5 solutions to stop California's disastrous budget cuts.

California is in a crisis. Much of the making is due to the severe national recession. But much is also self-imposed by the archaic and regressive constitutional requirement that the budget and any associated tax increases be passed by no less than two-thirds of each house of the Legislature.

The Legislature has been reduced to hearing ever more desperate appeals from individuals, groups and organizations that are all deserving. We need healthcare, scholarships, AIDS funding, parks and dozens of other vital programs. We realize that all will be cut, but we want all to be cut less.
Here are five steps we believe the Legislature should enact immediately in order to lessen the pain. Gov. Schwarzenegger will not like them. The Republicans in the Legislature will hate them but should be forced to go on the record voting yes or no.

First, the Legislature should simply reverse three expensive tax concessions to businesses that were offered up as bribes to Republicans in September 2008 and February 2009. They were distasteful then -- they are immoral now. The three breaks are allowing corporations to share credits with affiliated companies; allowing companies to use this year's losses to obtain rebates (!) on prior-year taxes; and allowing multi-state and multinational corporations to choose among different formulas that will reduce the taxes they owe California.

Second, California should join every other oil-producing state and tax the extraction of oil. With oil prices rising rapidly, we are leaving billions on the table that every other state is using for the public benefit.

Third, the Legislature should update the administrative rules governing the assessment of commercial property. Today, these rules are terribly out of date and written for the circumstances that existed before Prop. 13 passed. They allow companies that own commercial real estate to avoid having their property values updated, except under unusual circumstances. Over time, this has radically shifted the burden of property taxes from businesses to homeowners -- definitely not what the public thought it would get in enacting Prop. 13.

Fourth, it is time to impose a sales tax on medical marijuana. This is quite different than legalizing all marijuana sales -- Californians are purchasing hundreds of millions of dollars of marijuana, with a doctor's prescription, for medical purposes. This should be taxed.

Finally, the Legislature should assert that the current crisis is the rainy day emergency that our $4.5 billion emergency reserve fund exists to solve. We should not use 100% of it -- there will be unexpected fires -- but it is time to tap the reserve to save lives and preserve services until the economy begins to recover.
I just signed the petition to tell Senate President Steinberg that it's time for brave approaches to the budget crisis. Pass the CREDO solutions to a roll call vote. Let the voters know whose side every legislator is on -- I hope you will too.

Please have a look and take action.

http://act.credoaction.com/campaign/ca_budget_june2009/?r_by=4507-466513-DEbG78x&rc=paste

Thanks!

They finally passed a budget

As expected, the Governor signed the state budget yesterday at a small ceremony in his office, after a record 85 days into the new fiscal year. The Governor also exercised his line-item veto power to slash another $510 million from various programs, beyond the $10 billion in cuts already in this budget to education and other vital health and social programs.

Impact to K-12 Education
Overall, K-12 schools and community colleges will receive a total of $58.1 billion under the Prop. 98 minimum funding requirement, compared to $61.1 billion that we are entitled to receive under the law. This is a cut of $3 billion to K-14 education when increased workload costs are considered. This funding will only provide a COLA of 0.68% for K-12 schools, county offices of education, and our community colleges (instead of the statutory COLA of 5.66%). This budget also restores the Governor's cuts to categorical programs.

The Governor vetoed another $25 million from K-12 education, including: $6 million from low-performing schools that are still subject to state sanctions, $600,000 from the federal Title I funds for an evaluation of the Migrant Education program, $1.2 million of Title III funds for English learner activities, $16.4 million for Stage 2 child care to align expenditures with updated estimates, and $862,000 for Child Nutrition.

Impact to Community Colleges
The colleges secured some growth funds (albeit not enough), a small COLA of 0.68% like K-12 education, and avoided deep cuts to student services programs. Enrollment growth is funded at 2 percent. Categorical programs are funded at the 2007-08 levels, and student fees remain level at $20 per unit. There is also $75 million to partially backfill a property tax shortfall for the 2007-08 fiscal year.

The Governor vetoed $531,000 from to the Chancellor's Office budget.

Other Budget Highlights
This budget contains major tax breaks for corporations at the expense of schools, seniors and children, including:

• Corporate Tax Giveaways: The Legislature passed two tax breaks to corporations by allowing them to transfer tax credits from one corporation to another even if they did not qualify for those credits. In addition, corporations can adjust prior year's income tax returns to get a refund. These tax giveaways will cost about $1.5 billion annually.


• Budget Power Grab and Mid-year Cut Authority: This budget will increase the existing budget reserve from 5% to 12.5%. This is another attempt by the governor to secure more budget power to make mid-year cuts, and cap future spending regardless of growth in the population for schools or seniors. This budget power grab will need to get voters' approval at the next statewide election.
  
  The budget also gave new mid-year authority to the Governor to cut up to 7% from state operations (not to local schools and colleges), and it also gives the Governor the power to suspend COLA by 120 days. These changes represent an unprecedented power grab by the Governor and upset the balance of power between the three branches of government. It also will lock spending in at the current inadequate levels for most programs.


• Weakening Overtime Protection. This budget expanded the overtime exemption to take away overtime pay from workers in the high-tech industry earning $75,000 or more.. Although the overtime takeaway affects only "technology" workers, it is the fist step in a series additional overtime and meal break takeaways sought by big business.


• Lottery Securitization. This budget relies on a proposal to "securitize" the State Lottery to provide $5 billion in each of the 2009-10 and 2010-11 state budgets. Essentially, this proposal amounts to borrowing against future lottery receipts as collateral. The $1.2 billion Lottery funds that education currently receives will come instead from the State General fund. This proposal requires voter approval at the next statewide election.

What's Next?
Even before the 'ink' is even dried, this budget is expected to be short by about $1.5 billion. Failure to pass the two components that require voter approval (the budget power grab, and the Lottery Securitization) could enlarge the deficit by another $5 billion. The Governor has hinted that he could call for a special election as early as March. However a date for the election is not yet known. or place them on the 2009 June Primary Election.

Given the severity of the budget shortfall, the final budget clearly is not what anyone wanted. Because of a few ideologues who were willing to hold up the budget further, a majority of the Legislature could not overcome the 2/3 vote requirement to pass a budget with new revenues. CSEA and our Education Coalition partners supported the Conference Committee Budget, which would have raised sufficient new revenues to prevent such deep cuts.

Despite of the outcome, things could have been worse if not for the hard work of our staff and members who spoke out on an all-cuts budget. We want to take this moment to thank you for your hard work and efforts in this budget fight.

While it is too soon to know if that will occur, CSEA and our Coalition partners are already planning for a bigger fight next year, and we will keep you informed of our plans and effort in the coming months.

It is July... Must be Budget time...

Every year we have this budget crisis in California. Five years ago there was an idea to make the Budget and the process more accountable. It was the Budget Accountability Act. The would have Act held legislators accountable for passing a budget on time and provides penalties to prevent a budget deadlock. Among the provisions of the Act were:

• If the budget is not passed by the June 15 deadline, then the Governor and members of the legislature permanently forfeit their salaries until the budget is signed.
• The legislature is required to stay in session until the budget is adopted.
• The two-thirds vote is replaced by a 55 percent vote requirement, making the process less vulnerable to the stalemate that plagues the current system.
• Sets up a "rainy day" fund that could only be used when revenues fall below current service levels.
• Requires the Secretary of State to publish how the state actually spends its funds, as well as publishing information on how legislators vote on the budget.

Unfortunately this did not pass... most of the arguments had to do with the fact that this may make passing new taxes easier also. The funny thing is the other propositions passed that year DID raise taxes...

California is only one of THREE states in the United State to require a two-thirds majority vote.

This year... we are faced with a large budget deficit. The two-thirds requirement will make it an interesting compromise this year.

Rob Feckner, CSEA's Association President, posted an editorial on California Progress Report blog. Cool stuff.

Yes on Proposition 92!

Proposition 92 will help community college students. This proposition is backed by students, educators, business groups and labor. Check out the long list of endorsements.

This is a win-win for both students and employees. Check out the website for more information.

California FINALLY has a budget

Well the Governor finally signed the budget. It is not one the best budgets we have ever had, but the holdout by the few Senators highlights the issue that a small minority can hold up our state's budgeting process. More later.

California still without a budget!

I for one understand standing one's ground based on principle. But holding the State of California hostage to prove a point is a stupid move. Our legislators are paid to pass laws including the state budget. They are VERY late. In fact, California is the only state to still have no budget adopted.

California's 2/3's passage rule is partially to blame. It gives the minority party so much power when it comes to the budget. It warps democracy to favor the few over the wishes of the many.

There are 15 members of the Senate's Republican caucus. They had agreed to vote for the budget only if a majority of the caucus voted for it. One Republican Senator did vote for the budget already. One of the hold outs (Bob Margett, the school district I work for is in his service area) had this to say:

"Why would somebody abandon a deal, a handshake, a commitment that was made?" Margett said. "Is he going to be admonished? Is he going to be reprimanded? Is he going to be kicked out? Is he not going to get any money for his reelection? There's a lot of things that could happen." (L.A Times, GOP holdouts on state budget cite principles, August 18, 2007)

Wow... a threat against a legislator actually doing their job.

If only the Budget Accountability Act would have passed in 2004. First off we would have a state budget. Secondly, these legislators would be missing a day of pay for each day the state budget is late.

What do you think?