California Has a Budget! But Only For Now...

On Friday, July 24, pigs learned to fly. Not really, but the California state legislature finally passed a budget, which seems like pretty much the same thing.

The winners:

* People who were being paid in IOUs. As you might’ve read in my previous blog, this was mainly small business owners with large state contracts. Although they may still have to wait to redeem their IOUs, they will be receiving cash from now on.

* The California state legislators. After almost 20 hours worth of hearings on the 30 (maybe 31 depending on the source) bills in the budget package, the budget is approved, has Schwarzenegger’s approval (but not signature), and they can go home. Way to work about as hard as an auditor from the Big 4 on a deadline (although the state legislature clearly missed theirs)! At least they haven’t been getting paid in IOUs.

* The Santa Barbara coast. One idea to raise additional funds for California: open up a small area for oil drilling off the Santa Barbara coastline. Legislators rejected this proposal in the budget package, and the California coast is safe once again.

* The Governor. After the budget passed he said, “I know that college students will pay now higher tuitions, I know that teachers will be laid off, and I know state workers will get less money. But we have to do that. It's the only way to solve the problem and to save our great state.” (http://www.cnn.com/2009/POLITICS/07/24/california.budget/index.html?section=cnn_latest) I guess you got what you wanted, even if almost nobody else did.

The losers:

* College students. Students who attend California universities, including UC Berkeley, UCLA, and SJSU, to name a few of my favorites, have seen a 30% tuition increase since May. They will also likely see an increase in class sizes, due to a never before seen drop in state funding to California State Universities. Cuts to higher education totaled approximately $3 billion.

* Teachers and public schools. Teachers will be laid off and class sizes will increase. The teachers laid off won’t be those who have the lowest ratings or that are the least effective. Because of union rules, the teachers who lose their jobs will be the ones with the least experience. The ones who will have the hardest time finding a new job. Good luck in a state where unemployment has reached about 11.6%. As for increasing class sizes, districts will no longer be able to maintain a 20:1 ratio, and all I can say is I challenge anyone to manage a class of more than 20 screaming 6 year olds. Seriously, Mr. Schwarzenegger, most elementary school classrooms do not equal the set of Kindergarten Cop. Cuts to public schools totaled approximately $6 billion.

*Health and welfare programs. This includes cuts for in-home care of the state’s Medicare recipients, which will force many of those people who still manage to live at home, into nursing homes. Not that they’ll be able to sell those homes to pay for the nursing home care. Oh, and don’t forget that there will also be a huge loss in health care for children. Cuts to health and social services programs totaled approximately $3 billion.

* The prison system. “Lawmakers passed $1.2 billion in cuts to the state prison system. But they put off deciding how to make the reductions because the issue was too heated.” (http://freeinternetpress.com/story.php?sid=22292) Wow. Leave it to the state legislature to pass a budget without an actual solution.

* Your friendly, local city council. About $3.1 billion in state “revenue” will come from money that is supposed to go to city governments for parks, law enforcement, and transportation systems. Is this legal? I seriously doubt it. Will they sue? More than likely.

* State government workers. Workers employed by the state will still be forced to take three furlough days a month, equating to about a 15% cut in pay. Representatives of state workers say they may strike, and unions of state workers have said they will certainly challenge the budget package in court.

* The state legislators. I know, I know, they were winners a minute ago. Unfortunately, the budget, which passed on Friday, is based on estimated state revenues. Since the year is hardly over, and the economy may continue to decline, the estimated revenues may be grossly overstated. If that is the case, we have another budget deficit, and another budget crisis before the year is out. Of course, there is also the fact that part of the budget crisis was solved by certain accounting maneuvers, including pushing some payroll expenses into the next accounting period. Will that be a problem in the next fiscal year? Duh.

* Everyone else. Okay, I admit, that is probably a bit of an exaggeration. But, in all fairness to me, the budget passed with a $1.1 billion shortfall which really is everyone’s problem. Especially when the governor’s solution is to make up for it with cuts that his office has the authority to make on its own. I can’t help but wonder what exactly those are.