Archive for the ‘Mike Genest’ Category

Why State Budget Cuts Always Screw Poor People

Saturday, May 30th, 2009

michaelcgenestCalbuzz sat in on a conference call with state Finance Director Mike Genest on Friday, in which he detailed the latest $3 billion of cuts Governor Arnold is proposing to close the Deficit That Ate Sacramento.

We’ll leave it to the indefatigable Weed Eaters of the Capitol press corps to explain the full, acronym-laden complexities of the newest whacks (bottom line: a 5% pay cut for 200K+ state employees, $680 million more from schools — total cut now = $6B — and a new $1.3 billion in misery for poor kids and folks who are old, sick or both).

The most salient, big picture point, however, came in Genest’s clear and direct response to a great question by Judy Lin of the AP, who asked why it was that all the pain of budget cuts seems to fall on the poor. Said Genest:

“If you look at what the government does, the government doesn’t provide services to rich people. We don’t provide many services even to the middle class. . .”

Amid the constant and confusing flurry of numbers in the ever worsening budget mess – this was the third revision in nine days of the budget plan approved three months ago — Genest reminded everyone of a few, basic facts that often get lost in the daily dizzying reports about California’s fiscal meltdown.

1. “The budget” that’s now being cut, re-cut and re-re-cut is the state’s General Fund. Financed by income, sales and other general taxes, it represents only about 70% of California’s total budget. The other 30% includes stuff like the DMV, CalTrans and various bond funds and is financed by earmarked money, or user fees like gas taxes or license registrations, and is doing fine.

2. The bulk of the General Fund budget for the current fiscal year, which totaled just over $100B when it was approved last September, pays for three big items in particular: public schools, health programs, and welfare benefits for the poor, aged, disabled and infirm.

3. That $100 billion has now been reduced, in real dollars, by 11 percent since September; with the latest reductions announced yesterday, it will be cut another $8 billion for the fiscal year that begins July 1, leaving $83.5 billion in general fund spending.

“You have to cut,” Genest said, “where the money is.”

FYI: That’s Willie Sutton, who, when asked why he robbed banks, famously said (or didn’t really), “Because that’s where the money is.”

Arnold’s Final Bid for Budget Ballot Props

Thursday, May 14th, 2009

heilarnoldArnold’s drop-by at his big press avail on the May budget revision was a case of the elephant giving birth to the mouse.

The administration has been putting out details of its worst-case/worser case scenarios for almost a week: more cuts for schools, early release of thousands of state prisoners, selling off everything but the Golden Gate Bridge. So there wasn’t a whole lot new in terms of the numbers, and the governor’s plaintive plea on behalf of his ballot props next Tuesday was definitely déjà vu all over again.

(The Department of Finance report on the two alternatives for addressing the deficit for the fiscal year that begins July 1 — $15.4 B if the props pass, $21.3 B if they don’t — is here.

That said, his Arnoldship did make at least a few interesting statements, starting with his introduction of Finance Director Mike Genest – “this man is on suicide watch” – that will frame yet another budget brawl, which will erupt next week as soon the election formalities are finished:

1-“To look for new revenues is out of the question.” It’s true that in negotiating this year’s budget deal, Schwarzenegger kept insisting that he’d never go for tax increases, right up until he did. But his position at this point is basically irrelevant; with the six Republican legislators who signed on to new taxes in February all being punished – by losing their leadership posts, facing recalls, or being shunned by the GOP caucus – it’s a safe bet that the death grip Reps hold on budget matters because of the 2/3rds requirement will now be tighter than ever. So look for lots of anti-tax triumphalism by the party of Grover Norquist, er, um, Lincoln.

2-“I absolutely despise taking money away from local government.” Besides looming battles over more cuts for education and cutting prisoners loose, the loudest fight will be over Schwarzenegger’s grab for $2 billion from local governments, in direct violation of his earlier promise not to do just that. With cities and counties scrambling to pay cops and firefighters while facing the same recession-level revenue problems as Sacramento, taking an extra hit so the Capitol Clown Show can pretend to balance the budget won’t be popular.

3-“You hope the economy is coming back.” That’s a bottom line underlying assumption of Schwarzenegger’s fiscal strategy at this point, whether the May 19 props pass or not. In addition to squeezing the locals by “borrowing” $2 billion, both his fixes also call for $6 billion in new borrowing through Revenue Anticipation Warrants and scheming to use federal stimulus money to backfill state cuts; in other words, kicking the can down the road, one more time.