Bad budget blues
Local entities brace for the grim financial news coming out of Sacramento
Chico State University planned for the worst-case scenario and got it. Chico Unified School District has been holding its breath for months now, and it looks like it won’t be able to let it out any time soon. And Butte County is waiting for a very big shoe to drop.
It’s all thanks to the state economy and Gov. Gray Davis’ proposal, unveiled Dec. 6, that California alleviate a $21.1 billion, two-year budget shortfall in part by cutting $3.8 billion from public education—a 3.7 percent reduction—during the next 16 months.
And it all comes in the middle of the fiscal year when schools’ budgets are already approved and the money is well on its way to being spent.
“Everyone says this is worse than the [early] ‘90s,” said Scott McNall, Chico State’s provost, in reference to the last recession and cuts that devastated the school. “The budget cuts are so large that they could have a negative impact on the whole state economy.” The governor has asked the CSUs collectively to cut $59.6 million.
Earlier this year, Chico State officials, anticipating mid-year cuts, brainstormed and came up with 5 percent worth of reductions to Chico State’s about-$110 million budget without directly affecting students or staff. “Next year is a completely different story,” McNall said. If the cuts worsen, to an additional 10 percent next year, he said it’s possible the university would have to accept fewer students, which would have an economic ripple effect throughout the Chico community. As for layoffs, he said, “we will do everything we can to assure the people who are here at Chico today will be here tomorrow.”
The Associated Students government officers are rescheduling their finals so they can hop a bus to Long Beach for the Dec. 16 Board of Trustees meeting, where the possibility of student fee increases will be discussed. The officers will bring along letters signed by students urging trustees to vote against an increase.
“They’re setting a precedent by doing it now,” A.S. President Jimmy Reed said. “If they raise it 10 percent now, they could raise it 30 percent next semester.”
Budget-watchers at Butte College are also feeling déjà vu to the “worst part of the early 1990s,” said Martha Wescoat-Andes, vice president of administration.
“The potential impact of what the governor’s doing could be devastating for Butte,” she said. “It could be on a scale of $5 to $6 million—a 16 to 17 percent cut for us.”
The college is looking to maximize enrollment, seek more efficient energy contracts and brace itself for January, when it finds out whether the governor will even offer up cost-of-living-adjustment money and backfill property taxes. Butte has 83 percent of its budget in personnel, so it would be hard to make cuts that wouldn’t affect jobs, Wescoat-Andes said.
At the CUSD, the planners of the $99 million budget also saw cuts on the horizon. “It was pretty evident, looking at the way the governor built his budget—deferrals, loans and one-time use of funds—that we were going to get hit this year,” said Randy Meeker, the assistant superintendent in charge of business.
If the governor has his way, it looks like the CUSD will have to go back to its already-passed 2002-03 budget and cut another $1.9 million to $2 million—after already slicing into programs and personnel months ago amid community outcry. A big question will be whether the trustees will take the governor up on his offer to let the district dip into its 3-percent reserve or take the staff’s advice and just make the cuts.
George Young, president of the Chico Unified Teachers Association, said he’s not even thinking about the next round of salary talks. “I don’t see how they can give us money they don’t have,” he said. “We tend to know when there really is money and when there isn’t. I don’t think we’re that greedy.”
His frustration is directed more toward state leaders and “the fact that they didn’t have the guts to cut it six months ago, before the election.”
Members of the state Legislature will spend their holidays pondering the possibilities—including so-far-avoided tax increases. Also taking the hit under Davis’ proposal are social services for low-income citizens, transportation and environmental protection.
Butte County Chief Administrative Officer Paul McIntosh told the Board of Supervisors this week that local fallout from the state’s dire budget picture as painted in recent days in Sacramento should manifest itself by the middle of January.
“There is a major shoe out there yet to drop,” McIntosh told the board. “And it’s an OSHA-approved, steel-toed jackboot.”
In short, McIntosh and financial adviser Dale Wagerman of Sacramento told the board, it is still too early to tell what is headed down the pike from the State Capitol.
Gov. Davis, during a special session, has already called for $10.1 billion in cuts that “will have very little impact directly on Butte County,” McIntosh said, with the exceptions of libraries, education and cost-of-living adjustments for Medi-Cal and Social Security reimbursements.
Some transportation projects could be “shuffled in priority,” the CAO added, with the proposed $50 million cut in transportation contracts at the state level. Unspecified cuts in grants to the Sheriff’s Department could also be on the table.
The state Legislature has indicated that it will not address the proposed cuts until Jan. 10, the day the governor’s budget proposal comes out in full.
“The Legislature does not want to look at it in a piecemeal fashion,” McIntosh told the board. In normal years, he said, there’s not much budget activity at the state level until final revised budget comes out in mid-May.
But this year should be different because of the state’s looming deficit, projected to be as high as $30 billion.
“It’s going to be an extremely difficult year,” McIntosh predicted.
Wagerman cautioned that even that pressure to act may not insure smooth political sailing. This year’s budget, he noted, came in a record 67 days late because the Democratic majority had to round up four Republican votes to get it passed.
“Now, with the way the Legislature is split,” he said, “they’ll need six votes.”
Adding to that major hurdle in passing a budget is the fact that many one-time only financial tricks and shifts were used—pain-easing budget tools that will not be available in the future.
He told the board not to expect the state government, which includes 37 new faces in the Legislature, to make painful cuts of its own, noting that only 257 out of 280,000 state employees faced layoffs.
Wagerman predicted “lots of problems for public schools” and that many state-mandated programs will go unfunded.
He said that when budget conference committees meet, legislative analysts will be there to give advice that is geared to “protect the state at [the counties'] pain.”
“It’s a big challenge, but we’ve seen it before with the passage of Prop. 13 in 1978," Wagerman said, referring to the property tax law that greatly restricted local governments’ ability to raise property tax revenues, the major source of their operational funding. "Somehow we got through that," he said.