Wednesday, October 29, 2008

WE’RE BAAAAACK!……With the announcement of the Governor’s plan to reconvene the Lege on November fifth and his intention to cut the education budget, the A State without a Budget/A Government without a Clue 4LAKIDS BLOG ON THE STATE BUDGET MESS is back online ….after barely a month’s hiatus.


The dream of having “a budget system in place so that we don't have to argue about the budget all the time” … not working out.

  • With California's revenue plummeting, the governor says lawmakers will reconvene next week.
  • They will discuss solutions to the foreclosure crisis and an economic stimulus package.
  • Those solutions include immediate cuts in the range of $2 billion to $4 billion to public education .

So, to torture the illogic to its illogical extreme:  Shortchanging children and the future is the solution to the foreclosure crisis and will stimulate the economy?


GOV VOWS TO CUT FUNDS FOR SCHOOLS: California education leaders told to brace for big budget cuts

Educators say Arnold Schwarzenegger told them to prepare for immediate cuts of $2 billion to $4 billion. They say the governor also plans to keep pushing for a sales tax hike. "For virtually every district I know of, this would be catastrophic," said Scott Plotkin, executive director of the California School Boards Assn. 

By Evan Halper and Nancy Vogel | LA Times Staff Writers

Budget crisis may reach deeply in school budgets

Pictured above, Helen Bernstein High School on the first day of class.Robert Gauthier / Los Angeles Times

October 29, 2008 -- Reporting from Sacramento -- Gov. Arnold Schwarzenegger told education leaders Tuesday that he would push for a tax hike and deep cuts to schools to help close the state's yawning budget gap, according to several participants in a meeting with him.

The news, delivered in a conference room outside the governor's office, came as a shock to the educators, who were told to prepare for immediate cuts in the range of $2 billion to $4 billion.

With the announcement of the Governor’s plan to reconvene the lege on November fifth and his intention to cut the education budget, the a State  without a budget/a government without a clue 4LAKIDS BLOG ON THE STATE BUDGET MESS is back online after barely a month’s hiatus.

"There is just no way we would be able to cut that much," said Scott Plotkin, executive director of the California School Boards Assn., who was at the meeting. "For virtually every district I know of, this would be catastrophic."

Administration officials confirmed that the meeting took place but refused to discuss details.

"We never talk about the governor's private meetings," said Schwarzenegger spokesman Aaron McLear.

Several educators who were present said the governor stated clearly that he would renew his push for a sales tax hike in the special legislative session that is scheduled to begin next week. The governor unsuccessfully championed a temporary increase in sales taxes during the summer budget debate.

After the meeting, California Assn. of School Business Officials Vice President Renee Hendrick and Executive Director Brian Lewis sent an e-mail to members quoting the governor as saying, "I don't like raising taxes, but this is a moment when we have to."

Lewis elaborated in an interview: "He said we're in a very serious time and we're not looking at a swift upturn."

Analysts say early data indicate that the state budget -- passed only a month ago -- has fallen about $10 billion into the red. A deficit that size represents nearly 10% of all general fund spending. The governor and lawmakers say the rapid swelling of the deficit is related to the recent plunge of the stock market and the broader economic troubles gripping the nation.

The governor has announced that he will call sitting lawmakers -- whose terms end Nov. 30 -- back to Sacramento next week to deal with the shortfall.

Political strategists have said the governor stands a greater chance of pushing through new taxes with the lame-duck Legislature, which includes several members who are leaving office this year, than with the group to be elected Nov. 4.

School officials say that making billions of dollars of cuts in the middle of a school year would be devastating.

Los Angeles Unified School District Supt. David L. Brewer said that Schwarzenegger's proposal would cost the district as much as $440 million. He called cuts of that magnitude "impossible."

"They're going to have to go out and borrow money because we'd go bankrupt," Brewer said. "Fiscally, we can't do that without literally having to shut down schools."

By law, teachers cannot be fired unless they are told months in advance.

"You can't just hand out pink slips," Brewer said. Teachers "have protections, they have union agreements."

The looming cuts for L.A. Unified would follow $190 million pared last year.

The district also had to borrow $550 million last summer to get by while the Legislature and governor were deadlocked over a state budget.

On Monday, Brewer sent all L.A. Unified employees a letter warning them that "California's financial picture is getting worse every day" and "without substantial, systematic, responsible districtwide cuts and help from Sacramento, LAUSD will not be able to make payroll by the end of next school year."

Brewer said he had convened a blue-ribbon committee to find ways to generate more revenue for the district, including putting billboards on freeway-facing schools, which could generate $20,000 to $30,000 a month.

School officials statewide issued thousands of pink slips when the budget was being negotiated earlier in the year, bracing for multibillion-dollar cuts proposed by the governor.

But they were told by the governor and lawmakers that the state would provide enough money to avoid them.

"They told us not to do layoffs, because they would solve our problems," said Kevin Gordon, a lobbyist who represents hundreds of school districts. "Then they put together a budget with fake numbers. . . . I don't know how schools would keep their doors open with cuts of this magnitude."

Schwarzenegger told the officials that even if lawmakers approved a sales tax hike, deep cuts to schools may be unavoidable. The temporary one cent-on-the-dollar sales tax hike the governor had earlier proposed, which was blocked by legislative Republicans, would close only a fraction of the shortfall.

School officials say the governor is focused on the sales tax because it is one of the few available sources of new revenue that would create immediate cash. Other potential tax hikes, such as increased income taxes for the wealthy, would not boost state coffers for more than a year, when taxpayers begin to file under the new rates.

GOP legislative leaders predicted that their caucuses would continue to stand firm against a tax hike.

They suggested that school cuts could be averted by moving money out of other parts of the budget.

"The last thing Republicans want to do is take money out of classrooms," said Assembly Republican Leader Mike Villines of Clovis.

"There are plenty of fast-growing programs that should be looked at first. . . . Raising taxes is not on the table. Raising taxes on hard-working Californians is the worst thing we could do in this bad economy when many people are losing their jobs, their homes and are struggling to make ends meet."


Schwarzenegger calls back legislators for emergency budget session

With California's revenue plummeting, the governor says lawmakers will reconvene next week. They will discuss solutions to the foreclosure crisis and an economic stimulus package.

By Evan Halper | LA Times Staff Writer

October 28, 2008 -- Reporting from Sacramento -- Gov. Arnold Schwarzenegger has set Nov. 5 -- the day after next week's election -- as the start of an emergency legislative session to address the state budget deficit, which has swelled by several billion dollars in recent weeks as the stock market has continued its tumble and the economy has soured.

Schwarzenegger said this year's deficit will be "much more" than the $3 billion that state officials projected two weeks ago. Capitol budget analysts say preliminary data indicate the problem will probably grow to at least $10 billion.

With the announcement of the Governor’s plan to reconvene the lege on November fifth and his intention to cut the education budget, the a State  without a budget/a government without a clue 4LAKIDS BLOG ON THE STATE BUDGET MESS is back online after barely a month’s hiatus.

The governor and legislative leaders made the announcement to reporters in the hallway outside Schwarzenegger's office, where they had been meeting in private to discuss the fiscal crisis. They said that in the coming days they also will form a commission to study ways to restructure the state tax code to make revenue more stable

Schwarzenegger's move comes a month after lawmakers passed the current budget and adjourned until December, when the next class of lawmakers is scheduled to begin work. But the governor said state revenues are dropping so fast that he and legislative leaders decided to call a lame-duck session.

"The situation is far more severe than it was when we were negotiating the budget" over the summer, Schwarzenegger said.

At that time, experts had warned that the spending plan lawmakers were drafting was optimistic.

"They ignored the obvious," said Christopher Thornberg, principal at Beacon Economics. "They refused to recognize we were heading into this painful recession. It wasn't rocket science."

The state's problems are being compounded by the stock market bust. State revenues are expected to suffer substantially as a result of the carnage on Wall Street.

Relative to other states, California gets a disproportionate share of its revenue from the personal income taxes of the wealthy. The richest 1% of Californians pay half of all the personal income taxes the state collects each year.

"A lot of those folks receive much of their income from capital gains," said H.D. Palmer, deputy director of external affairs for the state Department of Finance.

When the stock market falters and capital gains fall off, state income plummets. This month the Standard and Poor's 500 Index has dropped 24%.

The state also relies heavily on sales taxes. Economists are predicting that those receipts will also take a dive as consumers tighten their belts.

The governor said he opted to bring sitting lawmakers back to town rather than wait for the new class because "they have dealt with the problem throughout the year." Some analysts have suggested that the governor stands a better chance of pushing through a temporary tax hike -- something he tried but failed to do during the summer -- with the current crop of lawmakers, because several are termed out of office and will not be part of a newly elected Legislature.

Republican leaders say their caucuses will continue to block any tax increase as they did in summer. They handed the governor a letter Monday calling for tax cuts.

The legislators proposed new tax breaks for a range of companies, including those involved in manufacturing, building new facilities in California and hiring out-of-work Californians.

"California has one of the highest tax rates on business in the nation," wrote Assembly Republican Leader Mike Villines of Clovis and Senate Republican Leader Dave Cogdill of Modesto. "With the tight credit market and worldwide economic turmoil, we must help California businesses to create, retain and expand job opportunities."

Legislators will no doubt be forced to weigh steep program cuts as part of the special session. The estimated shortfall already has grown so large -- $10 billion is nearly 10% of the general fund -- that even the sales tax hike the governor proposed earlier in the year would erase only a fraction of it.

In their special session, lawmakers will also consider proposals to deal with the state's foreclosure crisis, and an economic stimulus package designed to create more jobs in the state. One way to do that, legislative leaders and the governor said, would be to speed up allocation of public-works bond money already approved by voters. They are also seeking billions of dollars in relief from Washington, D.C., some of which could take the form of extended unemployment benefits for Californians out of work.

The top-to-bottom review of the state's tax code was initially proposed by Assembly Speaker Karen Bass (D-Los Angeles).

"California's tax structure was set up at the beginning of the last century," Bass said. "We know it needs to be modernized."

Several previous attempts to overhaul the tax code have been rejected. Experts say lawmakers easily find taxes to cut but can rarely agree on how to replace the lost revenue.

Special Session on California State Budget: Governor Will Call Session Nov 5th

• Budget Deficit Grows As Revenues Drop

• Spending On Programs Impacting People With Disabilities, Mental Health Needs, Seniors And Children Vulnerable For Major Permanent Cuts

By Marty D. Omoto in The California Progress Report


28 October 2008 -- Governor Arnold Schwarzenegger will call a special session of the Legislature next week, likely on November 5th (Wednesday) to address the State’s growing budget deficit that has reportedly swelled to over $3 billion and growing. The Governor is expected any day to issue an official order calling the special session.

It is not certain what proposals the Governor will make to the Legislature to address the worsening State budget situation, though many advocates fear major spending cuts to programs impacting children and adults with disabilities, mental health needs, seniors, low income children, and families, organizations, facilities and workers who provide supports and services.

Also vulnerable is spending on public education in general that could impact special education.

Senate and Assembly Republican leaders were adamant this past year against any tax increases during bad economic times – and they remain opposed to any such increases to bridge a growing budget shortfall. That would mean any proposal by the Governor or the Democrats, in order to win the needed Republican votes to pass any proposal during the special session, would have to focus on permanent cuts and ways to improve revenues without taxes

The news comes just weeks after the Governor signed the long delayed State budget on September 23rd, after a three month stand-off and comes less than 11 weeks before the Governor must present his proposed budget for 2009-2010 on January 10th.

The Governor used his line item veto power to cut hundreds of millions of dollars of spending impacting a wide range of programs and services impacting seniors, on top of cuts the Legislature approved.

The Governor and legislative leaders met yesterday and several times earlier this month to consider next steps in addressing the financial crisis impacting California, including the worsening budget situation.



* Only the Governor has authority under the State Constitution to call a special session of the Legislature for certain specific reasons. The Legislature must meet - but they are not required by the State Constitution to act. The Governor will likely present the Legislature with proposals to address the growing budget deficit.

* Governor also has authority under the State Constitution to declare - as he did last January - a "fiscal (budget) emergency" that requires the Legislature to respond within 45 days. It is not likely he will do so at this point however, given the time frames.

* Under a “fiscal emergency” called by the Governor, if the Legislature fails to send a bill or bills addressing the emergency to him within 45 days, the State Constitution doesn't give much authority to force them to act - especially at this point in the year. If the Legislature does not act (meaning does not send a bill or bills addressing the fiscal emergency) then it cannot pass other bills or adjourn in recess. The Legislature has no bills to act on or pass during the fall and really will not have any to act on regular session bills until February next year.

* The Legislature finished its work on regular bills as of August 30th, and came back into session in September because of the State Budget.

* Except for this year, the Legislature has never before met beyond its August 30th adjournment date during the second year of the Legislative session. The Legislature must send any bill to the Governor on or before November 15th.

* New members of the Legislature will be elected November 1th though they will not take office until December

* Current legislators who are termed out of office, including Senate President Pro Tem Don Perata (Democrat - Oakland), or who are retiring for other reasons, serve until November 30th.

* New members elected in November take office the first week of December and will be sworn in at the State Capitol in brief sessions on Monday December 1.

* Governor’s call for a special session of the current Legislature means that they must meet and complete work before November 30th - the final day on the job for termed out or retiring legislators (the would have to present a bill to him on or before November 15th however, based on one read of the State Constitution.

* The Governor could call another special session in December sometime after the new Legislature is sworn in, though many observers feel the financial and budget crisis may need to be addressed much sooner than that.

Omoto is Director/Organizer of the California Disability Community Action Network

The California Disability Community Action Network, is a non-partisan link to thousands of Californians with developmental and other disabilities, people with traumatic brain injuries, the Blind, the Deaf, their families, community organizations and providers, direct care, homecare and other workers, and other advocates to provide information on state (and eventually federal), local public policy issues.