August 19, 2004
California’s Budget, Compromised
Just as it seemed his honeymoon governorship was degenerating into insults and whining, Arnold Schwarzenegger finally signed a $105 billion state budget on July 31, about a month late.
The governor kept his promise not to raise taxes, the Democrats flexed their own muscles and won a reprieve from the drastic cuts they'd feared (especially in spending on health care) and most of the midsummer frustration has evaporated. Even Schwarzenegger's poll numbers saw a rebound.
Jewish political leaders won a major budget victory when proposed cuts to day care for frail seniors failed to materialize. Saving two state-funded services, Adult Day Health Care and the Multi-Purpose Senior Services Program, was the centerpiece of the Jewish Public Affairs Committee's May mission to Sacramento.
"We were very pleased with the governor's and the legislature's final budget," said Jessica Toledano of the Jewish Community Relations Committee, a wing of The Jewish Federation. "All of our programs here at The Federation have been maintained."
To make the bipartisan compromise work, the state budget borrows about $5 billion in bonds and liens on a slew of temporary funds secured from public education ($2.04 billion) and local governments ($1.3 billion). It's only a stopgap, of course, since those interests are guaranteed all their funding back in 2006.
If all this borrowing and temporary cash sounds familiar, that's because it is.
"The budget is pretty much concocted the same way that it has been the last two years," said Stephen Levy of the Center for Continuing Study of the California Economy. "It's the same mixture of stuff that we had before, and what it means is that we're guessing the long-term budget gap is about $10 billion."
"He did what the voters told him to do: don't cut spending, don't raise taxes. It's worked before," Levy said. "Well, 'worked' is a funny word for it, but it's essentially what we've been doing before, which is to postpone the hard choices."
Here's the upshot: Whichever side of the hard choice you're on, higher taxes or cutting social services, there doesn't seem to be a third option. California needs to either spend less or take in more revenue, despite the ongoing appeal of doing neither.
Unfortunately, the state now appears to be on track for a 2005 repeat of last year's budget nightmare.
"I don't think the bond houses are going to cut Schwarzenegger too much more slack, and, yes, we'll be back [in deficit] next year," Levy said.
Sounds like business as usual in Sacramento, perhaps with a few more cigar tents.
No doubt the biggest Democratic rescue operation in Sacramento was the successful defense of Medi-Cal, if only for the moment.
Back in January, the governor had proposed about $900 million in cuts to the program that funds health care for the poor, but he backed down after stiff opposition from Democrats and social service nonprofits. Schwarzenegger's policy team will return in January 2005 with a revamped proposal.
"About 50 percent of our annual revenues come from the Medi-Cal program," said Molly Forrest, CEO of the Los Angeles Jewish Home for the Aging (JHA), where fully 75 percent of the residents use state assistance to pay.
Forrest noted that the average "multilevel nonprofit health care provider" (more than just a nursing home) has only 20 percent of its residents on state assistance. JHA's extra assistance to low-income people makes it far more vulnerable to Medi-Cal cuts.
Needless to say, Forrest isn't content to wait and see what happens in Sacramento in January.
"In the last two years we've initiated about $1.5 million in cost cutting," Forrest said.
So to modernize its (already impressive) facilities, the focus is squarely on private donors and volunteers. Private funds, for example, created the fantastically hi-tech Goldenberg-Ziman Special Care Center -- a facility for Alzheimer's patients scientifically designed to feel more warm and comforting by incorporating research into how the disease affects behavior.
"The fact that so many [nursing homes] in California are outdated is related to the [Medi-Cal] reimbursement rate that the state is willing to pay," said Forrest. "The way we were able to [expand] was through the generosity of donors."
Alex Padilla, president of the Los Angeles City Council, said cuts in state-level assistance mean city officials should be taking a harder look at health care.
"I think the city can be supportive, financially and otherwise, of organizations who are trying to fill a void," Padilla said
"I believe there are fundamental human rights, and among them is the ability to live your golden years with dignity. The Jewish Home for the Aging provides that," Padilla said.
And not just for the wealthy, either.
Learn to Work
In a final bit of governor-related activity, the California Performance Review (CPR), a four-volume compendium of proposed changes to California's government, was released by Schwarzenegger's team on Aug. 3.
Though the report suggests reforming everything from taxation to wildlife management, some of the most interesting suggestions concern the issue on which the state spends more money than anything else: education.
Enter the Department of Education and Work Force Preparation, the CPR report's answer to California's education woes. That department would set policy from preschool to the university level, and adjust it to fit "the needs of employers," according to the report.
"I think it's a misreading of the American public school and its history to say that good schools need to serve the marketplace," said David Tokofsky, who represents about 600,000 people on Los Angeles Unified School District's Board of Education.
"Good schools have a far more important role in invigorating democracy, the civic socialization role," he said.
At the head of this new bureau would sit the governor's own appointed secretary of education (currently Richard Riordan), not the state's superintendent of public instruction (currently Jack O'Connell), who is actually an elected official.
"There's a real danger in the attraction of nonelected people in charge of schools," said Tokofsky, who was first elected to the Board of Education in 1995. He noted that the nature of American federalism runs counter to centralizing all power in the hands of one official.
It's highly likely that the reforms contained in the CPR report will be picked apart, revised, edited and amended innumerable times before any are passed into law. Nevertheless, taken as indicators of this administration's values, they are very telling.
"It's an irony that the Republican Party that's always for the theme of local government against Democratic centralism, is, now in power, singing the very tune of what it condemned just years before," Tokofsky said.