ECCANDC

Assembly speaker says all must sacrifice for budget

After lengthy deadlock in Sacramento, Legislature approves and governor signs a revised budget that closes a projected $42 billion deficit.

 

Assembly Speaker Karen Bass was all smiles last Friday, the day Gov. Arnold Schwarzenegger signed the revised state budget that closed a $42 billion deficit. (Photo by Gary McCarthy)

By OLU ALEMORU, Staff Writer

Story Published: Feb 25, 2009 at 8:03 PM PST

Story Updated: Feb 25, 2009 at 8:03 PM PST

Assembly Speaker Karen Bass has warned that California residents will have to "share the pain and sacrifice" in the wake of the signing of the long overdue budget.

On Friday, Gov. Arnold Schwarzenegger signed a $130-billion budget that raises income and sales taxes across the state for the first time in 17 years while slashing spending by the sharpest rate in the modern history of California.

After 15 weeks of deadlock, the spending plan wipes out nearly a $42-billion projected deficit with tax hikes, deep program cuts and borrowing. It hinges on $5.8 billion contained in several ballot measures that voters must consider in a special election May 19.

With the spending plan in effect, state officials can again begin issuing income tax refunds, paying vendors and making payments to public assistance recipients, though payments could be delayed until there is enough money in the treasury.

The passage also allows road builders and local transit agencies to resume stalled construction projects.

The budget would temporarily raise the state sales tax, starting April 1, by one cent on the dollar and nearly double the vehicle license fee to 1.15 percent of the vehicle's value, starting on May 19. The package would increase personal income tax rates by a quarter-point.

"There will be severe cuts in every area and South Los Angeles in particular will feel a reduction in the safety net and disability," said Bass in an interview Friday. "But we all have to share the pain and sacrifice. To balance the budget you either have to cut programs or raise taxes. It is going to be tough, but we will have to let people vent. Everybody wants better services, but we don't necessarily want to pay for it."

Bass looked to President Barack Obama's recently signed federal stimulus package to offset some of the hardships in the state's budget package.
She also refuted any notion the Democratic leadership had been inexperienced in dealing with their Republican foes.

"Hopefully, job creation will come in the stimulus package and there should be some federal money to cover food stamps and medical payments," she said. "The last-minute passing of the budget was a major concern, but Monday morning quarterbacking is always nice.

"We already had the votes in the Assembly but the Republicans in the Senate were holding a gun to our heads. They were going to shut down 276 construction projects and it would have cost about $400 million to get them started again."

Los Angeles County will lose an estimated quarter-billion dollars over the next 18 months under the new budget, a county official said.

Most of the cuts will be in reimbursements for county services such as mental health or probation services, according to a memo released by county CEO William Fujioka.

The county budget for 2008-09 is $22.3 billion, of which nearly a quarter comes from the state.

Under the revised budget, state reimbursements to Los Angeles County will be cut by $154.4 million this fiscal year and $98 million the following fiscal year ending June 30, 2010, according to the memo.

The estimates do not take into account the governor's line-item vetoes.
This year, the new funding cuts will mainly target juvenile justice programs, including a $16.74 million loss for juvenile probation and camps.

Next year, the cuts will hit mental health services the hardest, with the county facing a $64.4 million reduction in Mental Health Services Act funds.

Some of the lost funding could be restored by federal stimulus revenues, according to the memo, including millions in health care dollars, Fujioka said.
Fujioka's memo also addressed the estimated impact from state payment deferrals.

The long budget delay has depleted state coffers, leading state Controller John Chiang to defer $3.3 billion in payments to local governments, state contractors and taxpayers, which prompted outraged local officials to sue Chiang for the missing funds.

A proposal to delay payments to counties for up to seven months for various programs, which would have deferred more than $1.4 billion in payments to Los Angeles County alone, was not approved by state lawmakers.

A three-month delay in payments to some health, mental health, and social service programs that was approved, however, could defer about $448.5 million due to the county, according to Fujioka.

The county has joined dozens of other counties in suing the state controller for the missing funds.

In a statement released by his office, Chiang blamed the governor and the Legislature for his actions.

"It took the governor and Legislature three months to agree on a solution to California's budget problems and left us today without enough cash in the state's bank account to pay all of our bills, paralyzed public works projects and made California the worst credit-rated state in the nation.

"Today's budget agreement is a long overdue step that does not immediately fill our treasury that has run dry. Because I have been forced by this situation to delay paying $3.3 billion this month to local governments, state contractors and even taxpayers themselves, the state still owes them the gratitude for their patience and for shouldering the real burden of gridlock."

City News Service also contributed to this story.