Public Eye: California’s Worsening Budget Crisis: The Second Shoe Drops

By Bob Burnett
Wednesday March 18, 2009 - 06:17:00 PM

It’s understandable that Californians breathed a sigh of relief on Feb. 19, when the state Legislature ended months of political gridlock and agreed upon a $144.5 million budget. Given America’s hard times, it’s likely that many Golden State residents turned their attention to pressing financial concerns such as holding onto their job or paying their mortgage. Nonetheless, Californians’ behavior is problematic because the issues that precipitated the fiscal battle have not been resolved and another serious problem has emerged: the possibility of an immutable spending cap. 

The Feb. 19 budget agreement had two components. The first closed the state’s $41 billion deficit through a combination of tax increases, painful service cuts, and $5.4 billion in new borrowing. However, to reach accord with a handful of Republican legislators to get the two-thirds majority required to pass the budget, Democrats were forced to agree to a second component, a May 19 special election where voters will decide on six budget-related propositions. Central to these is Proposition 1A that mandates a permanent spending cap. 

Proponents have labeled the labyrinthian Proposition 1A the “Rainy Day Budget Stabilization Fund” measure but a more accurate title would be “Proposal to Freeze California State Services at Current Levels.” Proposition 1A prohibits legislators from taking full advantage of additional revenues when California comes out of the recession and, instead, subjects service increases to an impenetrable equation including growth in the Consumer Price Index and state population. 

There are two problems with the notion of restricting service expenditures to a convoluted formula chiseled into the state constitution. The first is that it permanently locks spending to a baseline that is already too low to guarantee provision of adequate service. The second problem is that Proposition 1A shifts responsibility for future budget decisions away from the legislature and onto invisible state employees—primarily accountants—who would have to decipher the proposition’s abstruse language and perform the linear regression analysis required to determine the revenue cap. 

If Proposition 1A passes, most observers expect painful degradation of service. Jean Ross, Executive Director of the California Budget Project (, notes, “the baseline established by the proposed formula would be $14.2 billion below the amount needed to support the 2010-11 budget based on the governor’s long-term forecast.” Proposition 1A freezes service expenditures at a level that guarantees they will be inadequate in perpetuity. 

To better understand the dire consequences of Proposition 1A, it’s informative to examine the impact upon California education expenditures. The California budget agreement reduced the total 2008-09 funding level to $50.7 billion for K-14 programs, $7.4 billion (12.7 percent) lower than the level assumed by the 2008-09 Budget Act. Parents and teachers complained vociferously because even before these cuts, California schools were not performing. 

A Feb. 23 UCLA study declared, “California Schools Get Failing Grade.” The study went on to say, “California ranks near the bottom of all states in the number of students reaching their educational goals... California students generally have lower test scores than students across the nation... Only two-thirds of those students who started in [the high school class of 2006] went on to graduate. Of these, students prepared for and going on to attend college were abysmally low.” 

Writing in the Los Angles Times, journalist Peter Schrag deplores the “the Mississippification of California’s public services and governmental policy” and cites deterioration of the education system: “California’s college graduation rates are among the lowest in the country, our per-pupil funding of K-12 education is about 34th among the states, and 47th as a percentage of personal income.” Mississippification affects a wide array of California public services ranging from support for the aged to road repair. Passage of Proposition 1A would ensure the continued inadequacy of these services. 

Two steps need to be taken to bring sanity to California’s budget process. The first is for voters to reject Proposition 1A, the proposal to freeze California state services at current levels. The second step is for voters to change the rules governing preparation of the annual budget. California is one of only three states that require a two-thirds vote to pass a state budget. To get the Golden State back on track, the budget rule needs to be changed. It’s likely that subject will be addressed on the ballot for the June 2010 primary election. 

Barack Obama became President because he encouraged Americans to think positively about the responsibility of citizenship and take a strategic perspective that considers the future of our children and grandchildren. Californians must develop a strategic plan that paves the way to a positive future. We can start by agreeing that basic public services—such as education—need adequate funding and unite to defeat Proposition 1A on the May 19 ballot. 



Bob Burnett is a Berkeley writer. He can be  

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