Governor’s budget hits home

All eyes were on the governor last week, hoping against hope that he would say it wasn’t so—that he was just kidding when he pegged the state’s deficit at $35 billion.

No such luck. Gov. Gray Davis announced Jan. 10 a wide range of economy-driven cuts that will surely affect Butte County.

Chico City Manager Tom Lando called the governor’s budget “draconian” in nature and said that it was “much harsher than what we expected.”

Local city, county and school budgets will all be hit hard.

The Democrat-controlled Legislature has to sign off on the deal for it to take effect in the fiscal year that starts in July. If state lawmakers agree, we’ll all be paying a sales tax increase of 1 percent, and smokers will choke on a $1.10-per-pack hike in the cost of their vice. Davis’ Democratic colors showed as he proposed raising taxes for Californians who make more than $136,115 a year, and an even higher tax bracket was created for those earning more than $242,230.

But his more-liberal supporters may cringe at the list of cuts to social programs: lower payments to elderly and disabled people on Supplemental Security Income; less money for health and social services; and a 15 percent drop in the Medi-Cal reimbursement rate to doctors. More than 1,500 state workers will be laid off. Indian casinos—increasingly present in the Northstate—will be asked to share an extra $1.5 billion of their money.

Republicans blasted the plan, particularly because it increases taxes. But Davis said in a Jan. 14 teleconference that, before things can get any better, the president and Congress need to come through with an economic-stimulus package “that puts people back to work now, not years from now.” He also called for reimbursement to counties for costs relating to homeland security.

In Chico, Lando said the city will take a $3.6 million hit when the state grabs vehicle license fees for the next year and a half.

“Fortunately, the council has done a good job of filling reserves,” Lando said. “We will be able to adjust, but it’s going to be tight. There is $5 million in reserves we could tap into, but once you do that, they are gone.”

He said the city will hold off on some general-fund projects and not replace city equipment, which it can afford to do because of diligent replacement in recent years.

“We will look at anything funded by general-fund money and determine whether or not we should or would pursue it. I’m not sure I see anything specific right now.”

All things considered, Lando remains optimistic.

“In the short term the council’s done a good job,” he said. “We will not reduce our workforce.”

At Tuesday’s Butte County Board of Supervisors meeting, county CAO Paul McIntosh laid out a bleak picture for the general fund, especially if the state yanks funding from vehicle licensing fees, worth $12.4 million a year to Butte County.

“That is the single most egregious proposal I’ve heard,” McIntosh said after the meeting. “This is money that was promised to the counties, and basically the state is just taking it away. We have no way of making it up.”

Vehicle licensing fees make up the second-largest discretionary revenue source to the county. The money, McIntosh said, is most needed in the general fund, where it makes up about half of what the county spends every year on vital services such as law enforcement. The county is joining forces with other counties to lobby legislators into keeping the money flowing, but if that fails, the only option may be to sue the state, McIntosh said.

McIntosh also cautioned that Davis’ plan to transfer $8 billion in state services to county administrators would be a complex and costly enterprise. In 1991, when McIntosh ran El Dorado County, the Wilson administration transferred, through a process called “realignment,” responsibility for services worth about one-quarter of what is proposed now, and that process took years to iron out, he said.

Realignment doesn’t directly take money out of county coffers. In fact, it puts money in, but with the caveat that counties take on more of a role in providing expensive services such as health care, foster care and drug courts. Costs for many of the services the county would have to administer—such as long-term nursing care—have been spiraling out of control for years.

Butte County Sheriff Perry Reniff and District Attorney Mike Ramsey spoke of Davis’ plan to make counties pay for forensic, ballistic and fingerprinting work now done for free at state crime labs. If that were to happen, it could cripple the county’s capacity to investigate crimes.

“Without that ability, it puts us in quite a quandary,” Ramsey said, adding that DNA analysis, done at about $3,000 a case, has become the best method of determining guilt or innocence. That capability would be well beyond the means of Butte County if it were forced to pick up the tab.

“When you’re talking to the mother and father of a homicide victim, how do you put a dollar amount on how much you’re going to spend on [their investigation]?” Reniff asked.

Chico State University President Manuel Esteban, who retires this year, said that while nothing in the governor’s proposal came as a surprise, it still stings. He’s off to CSU headquarters in Long Beach this week to learn more about Chico State’s share of the $326 million in cuts.

Enrollment won’t be allowed to grow unfettered, since students don’t pay the full share of their educations and the state can’t afford to subsidize all of them. That means fewer classes offered, fewer and frustrated students and a trickle-down effect that will touch all of Chico.

“There’s no doubt that whenever there is a reduction in [enrollment], it has a ripple effect in the economy, not only in Chico, but also in the area in general,” Esteban said.

But the economy is cyclical, Esteban pointed out, remembering the cuts of the early 1990s. “We go through periods where the roof seems to be caving in,” he said. “This, too, will pass.”

At community colleges such as Butte College, students would be paying $24 per unit rather than $11, under the governor’s proposal. However the local colleges wouldn’t see any of that money, said Pat Blythe, executive director of institutional advancement for Butte. “We do expect students to be impacted dramatically,” he said, and in rural colleges that could mean a decline in enrollment by even more than the 5.7 percent predicted by the governor.

Gov. Davis’ potential directive to K-12 schools is somewhat of a relief to administrators, long frustrated by how many programs are tied to grants that can’t be used for anything else. The Davis proposal lifts many of those restrictions and creates a new “block grant” setup, which makes things more flexible for local districts but will make users of the 64 affected programs—$5.1 billion worth statewide—very nervous.

Randy Meeker, the assistant superintendent in charge of business for the Chico Unified School District, said staff won’t propose raiding programs to balance the budget. But the list of those covered by the new plan is broad: from community day schools, books and gifted programs to bus transportation and staff development days. Class-size reduction and special-education monies are secure, however.

The CUSD plans to cut at least the governor-directed 3.66 percent from its budget. While some had expected Davis to allow districts to dip into their mandated 3-percent reserve, he didn’t mention it Friday, and Meeker said the CUSD wouldn’t have taken him up on it anyway. “We don’t believe in it. We think all that’s going to do is get districts in trouble.”

In the meantime, CUSD officials will be recommending that the school board OK a spending and hiring freeze. "We only have the rest of the year [to make the cuts]," Meeker said, and if purchase orders and such aren’t going in and out, the board can better visualize its alternatives. He confirmed that the district may even rethink the $304,000 it has earmarked toward an improvement plan that committees have worked on for many months. "The Strategic Plan will be one of the items that the board looks at this spring to continue or discontinue it," Meeker said.