California meltdown

A biweekly flyover of the state budget crisis

With Gov. Arnold Schwarzenegger scheduled to release his preliminary 2010-11 budget Friday (Jan. 8), the big questions is: How bad will the cuts have to be in order to balance a projected $20.7 billion deficit over the next 18 months? In the meantime, here’s what happened leading up to the budget release:

Dec. 21: Gov. Schwarzenegger announces $26.5 million in awards to help California counties combat fraud in the state In-Home Supportive Services (IHSS) program (Butte County will receive $198,954). Officials estimate the effort could save $130 million this fiscal year, but many analysts are dubious.

Dec. 23: State-mandated furloughs have delayed the delivery of federal disability benefits for thousands of Californians, forcing some of them into homelessness, Capitol Weekly reports. At the same time, these furloughs have not saved the state any money, since the federal government pays the furloughed employees’ salaries.

Dec. 23: The Los Angeles Times reports that, facing a budget deficit of more than $20 billion, Gov. Schwarzenegger “is expected to call for deep reductions in already suffering local mass transit programs, renew his push to expand oil drilling off the Santa Barbara coast, and appeal to Washington for billions of dollars in federal help.” If Washington does not provide roughly $8 billion in new aid, he “threatens to severely cut—if not eliminate—CalWORKS, the state’s main welfare program,” as well as axe the IHSS program and Healthy Families and extend his cuts in the state payroll, now handled through furloughs. He also will roll back two corporate tax breaks the Legislature passed in February 2009.

Dec. 28: The Sacramento Bee reports that, in a letter to Congress, Gov. Schwarzenegger questioned a federal court decision that blocked rate cuts for IHSS workers and said he would consider eliminating the program altogether if courts continue to reject partial cuts. Court decisions are making it difficult to balance the budget, he said. The problem is that when one solution is put off-limits, another has to be found, said Deputy Legislative Analyst Michael Cohen.

Dec. 30: Speaking of which, the Los Angeles Times reports that the governor’s plan to raise $1 billion to help balance the budget by selling a chunk of the state-run workers’ compensation company is so tied up in court it’s essentially dead. And the person who sued? None other than the governor’s fellow Republican, state Insurance Commissioner (and governor candidate) Steve Poizner, who believes the fund would be weakened if part of it was sold.

Dec. 31: In a further blow to budget-balancing, Alameda County Superior Court Judge Frank Roesch rules that the governor’s reliance on the state Emergency Services Act to order three furlough days a month was illegal. The suit was brought by three unions, including the 90,000-member SEIU.

Jan. 2: Watch out for what you ask, eh? The Sacramento Bee reports that, following Judge Roesch’s ruling, state workers are suddenly afraid that, instead of being furloughed, they may be laid off. There is also speculation that the governor may increase reliance on private contractors and vendors.