Painful Cuts

052610

Suppose your family finances are in a terrible state. What will you do? The car needs tires, the kids need braces, grandma might lose her foot to diabetes, the paint on the house is starting to peel off in sheets.

Most poor families have various strategies. They pull in excess spending on "luxuries" like potato chips and beer. They take on what small jobs they can find, or operate a small business. They drive one car. They borrow a little money from relatives. They garage sale everything worth selling. They encourage older kids to move out. They "find surplus" things like aluminum and copper and firewood. But, what do you do when that isn’t enough? Do you borrow in the hopes good times return and you can repay before you lose everything, or do you stop eating, stop treating grandma’s diabetes, stop sending the kids to school?

What about selling some lumber from the house, perhaps a porch or some non-load bearing walls. Maybe accept some bags of "mystery trash" to be buried in the back yard. Perhaps you have a son who could do mercenary work, or a daughter who would bring a nice price on the street.

Your California finances are in a terrible state. The state is nearly $20 billion in the hole. The governor has proposed a budget that would slash public services to the bone. He notes we’ve passed the yard sale and stealing firewood stage:

"California no longer has low-hanging fruits. We don't have any medium-hanging fruits, and we also don't have any high-hanging fruits. We have to take the ladder from the tree and shake the whole tree."

Schwarzenegger, who is not eligible for reelection and so may tell the truth, has stated that this new budget would be "painful" and contain "terrible cuts."

In-home health care and welfare-to-work are out the window in this new budget, but that would cost the state in Federal funds.

The budget will save over a billion by deleting CalWorks, which currently serves over a million people, mostly the children of families seeking employment. It will cut $532 million in MediCal. It will eliminate Healthy Families, the health insurance for children in the state.

Among plans being discussed is housing state inmates in county jails. In many instances, that would require the early release of local prisoners. Some find the problem to be one of community safety, but it’s actually one of unemployment. People who can’t find a job that pays a living wage tend to get by other ways. The current prison system was designed for 80,000; California’s criminal justice laws have resulted in about 150,000 people in prison. Over-crowding causes tension and fights, and a federal court judge has ordered California to reduce over-crowding by 2011. That ruling is being challenged, because the state thinks it’s a good idea to have twice the intended population in each facility. The state would save about $360 million by dumping prisoners and their expenses on the counties, and another $811 million by reducing medical treatment to inmates.

State workers would have one "personal day" a month without pay. They would pay more for retirement and receive a 5% pay cut. This will save over a billion and a half dollars.

Finally, the state intends to make money off speeders. Beefing up red light technology in cities, the state would gain an estimated $330 million in ticket fees.

The state has already cut funds owed to counties, including the compensation owed under the Williamson act.

Republicans generally support the budget, because it doesn’t tax anyone. They would like to see more off-shore oil and more dams. Their plan calls for "encouraging small businesses" but it isn’t clear how they would do that, except for rolling back environmental and health regulations. The Republicans want undocumented workers kept out of the state, so who knows where the low wage workers will come from to fill these small jobs.

Above all, the Republicans don’t want higher taxes, which they feel causes capital to leave the state, increasing joblessness.

The Democrats don’t want to make those cuts, noting they are mostly to the old and the poor. Instead, they want to run everything on Visa until the economy gets better. Their plan calls for taxing oil and borrowing heavily, essentially deferring the misery until the state can better afford it. They would delay tax cuts to the rich, and would probably seek to raise other taxes and sell bonds as well.

Whatever happens, there is no doubt that the state’s income simply won’t meet its needs.

What will the elderly do if they can’t get in-home help? What will prisoners do when there are no jobs? All things considered, times are likely to get worse for the poor, and the sick and the old are likely to die.

See a nice budget page HERE