California's Budget Fiasco
California's budget fiasco California's new budget ends months of political gridlock, but the cuts to state services are hardly cause for celebration
Now, nearly a year after the fiscal collapse, get ready for structural readjustment.
California, the richest state in America, finally passed an emergency budget revision on Friday that bears shocking similarities to the budgets foisted on third world countries by the World Bank and IMF in decades past.
Seeking to close a $26bn budget gap, legislators dithered for months, as California's credit rating collapsed, as its finances sunk so low that it had to start issuing IOUs to vendors, as its school funding withered. They seemed to be waiting for a miracle (read: a Washington bailout), and when the miracle didn't materialise, they seemed to hope they could run the clock down with endless debates and little action. The Republican minority blocked all tax increases, and the Democratic majority stood in the way of all meaningful service cuts. As revenues collapsed, Sacramento's political leadership gave new meaning to "gridlock".
Finally, they've had to act. And, as everyone knew it would be, it's horribly ugly. The new budget, overwhelmingly, is about cuts rather than tax and revenue increases, and, not surprisingly, an awful lot of vulnerable people will be battered.
The highlights: billions of dollars in spending cuts to already cash-strapped schools. A sharp contraction in welfare, healthcare and in-home services to the poor and sick, with an estimated 40,000 Californians immediately losing in-home aid. A wave of closures of state parks. A forced borrowing of billions of dollars from cities and counties. An indefinite three-day a month furlough (equivalent to a 14% pay cut) for all state employees. And a huge, and likely irreversible, reduction in the state's commitment to its once-vaunted public university and community college system. Already, California State University faculty has voted to accept furloughs. And, soon, pay cuts will be implemented throughout the University of California system that range from 4% to 10% salary reductions.
Prisons, too, have been cut, but by less than other agencies. The Republicans, with the backing of crime victims' groups, threatened to torpedo the entire budget deal unless some of the deeper prison funding cuts were withdrawn.
The only good news: the assembly prevented the state from raiding $1bn in transportation funds controlled by local governments, and they also blocked oil drilling off the beautiful Santa Barbara coast – a plan Republicans argued would bring in hundreds of millions of dollars in leasing revenues.
Exhausted state politicians, who had been working around the clock to pass this budget, congratulated each other Friday afternoon as the last of the many bills cleared the assembly. But, truth be told, this is a budget to weep about rather than one to toast. While the cuts were unavoidable given the utterly blinkered failure of Republicans to countenance tax increases, it represents a catastrophic and shameful failure of governance.
It's a failure that has been expanding in fairly open view like an infected boil for years now.
The ingredients of the failure: too many special interests feeding off the public trough, at least in part through pushing spending proposals via the initiative process. A public willing to mandate a generous array of programmes into existence but unwilling to cough up tax revenues to fund it. A political culture that follows public opinion rather than seeking to lead. An initiative process that almost guarantees political incoherence. A tax-and-budget process that guarantees annual political stalemate. And a term-limits system, passed in the heyday of anti-government rhetoric in the 1990s, that discourages expertise and too often discourages high-calibre personnel from seeking public office.
The past couple year's economic turmoil brought all of these crises to a head. 24 July 2009 marks the day that the boil was lanced.
Will things get better now? Or will the lanced boil grow infected, creating an evermore toxic political climate and an evermore brutal fight for diminished spoils?
Already, cities are muttering about suing the state to prevent it from forcibly "borrowing" their money. Already, the public service employees' union, representing nearly 100,000 of the state's nearly quarter-million workers, is talking about a strike ballot. Morale at every level of the public sector in California has collapsed.
It reminds me of that old curse: "May you live in interesting times." The Golden State's imploding. But, hell, the stock market's soaring, and the big banks are posting profits again, so things must be going in the correct direction again, right?
© 2009 Guardian News and Media Limited