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A Balanced Approach to Fixing California’s Budget Deficit—This Year and Beyond
In today’s Democratic weekly radio address Assemblymember John Laird talks about the difficult financial decisions that need to be made by the Legislature and the Governor in light of the state’s growing deficit. Assemblymember Laird, the Chair of the Assembly Budget Committee, says, there is a better, fairer and smarter way to balance the state budget than the Governor’s “cuts only, across the board” approach. In the radio address, Assemblymember Laird says, “Rather than papering over the budget problem for one more year on the backs of school kids, the elderly and the poor, we need a mix of responsible, ongoing budget cuts and practical, ongoing new revenues.”
You may listen in English or Spanish or read the transcript below:
The California state budget is a blueprint for investment in our state and in our future. In the era of Governor Pat Brown in the 1960's, our state invested in roads, water, and higher education - and this investment helped make California the eighth largest economy in the world.
Today California is at a similar crossroads—and decisions taken last week and over the next months will determine whether California will continue playing a similar economic role.
In January, the Governor identified a $14.5 billion gap in a state budget totaling $101 billion. That gap was primarily the result of three things. First, the reduction of the Vehicle License Fee in 2004 and the voter approval of Proposition 1A locked the expenditure that the VLF used to pay for into the constitution—that amount is now $6.1 billion. Second, the debt bonds approved by voters in 2004 will cost the state $3 billion in the current year. And third, the softening of revenues, due primarily to the state housing slump and high energy costs, negatively impacts the budget this year.
This past week the non-partisan Legislative Analyst said the total budget problem has reached $16 billion—up a billion and a half dollars from the Governor's original estimate presented just last month.
The State Assembly has taken the budget challenges very seriously. We held twenty-two budget hearings over a three-week period and worked to craft a bi-partisan emergency budget plan approved last week and signed by the Governor.
That plan cut next year's $16 billion budget problem in half, turned this year's $3 billion budget hole to a positive $1 billion, and fixed the state's cash flow situation for the current year.
The plan that passed also includes cuts to virtually every area of the budget and reflects the Governor's action to borrow another $3.3 billion in deficit bonds.
However, the bipartisan agreement did not extend to closing tax loopholes. Assembly Republicans refused to join Assembly Democrats in repealing a yacht tax loophole approved by the State Senate.
As we cut education and medical care, it is unconscionable to let yacht owners off the hook for playing a role in fixing our state budget problem.
Now we will move on to next year's budget. While many of the actions to close the first half of the problem were very difficult, the second half will be much worse.
The Governor has taken a “cuts only” approach. He has suggested a budget based on across-the-board cuts that hit parks, medical care, education, and prisons equally, not on priorities that place some items more important than others.
There are those who argue that recent spending increases show that the “state has a spending problem” and that there is room for budget cuts. But the facts are more complicated. Simply undoing recent spending increases would mean increasing the Vehicle License Fee, suspending Propositions 42 and 98, cutting state support to education and transportation, and defaulting on the state's debt.
There is a better way. There is a fairer way. There is a smarter way.
Rather that papering over the budget problem for one more year on the backs of school kids, the elderly and the poor, we need a mix of responsible ongoing budget cuts and practical ongoing new revenues.
As the Assembly Democrats continue to craft a final budget that closes the entire $16 billion budget shortfall and leave the budget balanced in the years ahead, we must have a balanced approach.
We must craft a budget that matches difficult, ongoing, cuts with new revenues. When we look to increase revenues we will be careful to ensure that we do not harm an already struggling economy, and instead raise revenues that help our economy rebound by allowing our schools to succeed, by enabling access to higher education, by avoiding cuts to infrastructure improvements, and by keeping the elderly and the poor fed and not forced onto the streets.
With a balanced approach, we can fix our chronic budget problems and move our state forward. We can't avoid tough actions on cuts and new revenues, but if we act responsibly, we can craft a budget that gets California back on track. Our economic future depends on it.
Espanol:
Qué tal, les habla el presidente del Comité del presupuesto, John Laird.
El presupuesto del estado de California es el plano para la inversión en nuestro estado y nuestro futuro. Durante los sesentas, en la era del gobernador Pat Brown, nuestro estado invirtió en calles, agua, y en la educación superior – y estas inversiones ayudaron a que California se convirtiera en la octava economía del mundo.
Hoy California se encuentra en una situación similar— y las decisiones tomadas la semana pasada y en los próximos meses determinarán si California seguirá jugando un papel económico similar.
En enero, el gobernador identificó una brecha de catorce mil quinientos millones de dólares en un presupuesto fiscal de ciento un mil millones de dólares. Esta brecha es el resultado primeramente debido a 3 cosas. Primero, la reducción del precio de la matricula vehicular en el 2004 y la Proposición 1A aprobada por los votantes que puso un candado a los gastos que previamente la matricula pagaba dentro de la constitución — esa cantidad en estos momentos es de seis mil cien millones de dólares. Segundo, la deuda de los bonos aprobada por los votantes el 2004 costará al estado tres mil millones de dólares en el presente año. Y tercero, la falta de los recursos, debido principalmente a la crisis hipotecaria y a los altos costos de energía, trajo impactos negativos al presupuesto fiscal de este año.
La semana pasada el Analista Legislativo dijo que el problema del presupuesto alcanzó a 16 mil millones de dólares—mil quinientos millones de dólares más que los estimados por el gobernador el mes pasado.
La Asamblea del estado ha tomado estos desafíos seriamente. Tuvimos 22 audiencias sobre el presupuesto en un periodo de tres semanas y trabajamos para crear un plan bipartidario de emergencia presupuestaria que fue aprobada y promulgada por el gobernador la semana pasada.
Ese plan recorta $16 mil millones del problema del presupuesto para el próximo año por la mitad, convirtiendo un vacío de 3 mil millones de este año en una ganancia de mil millones de dólares, y mejora la situación de caja para el año actual.
El plan aprobado incluso tiene recortes en casi todas las áreas del presupuesto y refleja la acción del gobernador de tomar prestado otros 3 mil millones de dólares en bonos de déficit.
Sin embrago, el acuerdo bipartidario no tomó en cuenta el cierre de los vacíos tributarios existentes. Los asambleístas republicanos se negaron a votar con los demócratas para repeler la brecha tributaria de los yates que fue aprobado por el Senado del estado.
Así como hacemos recortes a la educación y al cuidado médico, es inconcebible que dejemos a los dueños de yates libres de aportar para arreglar nuestro déficit fiscal.
Ahora nos disponemos a tratar el presupuesto del próximo año. Aunque muchas de las acciones para cerrar la primera parte del problema fueron difíciles, la segunda parte lo será mucho más.
El gobernador ha tomado el camino de “solo recortar”. El ha sugerido hacer recortes en todos lados que perjudicarán en condiciones iguales a los parques, servicios médicos, educación, y prisiones, y no basado en las prioridades que algunas cosas son más importantes que otras.
Hay algunos que pregonan que los gastos de los últimos tiempos son que el “estado tiene un problema de gasto” y que existe el espacio para hacer los recortes. Pero los hechos son más complicados que eso. Deshacerse de los gastos hechos en los últimos tiempos significa aumentar la matricula de vehículos, suspender la Proposición 42 y 98, recortar el apoyo del estado a la educación y el transporte, así como entrar en morosidad con los pagos de las deudas del estado.
Existe una mejor manera. Más justa. Y más inteligente.
En vez de tapar el problema del presupuesto por una año más sobre las espaldas de los estudiantes, los ancianos y los pobres, lo que necesitamos de recortes responsables y abrirnos a la posibilidad de adquirir nuevos recursos.
Así como los asambleístas demócratas continúan trabajando para bosquejar un presupuesto final que elimine el déficit de 16 mil millones de dólares y deje un presupuesto balanceado para los años venideros, todos debemos estar abierto a tomar un camino mas balanceado.
Debemos crear un presupuesto que combine los difíciles y continuos recortes con nuevas fuentes de ingreso. Cuando miramos como aumentar los recursos debemos asegurarnos que no dañemos a nuestra agobiante economía, y en vez crear fuentes que ayuden a nuestra economía a reactivarse dejando que nuestras escuelas triunfen, al permitir el acceso a la educación superior, y no recortando los fondos para el mejoramiento de la infraestructura, y manteniendo a nuestros ancianos y pobres fuera del sufrimiento del hambre, como tampoco forzándolos a que vivan en la calle.
Con una posición balanceada, podremos arreglar nuestro problema fiscal y llevar a nuestro estado hacia adelante. No podemos evitar los severos recortes y adquirir más recursos, pero si actuamos responsablemente, podemos tener un presupuesto que permitirá a California volver a su sendero. Nuestro futuro económico depende de eso.
Gracias por su atención. Les habló el asambleísta John Laird.
Comments
You probably won’t believe the following claims, but the State could (and should) deal with over half of the state budget deficit by simply eliminating waste in the State prison budget. And it does not have to involve any early release of inmates.
1. Release requests for proposals from cities, counties and private venders for 16,600 correctional beds, eliminating the prison overcrowding problem, reducing operating costs by about 10% to 20% for these beds and providing annual savings of about $60 million to $120 million in operating costs.
The $7.7 billion prison construction package includes about $6.5 billion to add capacity for about 70,000 more prison inmates, and will result in a 20,000+ prison-bed surplus. Instead of construction, the state should follow the example of some other states and release Requests for Proposals for 16,600 correctional beds to house short term, low risk offenders and technical parole violators currently in prison. These offenders are in prison rather than county jail only because of the long term county jail bed shortage. This action would provide sufficient correctional beds to eliminate prison overcrowding in a few months rather than a few years, and avoid spending any money for prison bed construction. Only about 4% of the California prison population is held in private facilities compared to 9% in Texas and 6% in Florida. The $6.5 billion in bond funds could be applied to the deficit.
2. Making local beds available to house parole violators awaiting violation disposition would also enable the prison system to reduce parole violation rates to a reasonable level and save over $.5 billion in annual prison operating costs.
Of course, the Governor and Legislature would never take such actions primarily because it would be strongly opposed by the correctional unions.
Posted by: richard mckone at February 23, 2008 03:29 PM
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