A wise man once suggested we should allow ourselves a brief amount of time to absorb bad news and then pick ourselves up off the ground, dust off, and get on with things.
Here’s the bad news – read it and weep. Governor Schwarzenegger released his FY 2008/09 state budget today. Not good.
The following is summarized from a bulletin out today from the California State Association of Counties (CSAC):
The Governor officially declared a fiscal emergency due to the budget deficit. He has until Feb. 23rd to initiate a 45-day special session to address it.
Lamentably, the state is spending between $400-600 million more every month than it is receiving in revenues and a budget deficit estimated at anywhere from $15-30 billion is predicted next fiscal year if aggressive cuts are not made.
Here’s what the Governor has proposed to do to deal with the situation.
Cut current state budgets by imposing 10% cuts in nearly all state departments (over 52% of the reductions are in health and human services departments and the executive and judicial branches are included in the cuts) in the current year.
Sell $3.3 billion of Prop 57 Economic Recovery Bonds by the end of Feb.
Make significant cuts to Medi-Cal and Health and Human Services programs.
$3.9 million reduction in Williamson Act/open space subventions.
$23.8 million reduction in Citizens Option for Public Safety/Juvenile Crime Prevention Act programs.
$1.9 million reduction in the Small/Rural Sheriff’s Program.
Early release of non-violent, non-sex offender prisoners with 20 months or less remaining in their sentence.
Surcharge or fee of 1.25% on homeowner insurance policies to finance additional file suppression equipment for Cal Fire.
Delay local gas tax subventions by 5 months (September 2008).
This is just the opening salvo in the 2008 Budget Wars. There will be significant lobbying by special interests and legislators to restore funding to pet causes, although due to the severity of the budgetary condition of the state, it’s not likely there will be much mercy. The state has got to rein in its spending.
Not surprisingly, the proposed cuts would have significantly negative impacts on counties’ ability to provide certain critical (and mandated services). Stay tuned as we monitor the machinations in Sacramento and adjust accordingly.
This is tremendously bad news. But it’s not the first state budget crisis we’ve weathered and it won’t be the last. We’ve been cautious in projecting revenues for this year and have very little debt. We’ll make it. Better than some counties…