State Senator Loni Handcock on Budget Impasse (July 10)

Subject: Senator Hancock's Budget Update
Date: Fri, 10 Jul 2009 17:00:34 -0700
From: Senator.Hancock@senate.ca.gov

Dear Friend,

Last week, as California's budget collapsed, the state Controller began issuing IOUs. This week, California's largest banks say they will soon stop accepting them. We have been brought to this place by the reckless and unnecessary choices made by Governor Schwarzenegger.

In June, Democrats passed a $23 billion budget reduction package - the Governor vetoed it. The package had more than $11 billion in heartbreaking cuts which no Democrat wanted to make. However, we refused to shred the safety net for millions of human beings, as the Governor demanded. We recognized the crisis and made more than a good-faith attempt to address hard economic times and meet the Governor halfway.

After the veto, Democrats attempted a second compromise. We proposed a $23 billion package, this time without taxes - just as he demanded. It included cuts to almost every health and welfare program but still protected the safety net for millions of Californians, although at a very
minimal level. We were able to do this without new revenue by re-allocating $1 billion of redevelopment funds and using $1 billion of reserve funds. A rainy day fund of $3 billion remained. Once again, the Governor refused to meet us half-way.

Then, as June came to a close, the Governor rejected the Legislature's attempt at a short-term solution that would have taken us through the summer and avoided the need to resort to IOUs. With that irresponsible act the Governor dug the state into an even deeper hole, adding at least $3 billion to the deficit. That means that more money will need to be cut from schools, cities, parks and health care.

Now the Governor is demanding long-term policy changes that have been repeatedly turned down by voters through the initiative process and that he cannot get approved through legislation. The Governor is insisting on his way or the highway, and refusing to compromise.

As a result millions of Californians will suffer - and I'm learning that it takes a lot of human suffering to reach even $1 billion in cuts. It didn't have to come to this. California has reasonable and legitimate options to raise revenues: An oil extraction tax (California is the only oil producing state without one) and a tobacco tax, for example, are two such options.

Additionally, we have the largest cash reserve the state has had in 20 years. If reserves are meant to be used on a "rainy day", now is certainly the time to use them. But, the Governor says no.

Rather than move toward compromise, the Governor's position seems to have hardened in recent days, veering away from working together to find a reasonable solution. As a result, we will pay millions more in interest payments and families and small business people throughout the state will face hardship and an uncertain future.

If you would like to see more detailed information about the inaccuracy of the Governor's statements regarding the state's safety net programs, I recommend an analysis prepared by the California State Association of Counties. [loads in Safari but not in Firefox]

Additionally, Assemblywoman Noreen Evans, Chair of the Assembly Budget Committee, has provided a comprehensive analysis of what's wrong with the Governor's so-called "reform" proposals.

I hope that you will continue to make your views known to the Governor on this crucial matter. As always, I look forward to hearing your comments and suggestions.

Sincerely,

Senator Hancock
9th District, California State Senate