December 2008 

By Tim Yaryan, Legislative Counsel and Advocate 

There is simply one word to describe California’s fiscal mess:  “awful.”

Last year, we went through an epic political battle over the budget. It appears certain that we will, once again, face another major battle in 2009. Governor Arnold Schwarzenegger has met with legislative leaders to discuss the deepening budget deficit. The state is facing a looming cash crunch and a sagging economy that will throw the precariously “balanced” 2008-2009 budget back into the red.

This budget’s base-line revenue estimates are six months old and assume that the economy would be beginning to pick up by now. Instead of picking up, however, the economy is eroding quickly, and California is faring far worse than the nation as a whole, because of the housing and stock market meltdown. Forecasts see this recession lasting through most of 2009, perhaps longer.

California unemployment hit 7.7 percent in August, up sharply from a year earlier, and is one of the highest rates in the nation, adversely affecting income taxes. Sales of autos and other retail goods are plummeting, which dampen sales taxes. Every major economic forecasting group sees nothing but bad economic news ahead for California.

In passing this year’s budget, the Legislature made little attempt to “put lipstick on the pig.”  They balanced the budget, which was $15.2 billion in the red, with $7.1 billion in cuts (mainly 10% “across the board” cuts for most programs), increasing payroll taxes by 10% (refundable in2010), closing other “tax loopholes,” such as the infamous “yacht tax,” which netted $1.9 billion, “borrowing” $4.7 billion, and “shifting” and“transferring” (budget sleight of hand) the remaining $2.7 billion. There was $900 million set aside for the“rainy day” Budget Stabilization Fund. 

This fiscal problem we faced in last year’s budget pales in significance to what we now face. The current budget deficit is estimated to be around $11.2 billion, and most analysts see a $25 to $27billion deficit projected by the end of this fiscal year. To put this in perspective, the state could close all the state prisons and all the state colleges and universities, and we would still have a budget deficit!

To address the current ($11.2billion) deficit, the Governor has called the Legislature into special session after declaring that California faces a “fiscal emergency,” and has proposed a budget package which includes $4.5 billion in cuts in programs and $4.7 billion in revenue increases. Most of the revenue increase proposed by the Governor would come from a temporary cent and a half sales tax increase. Cuts would come from further “across the board” program cuts.

The Governor’s proposed cuts to public safety are significant, especially in view of the major reductions to public safety funding made last year. For 2009 – 2010, the Governor proposes to fund COPS at $95.8 million, JJCPA (Juvenile Funding) at $95.8 million, BookingFees at $31 million and Probation Funding at $135.8 million. The latter, which had previously been earmarked for funding camps and ranches, is now simply to fund probation as part of the transfer of parole functions from the state to the local level. The public safety funding levels have decreased from $609 million in 2007, to $501million in 2008 to $359 million proposed in 2009-2010.

In a joint letter of opposition to the Governor and the Legislature, a letter signed by all major management groups and rank and file law enforcement unions, we declared:  “Local law enforcement has already suffered severe budget cuts at the local level, endured a 10% cut in the last budget which eliminated $100 million in critical public safety funding and now is facing the bleak prospect of further cuts that will utterly destroy some front line programs, while merely crippling others. In addition … the contemplated cuts within the correctional and parole system will serve to make our jobs harder by endangering our communities.” (Letter dated November 25, 2008)

The Bottom Line:  Public safety is being asked to take a 40% reduction in funding from 2007 levels, yet is being asked to assume even greater levels of responsibility because of proposed changes to the corrections and parole system. These program cuts cannot be sustained without jeopardizing the safety of the public, and these new program responsibilities cannot be assumed without sufficient additional funding.

2009-2010 will be a huge challenge for all of us. We had best hang together, or we will hang separately.

Until next time, stay safe.