There were not many pieces of good news in the budget however there was some. For environmentalists the defeat of the Tranquillon Ridge oil drilling project in the majestic waters of the Central Coast was the result of strong and almost unanimous pressure from environmental organizations. Republicans in the Assembly fought the reimbursement of education for the funds that were raided but were defeated in that effort. Cities won some on Friday as monies that were raided on Monday were restored in the floor fight.
All told, the legislature ended up falling short of closing the entire budget deficit. In the meantime education, health care, support for disabilities, state workers, and other programs took huge and devastating hits.
Transportation Money Given Back to Local Cities in New Budget
The biggest winners may have been local governments who as late as Wednesday were lining up to sue the state over raids to monies that were supposed to go to local governments through Proposition 1A and HUTA (Highway Users Tax Act).
The deal struck by the “Big 5” struck by the big 5 included a plan to transfer roughly $4.4 billion from local tax revenue to Sacramento. Over 130 cities signed on to sue the state government. As we reported on Wednesday, the deal would have dealt a huge blow to Davis who is precariously perched with a balanced budget. The original budget deal would have meant an additional $2 million deficit for the general fund of Davis.
Chris McKenzie, head of the League of California Cities was pointed in his criticism of the budget agreement that was reached on Monday:
“California’s legislative leaders and Gov. Arnold Schwarzenegger have agreed on a proposal to “balance” the state budget with illegal raids of local government gas tax, public transit and redevelopment funds, according to recent court decisions and a legal analysis obtained by the League of California Cities, as well as a “loan” of local government property taxes that is unlikely to be repaid.”
“By relying on illegal mechanisms and fund shifts, this budget resembles a Ponzi scheme that the League of California Cities condemns in the strongest possible terms.”
Because of these omissions of course, the budget falls short of actually closing the budget deficit, only erasing $23 billion of the $26.3 billion gap that the Governor’s finance experts have projected.
Attempts to raid local monies have prompted lawsuits in the past and the cities have often won these. The Assembly in the end excluded both the Redevelopment Agency and the HUTA raids. That puts local governments in a far better position than they appeared to be just a few days ago. It was a huge victory for cities.
In the end the gas plan (HUTA) was defeated as Democratic Mayors of big cities such as Antonio Villaraigosa and Gavin Newsom joined with Republicans.
Speaker of the Assembly Karen Bass:
“Assemblymembers on both sides of the aisle were deeply concerned about taking gas taxes away from local governments. We are protecting the still-vital local governments.”
The budget plan however retains a $1.7 billion shift in local redevelopment revenues into the state’s general fund. Will state governments continue to sue? That is anyone’s guess.
Assembly Republicans fought and lost on efforts to eliminate a reimbursement of $11.2 billion that will restore funding to schools in future years. That “maintenance factor” reimbursement will not take place until the state’s economy stabilizes. Education leaders question the state’s ability to repay this funding at all.
All told the damage is roughly $5.7 billion in cuts in 2009-10 which is a number on top of the cuts that were made back in February and before that in September. Proposition 98 will not be suspended, however an accounting maneuver has been utilized to make a $1.6 billion cut from Proposition 98 in the fiscal year that ended June 30 in order to reduce the base for 2009-10.
State Superintendent of Education Jack O’Connell appreciated the budget conclusion but lamented the cuts to education.
“I am glad to see that the Governor and Legislative leadership have reached an agreement that addresses our budget shortfall and resolves our cash-flow crisis, at least for this year. Sadly, the agreement includes $7.6 billion in cuts in Proposition 98 funding. This new massive reduction, which is added to the $11.6 billion in school funding cut just last February, will result in very real consequences for students. Larger class sizes, canceled summer school, a shorter school year, and no new textbooks are just a few of the painful results. I fully recognize that given the magnitude of our state fiscal crisis, the pain for schools could have been worse than that created by the agreement that was reached. I am pleased that the agreement did not include a suspension of Proposition 98 and that schools eventually will get the approximately $9.2 billion that is owed under the Prop. 98 guarantee.”
“The reductions that our schools must absorb now will heighten the challenge educators face in trying to increase student achievement and close the achievement gap, and I fear that the last decade of progress in statewide student test scores will be interrupted. I continue to have faith in the hard work of our teachers, administrators, school staff, parents, and students, and I sincerely hope that this fear is proven unfounded.”
David Sanchez, president of CTA, said earlier that while the compromise budget agreement may limit further damages to our students and schools by repaying billions owned to the law, the budgets cuts will be damaging and painful.
“Suffering the largest budget cuts since the Great Depression, the casualties of the state’s budget battlefield will be starkly apparent when our students return to their schools this fall to find fewer teachers, fewer course offerings, and fewer resources. School funding was cut more than $12 billion. Class sizes will be painfully larger and many art, music, career technical education and other vital programs are gone. More than 17,000 teachers, nurses, school librarians and counselors lost their jobs. Community colleges and universities will turn away thousands of students.”
Marty Hittleman, President of the California Federation of Teachers, the other major teacher’s union in California was more critical.
“The priorities are wrong. Massive cuts to all levels of education while, at the same time, preserving unproductive corporate tax breaks, is a blueprint for further California decline.”
“The governor and Republicans refuse to provide more state revenues to cover necessary education programs. Meanwhile, they’ve been busy handing out huge tax breaks to corporations. That is exactly contrary to the people’s view that education spending should be increased. We look forward to giving the people a chance to vote against the tax loopholes punched in the budget for corporations with a ballot measure to repeal them.”
Scott P. Plotkin, executive director of the California School Boards Association:
“Once again, the Governor and legislative leaders have failed our students. Our kids are paying the consequences for the state’s unacceptable funding system. These cuts will cause lasting harm to our students and our state’s ability to compete and succeed in the future.”
Paula S. Campbell, CSBA President added:
“Increased class sizes, cuts to key education programs, additional layoffs for teachers, librarians, counselors and administrators and a shorter school year are just a few of the overwhelming consequences our districts face with this budget plan. When schools re-open next month for the new school year, we will all see the profound impact of these draconian cuts.”
When we last checked, the Davis Joint Unified School district was in reasonable shape to ride out further cuts for this year. We will check in next week to see if anything has changed in that regard. However, there is little doubt that statewide the three consecutive rounds of cuts to education have to be taking a huge toll on the quality of education to children.
Oil Drilling Plan Nixed
By a vote of 43-28, the California Assembly defeated a proposal that would have allowed the first first new oil drilling lease in California State waters since the 1969 Santa Barbara oil spill.
Assemblymember Pedro Nava represents Santa Barbara in the legislature:
“The Governor made Santa Barbara a target for new oil drilling. I am proud that we rejected this insidious proposal. The plan would have unraveled critical environmental protections, put the coast at risk, and set a terrible precedent while the federal government is considering their 5 year drilling plan for the outer continental shelf.”
It was a proposal that every major environmental organization in the state opposed. As Assemblymember Nava put it:
“This bill has only two supporters, the Governor and the oil company.”
Under the proposal, the Governor would submit his oil drilling plan to an ad hoc committee where he is assured approval. The three member committee would include two appointees from the Governor (Secretaries of Resources Agency and Cal EPA) along with the Attorney General.
“This is a sham. Other than the Attorney General, the Governor controls the ad hoc committee and there is little doubt that two of the three votes will quench the Governor’s thirst for more oil. If your child’s little league team tried this kind of do-over, they would be disqualified and kicked out of the league.”
In a letter from 53 environmental organizations published Friday:
“While the precise language has not been released for legislative or public review, and may not be in time for any legitimate discussion, it is our understanding that it overrides the State Lands Commission’s legitimate denial of this project, creates an ad-hoc commission dominated by gubernatorial appointments, instructs this commission to find that the lease is in the best interest of the state, extends the duration of drilling operations, gives the public a mere five days of notice prior to a hearing, and fails to include any specifics on royalty payments that are supposed to be the rationale for approving this lease in this most unprecedented manner.”
The State Lands Commission report stated in part:
“The goals of the agreement could not be reliably enforced and the legal context for the public benefit requirements of the agreement prevented staff from devising mechanisms to improve enforceability. The Commission cannot reliably require PXP to stop and close production on federal leases.”
Victoria Rome of the Natural Resources Defense Council said,
“I think it should be very troubling to the public that a decision that was made through a public process in the light of day can be overturned by a few leaders behind closed doors.”
Speaking on the Assembly floor Assemblymember Nava,
“The Governor’s proposal implies that when times are tough we ignore long established public policy, set aside our values, and if the state needs money it is acceptable to put our environment at risk.” He continued, “I strongly oppose this approach to development of environmental policy.”
Lieutenant Governor John Garamendi said earlier this week,
“The Governor just put California’s coastline up for sale when he had other options that don’t put our natural resources at risk. He refused to approve a plan to tax oil companies that now extract oil in California to fund health care services, children’s programs and education. California is the only oil producing state without an oil severance tax, and it would generate $1.2 billion dollars annually for our state. Instead, we are taking dirty money. Big Oil has offered to California $100 million dollars to seduce the state into granting the first new oil drilling lease in California since the Santa Barbara oil spill 41 years ago. The loan must be repaid by forgiving future royalty payments to California. This is an incredibly reckless fiscal policy.”
Willie Pelote, California Political & Legislative Director, American Federation of State, County and Municipal Employees:
“This individual project off the Santa Barbara coast simply is not a Budget issue. If the Governor really wants to generate more revenues he should charge oil companies for extraction just like they do in Texas, Alaska, and other oil producing states.”
Richard Charter, of Defenders of Wildlife, has 35 years of experience in coastal drilling issues.
“The Administration has triggered the political equivalent of the Santa Barbara Blowout, rolling the State Lands Commission and the Democrats in the Legislature, while punching a big hole in the 40-year precedent that has protected California’s own nearshore coastal waters from new offshore drilling.”
“The oil lobby, reaping tens of billions in taxpayer dollars from this scam, is laughing all the way to the bank, confident that any removal of rigs or facilities cannot be enforceable without congressional legislation they know is not even pending. If this deal goes forward, the driller’s next stops are Malibu, Santa Monica Bay, and La Jolla.”
Graham Chisholm, executive director of Audubon California:
“The enduring image of nearly every oil spill is a dead or dying bird lying on a blackened beach, its feathers covered with oil. Californians have stated many times that they don’t want to see any more of that destruction, and yet the budget crisis is prompting our leadership to risk exactly that. Our shorelines are too precious to take those kinds of chances.”
Assemblymember Nava concluded his remarks Friday:
“This is a historic moment. How we deal with this issue will affect generations of Californians. Long time residents of Santa Barbara still clearly remember the 1969spill. Washington is looking to California to see how we handle this issue. If we approve this bill, we are sending the Obama Administration a strong message that we want more drilling.”
While there may have been small though not insignificant victories on Friday, the overall plight of California is that students, the poor, state workers, the middle class, people reliant on state services, those in need of Government health care, those with disabilities got hammered in this budget deal. The Democrats yielded and put no new revenues on the table not in oil severance, not in gas taxes, not in cigarette taxes. There was no real and meaningful prison reform. There was no reform of the tax system. There was no structural changes.
California needed to pass a budget, any budget, this was indeed any budget and it was a bad deal for most people in California.
—David M. Greenwald reporting