California’s New Budget – What does it mean for you?

Gov. Jerry Brown signed California’s 2011-2012 budget Thursday. Calling it “honest but painful”, Gov. Brown says the budget cuts the state’s $26.6 billion deficit by $15 billion.

Originally, Gov. Brown and Democrats had hoped for a referendum on tax extensions and increases, but Republican opposition derailed those plans, as GOP lawmakers refused to vote for such a measure without significant reforms to the pensions of state workers.

The new budget was passed without any Republican support. It assumes a $4 billion increase in state revenues, with provisions for dealing with situations where that extra cash does not appear. Specifically, if new revenues are less than $3 billion, then a set of cuts to education, Medi-Cal, prisons, and other areas totaling $601 million would automatically take effect. If new revenues are less than $2 billion, then another set of automatic “trigger cuts” would hit education, reducing the school year by 7 days and eliminating direct home-to-school transportation. This would save almost $1.9 billion.

Where are they expecting these new revenues to come from? Well, one area is taxes on online sales. The state will begin collecting sales tax from online retailers – something that has offended, who has threatened to drop its California vendors, as they have done in Connecticut and Arkansas.

Here are some highlights of the new budget:

  • Medi-Cal will get a $2 billion cut. This will mean Medi-Cal patients will have to pay a $5 co-pay for doctor’s visits, a $50 co-pay on emergency room visits, and a $100-$200 per night co-pay on hospital visits. Doctor’s visits that don’t have a physician’s approval will be capped at seven a year.
  • Mental Health Services will get an $860 million cut.
  • Developmental Services and In-Home Support Services will each get about half a billion dollars of their budgets eliminated.
  • Almost $180 million in Supplemental Security Income will be eliminated. This will mean that SSI payments to the elderly, blind, and disabled will be reduced to the minimum required by federal law.
  • K-12 education will be kept at about last year’s levels, as mandated by Prop 98 during “hard economic times”. This means grade schools will not lose money except in the case of one of those “trigger cuts”.
  • The UC/CSU systems will get a $1.3 billion cut. This will probably mean higher student fees, as it has in the past.
  • Requiring an increase in community college fees of $10 per class.
  • More than a billion dollars will be cut from transportation, particularly railroads. This will delay the planned high-speed rail from San Francisco to LA, and will scrub planned upgrades to BART.
  • Reducing the inmate population of California’s prisons by 25 percent. This will mean letting 37,000 people go free to reduce the state prisons system’s notorious overcrowding. This will meet a court-ordered requirement.
  • Going ahead with 70 planned state park closures.
  • Downsizing. The state will lay off 5,500 workers and eliminate 20 commissions and boards
In addition to these measures, the state will stop funding local police, fire, and emergency services, transferring responsibility for these areas to local governments. Previously, many local governments had been dependent on state funding to support these services.
Information from the California Department of Finance.

One Response to California’s New Budget – What does it mean for you?

  1. “The problem with socialism is that eventually you run out of other people’s money.”

    This is what that looks like.

    California has a long history of handing out money based on how deserving the recipient was, rather than anything remotely relating to budgeting. The problem with this is that you eventually run out of money to hand out and then you have to make cuts. And, since you have been handing out money based on how much they ‘deserve’ it, those cuts hurt.

    Compounding the problem is that California’s proposed solution to the budget problem (more taxes) is simply going to drive away the the businesses that they need to balance the budget. Sort of a ‘killing the goose that laid the golden egg’ phenomenon.

    Result? I think that this is the beginning of massive cuts, not the end.

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