After months of anticipation and negotiation, a bipartisan budget committee came up Monday night with a $26 billion revision that will address the state’s current deficit. The proposal saves – with some reductions – the Healthy Families insurance program, as well as the CalWorks and CalGrants programs. State parks will remain open and additional taxes on cigarettes, vehicle fees and oil drilling were avoided.

In fact, an oil drilling proposal, which has not been finalized, has the potential of bringing in $100 million annually by taking oil from off the coast of Santa Barbara. The message from voters that no new taxes would be tolerated was heard, as the proposal does not include any new taxes.

But a plan to take $4 billion in state funding from cities and counties, referred to by Speaker Karen Bass as making them “partners in the plan” was not received well by either the county or the city.

“Today the Los Angeles County Board of Supervisors expressed their intent to file a lawsuit against the state for the state’s proposal to hijack the county of funds generated locally so that the state can balance its budget essentially on the backs of our county taxpayers because of their inability to balance a budget which the county’s been able to do,” said Tony Bell, spokesperson for Supervisor Mike Antonovich.

“They are going to pass the pain on to county taxpayers. They won’t eliminate the unfunded mandates, so the county will be required to continue to provide services that the state demands but we won’t have the money to do it. Additionally, our fire districts will be impacted to the tune of $40 million initially. This is a very irresponsible, reckless act by the state.”

Santa Clarita City Manager Ken Pulskamp wasn’t too happy, but said it wasn’t unexpected.

“We’re very disappointed in the state, they’ve done a miserable job of balancing the states finances and now they’re trying to balance it on the backs of the counties, the special districts and the cities,” he said. “It’s a very sad day for California.”

Pulskamp said that city finance staff had already penciled out a “worst case scenario” for the $7.9 million dollars hit that Santa Clarita is expected to take.

“It’s $3.2 million borrowed from the General Fund monies, a $3 million take from gas tax and $300,000 a year from redevelopment monies for the next three years,” he explained.

While Los Angeles County gears up for a major lawsuit to stop the raid on their treasury, Pulskamp said the city has done what it could for an entity of its size.
“Larger entities or groups representing a special interest usually initiate the lawsuits,” he said. “We’ve already done quite a bit of lobbying and the local legislators are completely sympathetic to our position.”

Senator George Runner said that it’s a compromise that should temporarily help the situation.

“I think it is a partial solution,” Runner said. “I think we will be revisiting these issues in the future, the cuts were done are certainly shrinking the size of government, but some of the parts and pieces done to achieve the $26.5 billion involve a lot of detail that’s not going to get done until we come back next month.”
Runner said that cutbacks in the corrections budget purportedly involve the early release of some prisoners, a move he hopes to avoid.

“The corrections budget has been cut by $1.2 billion, but yet there are no specifics as to how that cut will be allocated. I imagine that will be talking about early release next month, but that could be pretty disastrous.”

He’s been working with law enforcement and corrections groups to make cuts that will make the system work better without endangering the public.

“We’ve been working with the Governor’s office about our juvenile facilities, for example,” he said. “We have seven and most of them are only half-full. We believe we can go ahead and consolidate those facilities down to two or three and save several hundred millions dollars; this would have nothing to do with releasing anybody early and will make the system run more efficiently.”

The state’s ability to borrow funds is governed by Prop 1A that passed in 2006. It requires that any monies taken from municipalities, special districts or agencies be paid back, with interest, within three years.

Assemblyman Cameron Smyth isn’t so sure of the state’s ability to do that.

“Certainly my biggest hesitation is borrowing from local governments. Just three years ago, I served on the city council when the state had come in and taken local government funding. I have a real problem with that philosophically.

“I don’t think it makes financial sense for the state,” he continued. “If we move forward and borrow under Prop 1A, the state has to pay that back within three years with interest and I’m not sure state will have that money. I don’t think that’s the best decision in the long term.  I will have to talk with my cities and counties and see what they have to say.”

“This is a budget solution that has plenty in there for Republicans and Democrats to hate and plenty in there for people to like as well, so it’s certainly a mixed bag, but under the circumstances we expected that,” Smyth continued.

He’s hoping there will be more definition as to what programs will be cut, now that the amounts of the cuts have been defined. He also echoes Runner’s concern about corrections having to let prisoners go before completely serving their time.

“A priority for me, without a doubt, is to prevent early release. This budget has so far avoided that.

Democrat colleagues see early release as a viable option. We were able to fight releasing criminals back into our communities before they’ve done their time.

Thursday, does expect vote from both houses.

A decision needs to be made, we’re burning through $200 million per week, the longer we wait, the greater the hit is to the state. This is the best deal possible, but it still needs to be sold to our respective caucuses.”

Smyth said that some resistance is expected.

“Unions have already spent several hundred thousand dollars in districts, including mine, dropping four or five hit mailers against me and my colleagues in an attempt to bully or intimidate us into raising taxes,” Smyth said. “In my case, certainly, that’s not going to happen, but it’s not just unions that are doing it; there are a lot of groups that are going to be walking the halls of the capitol in the next 48 hours.”

The three furlough days taken by state employees will continue, as that saves the state $1.3 billion. Union officials are asking their members to consider a strike to protest the furloughs. A vote of the legislature is expected on Thursday or Friday.

Near the end of the day Tuesday, State Superintendent of Public Instruction Jack O’Connell issued a statement about the budget proposal’s impact on schools.

“I am glad to see that the Governor and Legislative leadership have reached an agreement that addresses our budget shortfall and resolves our cash-flow crisis, at least for this year. Sadly, the agreement includes $7.6 billion in cuts in Proposition 98 funding. This new massive reduction, which is added to the $11.6 billion in school funding cut just last February, will result in very real consequences for students. Larger class sizes, canceled summer school, a shorter school year, and no new textbooks are just a few of the painful results. I fully recognize that given the magnitude of our state fiscal crisis, the pain for schools could have been worse than that created by the agreement that was reached. I am pleased that the agreement did not include a suspension of Proposition 98 and that schools eventually will get the approximately $9.2 billion that is owed under the Prop. 98 guarantee.

“Nevertheless, the reductions that our schools must absorb now will heighten the challenge educators face in trying to increase student achievement and close the achievement gap, and I fear that the last decade of progress in statewide student test scores will be interrupted. I continue to have faith in the hard work of our teachers, administrators, school staff, parents, and students, and I sincerely hope that this fear is proven unfounded.

“I am pleased that the California High School Exit Exam (CAHSEE) will remain as a condition of graduation for most students, but it is unfortunate that the agreement excludes the CAHSEE requirement for students with disabilities. Many thousands of students with disabilities have passed the Exit Exam, and many more will continue to take and pass this test. The Exit Exam requirement has pushed our system to help ensure that all students have the critical basic skills in English-language arts and math that are needed for productive work or college after high school. Eliminating this requirement for students with disabilities who are on a diploma track does nothing to help prepare these students for success after high school.”