Sunday, January 30, 2011

The California budget truth is "so horrible that we don't want to release it" says Governor Moonbeam

Gee. Finally, Governor Jerry Brown said the following according to Sacramento Bee pundit Dan Walters:
[Brown] not only defended the cuts [in the safety net programs] as "necessary because we just don't have the money," but made it clear that they are a big part of a permanent "retrenchment" in spending.

"They're a retrenchment in what California was attempting to do in recent years," he said, adding, "they look permanent to me" because "the money isn't there."

If Brown is serious about "retrenchment," it alters political dynamics. Budget stakeholders have been grudgingly willing to accept cuts in the past only because they were seen as temporary and would be reversed when revenue picked up.

As recipients and their advocates ponder permanent reductions in welfare grants, in-home care, adult day care, health care, child care and other safety-net programs, resistance is mounting, as last week's hearings indicated. It calls into question an assumption of budget politics....

"When we unwind what has been done (in the past)," Brown said, "it's very difficult," noting the outpouring of opposition. But if it's not done and the tax extensions aren't approved, he adds, the alternative is "so horrible that we don't want to release it."

After watching for 18 months in frustration, in May 2009 I posted here:
In Grapes of Wrath, John Steinbeck told a story about how folks migrated to California to find hope within The Great Depression. We are now in what Time Magazine calls "The Great Recession" but California is not going to be a place to find economic hope.

The "other shoe" is about to drop in our Great Recession. California is hosting a "belated" economic collapse. Of course, no one publicly calls it that because no one wants to see it. But the boring statistics are available....

...California will need to reorganize as a bankrupt entity....
It was obvious the moment I saw the details of Brown's budget he wasn't making California confront the truth which is "so horrible that we don't want to release it."

Anyone on the internet who can read and "do numbers" has the information at hand. The facts are that in 2007-08 the State disbursed from the General fund $107.3 billion and that the State will have $62± billion to disburse in 2011-12. That's a 42.2% cut over four years.

Is it horrible? Depends on our perspective, I guess. If one increases the amount disbursed from the General Fund in 1990-91 by the increase in population and cost-of-living since then, we should be disbursing $80± billion from the General Fund 2011-12. Brown's budget, which uses all kinds of gimmicks, is $7 billion higher than that.

An honest budget from Brown would have told Californian's the truth - we need to cut education and safety net General Fund support by 50% from 2007-08 levels. The immediate cause is that our economy crashed. We are in The Great California Slump.

But the underlying reason our government is in that position is that since 1978 we've relied on taxes that are too sensitive to the economy - sales, income, and corporate taxes.

When we gave up a huge chunk of our property tax revenue, we made our schools and government too dependent on economic cycles. In a recession we may buy less at Wal Mart because our income dropped 25%, but we don't pull one of our four kids out of school because the school's income dropped 25%.

On December 2, 2010 I posted:

Here's what the big picture might look like after another $25 billion in cuts are factored in on a formulaic basis:

STATE PROGRAMS & 2007-08 % of 2011-12 % of % of
LOCAL ASSISTANCE Actual Total Possible Total Cut
Total Education $52.2 48.7% $26.1 42.1% -50.0%
Total Health & Human Services $28.7 26.7% $14.3 23.1% -50.2%
Total Prisons and Jails $9.5 8.8% $8.5 13.7% -10.4%
Total Debt Payments $3.6 3.4% $6.0 9.7% 66.2%
Total Resources Protection $1.4 1.3% $0.7 1.1% -49.5%
Capital Outlay $1.3 1.2% $1.4 2.3% 9.9%
Everything Else $10.6 9.9% $5.0 8.1% -53.0%
Total Cash Disbursements $107.3
...In fact, almost no one in the press understood the facts before the election and Brown made no effort to educate them. So the public was, and still is, ignorant of the facts. Now no one offers even a guess regarding how General Fund spending could be reduced 40%....
Governor Brown 1.0, just "doing his thing" as a government philosopher and policy wonk 30+ years ago, was very much responsible for getting us into this situation we are in. Now Governor Brown 2.0 is treating us like kids - the truth is "so horrible that we don't want to release it."

Just keep doing your thing Governor Moonbeam, and you may have to release the truth, if the voters decide not to approve the tax increase extensions. Maybe that would be a good thing for California.

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