Tuesday, May 05, 2009

California in the red again

California over 6 Billion in the red, the special election results will make it worse.

Last year California had a serious budget crisis, over 30 Billion in missing revenue. The legislature and the governor passed some temporary tax increases and made harsh budget cuts to get us through this year. Propositions 1 A- 1E, would continue this budget “solution” for a total of 4 years. However, the state, like other states continues to fall further behind. We will soon receive an estimate from the Legislative Analyst’s office, but it appears that California is at least $6 billion behind at this time even with the increased taxes and budget cuts.
The severity of the national and international economic collapse has created budget shortfalls for state and local governments. Dean Baker, CEPR Co-Director and an author of a report says "Since many states are required by their charters or constitutions to balance their budgets, states will end up using federal stimulus dollars to offset these shortfalls." It currently looks as if much of the stimulus package will be used to back fill state budget shortages which sharply limits the potential success of the stimulus.

Step 1: the May 19, 2009 elections.
Major unions are divided on the Propositions.
The California Teachers Association urges a Yes vote on each of the propositions.
On 1 A, it says, Prop. 1A will control state spending and create a long term reserve funds to protect against more cuts to our schools, children’s health care, and funding for police and fire.

The California Faculty Association, SEIU, the California Teachers Association and others argue for a No vote on Prop. 1 A.
CFA says, Commonly referred to as a “budget cap,” Prop. 1 A would institutionalize more than ten years of budget cuts to the CSU and make it nearly impossible for the system to recover.
It will create a “Rainy Day Fund” called the Budget Stabilization Fund (BSF) that will require than general fund revenue be diverted until the BSF equals 12.5% of revenue. Thus funds will be taken from schools, universities, and police even in good years until this 12.5% reserve is created.

Our view:
No on Prop. 1 A.


Since 2002 the California State University has lost almost $1 billion in state funding. Students have been charged more fees to make up the losses. Prop. 1A places a spending cap on the state budget that will make these cuts permanent. The CSU budget will not be restored to the levels of 2002 and your tuition will continue to rise.

Yes on 1 B.

California's k-12 education system is in crisis because it is underfunded. Contrary to the wishes of the voters, politicians continue to fail to adequately fund our schools. When comparisons include cost of living- California ranks 47th. out of the 50 states in per pupil expenditures. Our schools are suffering. This is unacceptable.

Prop. 1 B would begin to repay the schools some $9 Billion taken by the Legislature from school funding this year in response to the economic crisis. The money would be repayed beginning in 2011, when we hope this economic crisis will have passed. Prop 1 B would return California to the minimum guarantee of funding for schools that exists in current law.

http://www.cepr.net/documents/publications/stimulus-2009-05.pdf
More to follow.
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