent more than we took in. As is bound to happen after long periods of excessive spending… when funding sources dry up the resulting lifestyle changes will be more pronounced.

    Despite who you want to blame, we are all losers in this state. What we need now is honesty and knowledge for the consequences for our actions and the required remedies for our problems. Tapping the “wealthy” business owners to maintain our unsustainable spending habits will only let politicians off the hook and perpetuate the denial about our screwed up fiscal house. It may help us feel a little better for the short-term, but it will cause us to face even bigger shortfalls later as businesses on the margins fail or move away.

    We have no choice but to shrink the footprint of California government while we work hard to lure businesses that provide jobs and tax revenue. The pain of our current situation was earned. We need to accept our bitter medicine and learn from it.

  13. Jonny Kozol

    Thanks for the empathetic note. I don’t know what I ever said that makes you think I support the legislature. What I don’t support is giving a veto to 33% plus one. As long as we have minority rule we will have a perpetual lack of accountability. If you want to blame the dems for overspending you can’t do it because they always need 2/3 to pass a budget. Sanity and accountability would prevail when we return to majority rule. If the Dems were to raise taxes under majority rule they could be held accountable and be voted out for their actions. As long as we have the current system there will be no accountablility.

  14. resident

    …learn exactly what from it??? that wall street created this financial mess and is scarfing up taxdollars like candy? that corporations will continue to elicit illegals for cheap labor, while taxdollars pick up the tab for those worker’s medical, housing, and ed? that our congress is unwilling to take the necessary steps to alleviate the situation? that deregulations which congress could have restricted is seldom mentioned by ANYONE. that banks which have made a killing on this recession are not being required to adjust mortgages for those who have lost their jobs/or income, and are now losing their homes. that budget cuts by ‘our’ respective representatives always start at the bottom…never the top, where those with $100,000.+ incomes would be ever so much more able to roll with the punch, rather than be relegated to the street. Which of those ‘lessons’ do you suggest that we haven’t learned? The question is: so what? so what can we do about it? so what are we doing about it? We wouldn’t dare take it to the streets, we’d be brutalized, jailed, or killed immediately.
    Goethe said something like, “no one is so oppressed as those who think they are free’ and a very smart economist once said, ‘if Nafta passes we will be a third world country in 15 years.’ and he didn’t miss it by much.

  15. resident

    ..did I say $100,000….what was I thinking????

    SFGate: Big five-column photo of Moraga-Orinda fire Chief Pete Nowicki in Monday’s Wall Street Journal – though it might not be the kind of celebrity he welcomes. The 51-year-old retiree is fast becoming the poster child for “pension spiking,” that is, making an already generous pension even larger via a pay raise granted just before retirement. Nowicki’s boost, as Contra Costa Times columnist Dan Borenstein has reported, came in the form of cashed-in vacation time and other compensation. The raise increased his annual pension from $185,000 to $241,000. Local outrage and vows to reform the system followed the revelation’s wake.

    As Nowicki rightly pointed out, “I did not negotiate these rules.” Public sector pension plans allow for such extravagance. Neither is he alone. The retired chief of the San Ramon Valley Fire Protection District, as Borenstein also noted, turned his $221,000 annual salary into a yearly pension starting at $284,000. Meanwhile, as the Moraga-Orinda Fire District Board of Directors looks for a new fire chief, Nowicki’s working as a temporary fill-in.

    At $14,700 a month. (Plus pension.)

    Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/07/21/BUN618S39O.DTL#ixzz0LvtpwANp

  16. Frankly

    [quote]learn exactly what from it??? [/quote]
    Learn to live within our means, and to make fiscally-sound policy decisions. Learn not to ignore overspending by our government. Learn that a lower business tax and regulatory base attracts more jobs so more people can care for themselves and CA has a more reliable tax revenue stream.

    [quote]“cuts by ‘our’ respective representatives always start at the bottom…never the top, where those with $100,000.+ incomes would be ever so much more able to roll with the punch, rather than be relegated to the street”[/quote]
    Because the “cuts” you are referring to are on the expense-side end of the balance sheet and the “top” you are referring to is on the revenue end. If you increase the tax on the revenue-producing side, eventually you will make less revenue. See: http://en.wikipedia.org/wiki/Laffer_curve. Given our already high tax rates and a dismal economy it is asinine to think raising taxes will solve the problem.

    I understand and share your empathy for those that have less and rely on government payments. Your perspective is that someone making $100,000+ has enough that they should be able to give up more, so those at the lower end do not have to suffer as much. The problem with that approach is that long-term consequences will make the problem worse. First consider that someone making $100k a year only has about $60k in net income after fed and state taxes and other fees. She most likely pays for her own health care costs, and makes her mortgage payments. She also buys things from stores that employ other workers. If the state increases her taxes, then she stops buying things and a few store employees lose their jobs. A bit more tax and she can no longer afford her healthcare costs; thereby adding her to the ranks of the uninsured needing public assistance. Go a bit further and she can no longer make her mortgage payment and property tax payments to fund local schools. Her home foreclosure drives down the value of property in her neighborhood thereby reducing property tax revenue from assessments on new sales.

    Prior to the economy crashing, CA had a spending problem not a revenue problem. Unfortunately, during the good times, Democrat lawmakers and public employees unions would not accept any meaningful reduction in spending. Now they own full responsibility for the pain of cuts required.

  17. David M. Greenwald

    What’s interesting as pointed out last week, we haven’t actually overspent. Our spending over the last 10 years mirrors what it should be given inflation and population growth. The problem is that the bottom has fallen out of the economy which has nothing to do with california per se.

  18. Frankly

    [quote]What’s interesting as pointed out last week, we haven’t actually overspent. Our spending over the last 10 years mirrors what it should be given inflation and population growth. The problem is that the bottom has fallen out of the economy which has nothing to do with california per se[/quote]
    Absolutely false.

    See here for example: http://sunshinereview.org/index.php/California_state_budget

    California Spending, Years in Comparison

    …………………..FY 1997-1998 ..FY 2003-2004 ..FY 2007-2008
    State spending $68.5 billion $104.2 billion $144.8 billion
    Federal money .$31.6 billion .$ 52.5 billion ..$59.5 billion

    During that same period the population of CA went from about 33 million to 36.7 million. Add an inflation factor of about 2.5% per year.

    How does this account for state spending more than doubling in 10 years?

  19. Overspending

    I refer you to George Skelton’s analysis which utilizes LAO data:

    Article ([url]http://www.latimes.com/business/la-fi-hiltzik28-2009may28,0,1859108.column[/url])

    [quote]
    Analyzing the 2008-09 budget bill last year, the legislative analyst determined that since 1998-99, spending in the general fund and state special funds — the latter comes from special levies like gasoline and tobacco taxes — had risen to $128.8 billion from $72.6 billion, or 77%.

    During this time frame, which embraced two booms (dot-com and housing) and two busts (ditto), the state’s population grew about [15%] to about 38 million, and inflation charged ahead by 50%. The budget’s growth, the legislative analyst found, exceeded these factors by only an average of 0.2% a year.[/quote]

  20. Don Shor

    Jeff: “She also buys things from stores that employ other workers. If the state increases her taxes, then she stops buying things and a few store employees lose their jobs.”

    If you take away 10 – 20% from state employees, they also buy fewer things at stores. In a community like Davis, where the vast majority of people work for state government one way or another, that can have a bigger effect than raising taxes slightly on higher income workers.

    “Your perspective is that someone making $100,000+ has enough that they should be able to give up more, so those at the lower end do not have to suffer as much. The problem with that approach is that long-term consequences will make the problem worse.”
    There are long-term consequences to any fiscal decision by the state. A prudent balance of tax increases and spending cuts, with a longterm fiscal reordering of the state budget, would have been responsible. When we had a budget crisis in the early 1990s, Pete Wilson and Willie Brown made a deal that was roughly 50-50 spending cuts and tax increases. The agreement announced today does significant harm to lower-income people by means of spending cuts that reduce the social safety net.

  21. earoberts

    I have a slightly different take. I believe most of the problem in CA is due to:
    1) the bloated state, county and local gov’t providing more and more social services MANDATED BY THE STATE;
    2) unsustainable salaries at the state, county and city levels, specifically at the upper end of the pay scale;
    3) a federal gov’t that is handing out money like candy, but it is not trickling down to the local state, county or city level in any meaningful way;
    4) much needed banking reform is not happening, which is resulting in even middle class people to lose their homes in foreclosure if they are getting furloughed, had their pay cut, or were laid off;
    5) a lack of leadership by all politicians, who really don’t want to grapple with the underlying causes of the latest economic mess – which include gov’t overspending and waste, as well as a lack of business regulation, particularly of the banking industry.

    If you look at Davis specifically, there are too many Davis city staff, too many city staff making ridiculously high salaries, and city staff being given benefits that are unsustainable.

  22. earoberts

    “Your perspective is that someone making $100,000+ has enough that they should be able to give up more, so those at the lower end do not have to suffer as much. The problem with that approach is that long-term consequences will make the problem worse.”

    My perspective is that those making $100,000 + are overpaid, don’t pay enough into PERS, are allowed to retire too early, and receive too much in the way of cushy benefits. The two Fire Chiefs mentioned earlier are a prime example.

  23. David M. Greenwald

    This would be my list of culprits for fwiw:

    1. The recession–sorry but when your revenues decline by $60 billion, that’s the number 1 culprit.

    2. Inability of the political system to reach consensus due in part to the two-thirds requirement and in part to the polarization between the parties to the point where the Democrats AND Governor had great difficulty getting three Republicans to join the February budget. This is a huge problem and I think it addresses your comment about the lack of leadership–there is no ability to lead under these conditions and there is no accountability.

    I’m critical of salaries at the top end, but just don’t see that as a driving factor here. There are just not enough employees making ridiculous salaries to add up to the billions.

    I do think Prop 13 is a problem in that it generally precludes local governments from raising money locally, that has led to a huge growth in state education spending leading to more state mandates and probably would be better handled at the local level.

    A lack of a universal health care system has a domino effect. It leads to the state taking the lead on health care, they have generally punted it to the counties. The counties are in the worst condition of all jurisdictions.

    Welfare reform at the federal level has not led to a decline of welfare, it has shifted the burden to the states who have again shifted it to the counties.

    Nevertheless most of this would be at least managable if (A) there was no recession and (B) we had a political system that was functional.

    In short, we have to wait for the recession to resolve itself and then work to end two-thirds and allow politicians to face the voters. They will either approve of the new taxes or vote the politicians out.

    I’d also end term limits, that contributes to the problem as well. You have rank amateurs who by the time they gain enough experience are termed out. It has shifted the power base from politicians to the special interest groups, lobbyists, and staffers. We vote for politicians not the others.

  24. earoberts

    1. The recession–sorry but when your revenues decline by $60 billion, that’s the number 1 culprit.

    I agree, but the problem is the recession was caused by a lack of banking/stock market regulation, which still needs to be addressed. Obama has failed abysmally to regulate the banking industry and shady stock market products.

    “2. Inability of the political system to reach consensus due in part to the two-thirds requirement and in part to the polarization between the parties to the point where the Democrats AND Governor had great difficulty getting three Republicans to join the February budget.”

    This one I am not certain about. I most definitely would not make it a simple majority. The most I would go for is 60% majority to pass the budget.

    “I’m critical of salaries at the top end, but just don’t see that as a driving factor here. There are just not enough employees making ridiculous salaries to add up to the billions.”

    I think you missed my point here. The problem, IMHO, is a combination of too many gov’t employees, too many making high wages of $100K or more, gov’t employees allowed to retire too early, gov’t employees whose PERS contributions are too little, and whose benefits are too generous. To put it more succinctly, it is as if the state gov’t has mandated a work program at the state, county and city level that pays as much if not more than the private sector. This should not be…

    Your point about Prop 13 is well taken.

    “I’d also end term limits, that contributes to the problem as well. You have rank amateurs who by the time they gain enough experience are termed out. It has shifted the power base from politicians to the special interest groups, lobbyists, and staffers. We vote for politicians not the others.”

    I absolutely agree with you on this one. Term limits was a collosally stupid idea, even if well intentioned. I knew from the get go it was a bad concept.

    My real concern is the increasing percentage of foreclosures, which is being somewhat ignored. Middle income folks are starting to lose their homes bc of the extreme furloughing. Foreclosures bring about more layoffs and foreclosures. The foreclosures are not going to finish peaking until the middle of next year at the earliest. I really wonder where this is all going to end…

    Normally I am an optimist, but this is the first time I have seen things this bad (I am in my late fifties). Obama is just clueless…

  25. A Humble Suggestion

    To achieve real savings to the City:
    1. Layoff all employees who are eligible for retiree medical benefits, effective immediately, so they cannot bleed us dry… (they only get this benefit if they retire under city service)
    2. Retreat from PERS, put all existing and future employees under Social Security, & have them pay for both employer and employee share… same for Medicare contributions. City should strive to recoup previous payments to PERS, & force those employees to serve long enough to qualify for SS.
    3. Make employees pay 100% of medical, dental, SDI payments for coverage.
    4. In addition to the above, no City employee should have a base salary over $100k. HS dipolma, advanced degree with registration, should not matter.
    5. This will allow a pay increase for lower-paid workers (clerical, janitorial, etc.) to meet CPI increases, increased benefit costs…

  26. David M. Greenwald

    “I agree, but the problem is the recession was caused by a lack of banking/stock market regulation, which still needs to be addressed. Obama has failed abysmally to regulate the banking industry and shady stock market products.”

    Perhaps but that’s not a state issue, it’s a national one.

    “This one I am not certain about. I most definitely would not make it a simple majority. The most I would go for is 60% majority to pass the budget.”

    I’d probably compromise but I don’t understand the rationale for anything above 50% passage.

    “The problem, IMHO, is a combination of too many gov’t employees, too many making high wages of $100K or more, gov’t employees allowed to retire too early, gov’t employees whose PERS contributions are too little, and whose benefits are too generous.”

    I understand your point, but I just don’t see the numbers there to classify it as a major problem. I think this is a far bigger problem at the local level than at the state level.

    “Normally I am an optimist, but this is the first time I have seen things this bad (I am in my late fifties). Obama is just clueless…”

    I’m not a believer that the President impacts the economy that much. I don’t think he’s clueless. I think the situation is complex and difficult. I might have done some things differently, but it’s hard to know what the right answer is.

  27. rick entrikin

    Bad choices all around, and plenty of blame to spread. Like it or not, this is our new State budget. So, let’s stop wringing our hands & twisting in the breeze.

    Our next, immediate, problem is the City of Davis budget. And, trust me, unless we reign in the huge salaries, benefit & retirement packages for City staff we will REALLY feel the pain for years to come.

    Time to accept what’s happened @ the State level and re-focus our efforts & concerns to address the City’s budgetary issues & challenges.

  28. Frankly

    [quote]I refer you to George Skelton’s analysis which utilizes LAO data:[/quote]
    From the article: “The inflation factor, further, isn’t the consumer price index, which rose about 35% over the period, but a separate federal index of state and local purchases. This makes sense because the state buys relatively less of what’s measured by the CPI, like bread and hamburger meat, and relatively more of what’s measured by the government index, like healthcare, heavy equipment and educated workers.”

    We know the government does a lousy job buying crap at market price. Note that this includes the high prices paid for union labor. Using their own special CPI just distorts the real spending problem. This is what I hate about the so called “non-partisan analyses”. How can we trust anyone working for the government to be objective about government spending?

    Also, the analysis fails to include payments from the Federal government which increased a bit faster than the rate of inflation.

    I don’t have time to do the math, but at a glance when considering the REAL CPI and fed payments, CA government spending over the last 10 years is at least $27 billion over what it should be. So, if we had lived within our means we would have a balanced budget right now.

  29. My View

    “Time to accept what’s happened @ the State level and re-focus our efforts & concerns to address the City’s budgetary issues & challenges.”

    Amen! But what is the City Council majority doing? Handing out $40K, to “explore” the possibility of finding funding for the residents to purchase Rancho Yolo, yet the owner says its not for sale. This is after the city already paid $37K in this fruitless endeavor. I can almost guarantee the City Council majority will not strike a labor deal particularly favorable the Davis. It will be relatively favorable to City Staff, but not to citizens of Davis.

  30. we dont need more tax credits to the wealthy

    if the lower and middle classes are expected to pay more taxes then so should the rich. So what, corporations provide jobs? oh really? only to illegal immigrants and a few poor americans whose low wages are supplemented by government spending.
    fuck you corporate america for holding us hostage. you call 5 bucks an hour a living? try living on 8 bucks an hour. puhlease. don’t do us anyfavors. go to hell mr. multimillionaire. raise your own taxes arnold. you low life hypocritical catholic piece of shit.

  31. CUT ALL ENTITLEMENTS TO ILLEGAL IMMIGRANTS

    They shouldn’t be allowed to come here illegally, get food stamps, welfare, medical, housing etc etc. if there’s any one group bleeding the state dry it’s ILLEGAL IMMIGRANTS. What’s worse, is once they get legal status, they get jobs in government and discriminate against American citizens any which way they can. hypocrits going around demanding rights, but not giving out rights. 5 billion is alot of money to be wasting on illegals. how about we bring that money back home and spend it on Americans. But no arnold would rather cut benefits to disabled americans than illegal immigrants. this whole thing disgusts me to no end.

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