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California Budget Crisis for 2010

Where to begin? Is the 2010 California Budget Crisis really a carryover from the 2009 budget crisis or the 2008 budget crisis?  Or is the 2010 budget crisis really the 2003 budget crisis only worse? Certainly a case can be made for a bit of both. Regardless, the 2010/2011 State budget development will be painful. Having used every accounting ploy and raid of funds possible, 2010/11 is a year of reckoning. In the Governor's State of the State, he lays out a promise to hold line on education cuts, but his budget will tell the tale. As you might expect, everyone had their own spin in reaction to the Governor's speech.  A 100 days after the July 1st, a budget was signed by the Governor. The initial analysis by California School Boards Association shows Prop 98 suspension for 2010/11 and exposure to possible midyear cuts.

Background Documents

EdSource Analysis of  2010/11 Budget December, 2010
CSBA Analysis of 100 Day Late 2010/11 Budget October, 2010
2011 Beacon Economic Forecast for City of Alameda September, 2010
LAO Report on Mandate Reform March, 2010
CSBA Legislative Review of Governor's Proposed 2010/11 Budget - January 14, 2010
2010 Beacon Economic Forecast for CSBA Annual Forecast Meeting- January 14, 2010 
LAO Overview of the Governor's 2010-11 Budget - January 12, 2010
Governor's January 8 Budget Document
2009 Economic Forecast prepared for CSBA by Beacon Economics
2010 Budget Process Overview and Review of May Revise from CSBA - May 22, 2010
EdSource Executive Summary 2010 Outloook
LAO Fiscal Outlook 2010 and Beyond - November 2009
State and Federal Representative Contact Information
Prior Year Links
AUSD Finances

January Developments

On January 8, the Governor released his budget for 2010/2011. While LAO indicated that Governor's budget was realistic for state revenues, the Governor's reliance on Federal reimbusements has downside risk. At CSBA Annual Forecast webinar, chief economist Dr. Chris Thomberg expected a SLOW recovery with a possibility of a mild recession in 2011. He did pointed forecasting in these tiem where teh Federal govenrment is proppong up the economy with policy decisions makes it difficult to predict.

Governor's State of the State

Prepared text of Gov. Arnold Schwarzenegger's State of the State address:

I want to begin with a true story from which we can draw a worthwhile lesson.

As you might guess, the Schwarzenegger household is something of a menagerie.

An Austrian bodybuilder, a TV journalist, four children, a dog, the normal goldfish and hamsters and so forth -- and in recent years we added a miniature pony and a pot-bellied pig.

It's not unusual for me to look up from working on the budget or something to find a pig and a pony standing there staring at me.

Now, the dog's food, which we keep in a canister with a screw-on lid, sits on the top of the dog's kennel.

The pony has learned to knock the canister off the top of the kennel, and then he and the pig wedge it into the corner.

There's this ridge on the lid of the canister, and the pig with his snout pushes this ridge around and around until it loosens, and then they roll the canister around on the floor until the food spills out.

I don't know how they ever figured all of that out.

It's like humans figuring out how to create fire.

But it is the greatest example of teamwork. I love it.

So one lesson to draw from the pig and the pony story is what we can accomplish when we work together.

And last year we here in this room did some great things working together.

We had a pig and pony year.

Now before some reporter writes that I compared the legislature to a pig or a pony, that is not the message at all.

Together, as a team -- as fractious, tentative and uncertain as it might have been -- together, we got California through the front end of the worst financial crisis since the Great Depression.

Although not without pain, we closed a budget gap of 60 billion dollars!

These decisions were very hard for both sides of the aisle.

On the Republican side, we had leaders who sacrificed their careers or put them at risk.

On the Democratic side, we had legislators who were threatened by their own interest groups.

To those on both sides of the aisle who took these risks for the good of the state, you have my deepest admiration.

We did what we had to do.

We made painful spending cuts. We passed temporary tax increases. We permanently eliminated COLAs for most state programs.

We made major reforms in welfare and parole.

And there are two accomplishments in particular I want to recognize.

Just last night the Assembly passed major educational reform, reform that once seemed impossible, but now will become law as soon as it hits my desk.

For too many years, too many children were trapped in low-performing schools.

The exit doors may as well have been chained.

Now, for the first time, parents -- without the principal's permission -- have the right to free their children from these destructive schools.

That is a great freedom.

Also in the past, parents had no power to bring about change in their children's schools.

But that will now change.

Parents will now have the means to get rid of incompetent principals and take other necessary steps to improve their children's education.

To increase accountability, we broke down the firewall so that teacher performance can be linked to student performance.

Another major accomplishment: for decades this state was in a literal war over water, with old and deep divisions, Northern California versus Southern California, Democrat versus Republican, farmer versus environmentalist, business versus labor.

We here in this room made history with the most comprehensive water package in nearly half a century.

Working together, we got it done.

And now we must work to pass the 11 billion dollars in water bonds that will be on the ballot in November.

Some people say... how can we afford these bonds in the current economic climate?

I say, how can we not?

It is the law that you cannot build a school; you cannot build a factory; you cannot build an office building or a housing development without identifying a source of water.

As a result, huge projects with thousands of jobs have been put on hold.

Our economy cannot grow without water. Our population cannot live without water. It is our state's lifeblood.

Now is exactly the time to invest in it, so that when Californians turn on the faucet, there is safe, reliable and clean water coming out the tap -- not just five years from now but 30, 40 or 50 years.

Now, the coming year.

If I had to summarize in one word our focus for the coming year, it would be the word "priorities."

We have to get them straight and we have to keep them straight.

The first priority for the coming year is the economy and jobs.

The people and businesses of California are an engine of self-betterment and progress.

As long as government keeps the engine oiled with prudent policies -- and more importantly -- does not pour sand in its gears, this state will persevere and prosper.

I will come to the main thing we can do to help the economy in a moment, but there are four proposals to spur job growth that I will introduce.

First, you will receive a $500 million jobs package that we estimate could train up to 140,000 workers and help create 100,000 jobs.

Second, you will receive a measure to streamline the permitting of construction projects that already have a completed environmental report.

Third, to stimulate other construction jobs, you will receive a proposal for homebuyer tax credits of up to $10,000 for the purchase of new or existing homes.

And fourth, since we want California to be the dynamo of green technology, I ask you to pass our proposal exempting the purchase of green tech manufacturing equipment from the sales tax.

That, too, means jobs -- jobs for the new economy.

While we still have a long way to go, the worst is over for California's economy.

And the really good thing is that we have the right economic mix going forward -- high tech, green tech, bio-tech, Hollywood-tech, farmer-tech and so forth.

Our economy is well-positioned to take advantage of the future.

So let me tell you the main thing that we here in this chamber can do to help the economy and jobs. We can be a better partner to the economy. To strengthen the economy, which is the foundation of all jobs, we here in this chamber must reform California's budget and tax system. That would be a huge stimulus.

The basic problem is that our tax system does not reflect our economy.

In 2009, California's economic growth declined 2.8%...but our tax revenues were down more than 8 times that much.

Our economy is diverse, whereas our tax system is not.

144,000 taxpayers pay almost 50 percent of all personal income taxes.

Think about it. 38 million Californians have to rely on 144,000 people for their schools, their fire protection, their health care, their public safety and many other services.

That makes no sense.

Here is what we need to accept: our economy is 21st Century, but our tax system is 20th Century. p>It's stuck in the wrong century.

The Tax Reform Commission did its work and came up with a plan for reform that was praised by both Willie Brown and the Wall Street Journal.

How often does that happen?

The Commission proposed major, radical reforms.

Some people say they are too bold and thus they would be too hard to enact.

What do they mean too bold?

Bold is what we do in California.

What do they mean too hard? If I had hesitated to attempt something because it was too hard, I'd still be yodeling in Austria.

We must begin work on these tax reforms because we simply cannot wait for the rich to bounce back.

State revenues are not expected to return to where they were until 2013 to 2014.

I sent you the Tax Reform Commission's plan in late September, but it seems to have disappeared somewhere under this dome.

Where is it? Maybe the pig and the pony have taken it.

But I am looking forward to working with the legislature to get this done.

Budget reform is just as important.

The budget crisis is our Katrina. We knew it was coming. We've known it for years. And yet Sacramento would not reinforce the economic levees.

In addition to taking action on the Commission's plan, I ask you to also take action on the Best Practices Budget Accountability Act, which has been drafted by the reform group, California Forward.

I especially support its proposals for performance-based budgeting and applying one-time spikes in revenues to one-time uses, such as debt reduction, infrastructure and the rainy day fund.

The leaders of this body have said that the legislature should be given a chance to enact reforms before reforms go directly to the people.

Here is that chance. I urge you to take it.

And as we struggle to overcome our differences, what I ask you to remember is that the current tax and budget system is cruel.

It is cruel because it is forcing us to make a Sophie's choice among our obligations.

Which child do we cut? The poor one? The sick one? The uneducated one? The one with special needs?

That is cruel.

We overcame the divisions on water. We can do it on the tax system and budget systems. I will address our immediate budget situation more fully in a few days, but let me give you an overview.

We face a $19.9 billion deficit -- $6.6 billion for the rest of this budget year and $13.3 billion for the upcoming budget year.

Big picture, let me tell you what will be required.

First, as bitter as the words are in my mouth, we face additional cuts.

We know what that means.

We know the pain it entails.

What can we say at this point except the truth? That we have no choice.

But I am drawing this line. Because our future economic well-being is so dependent upon education, I will protect education funding in this budget.

And we can no longer afford to cut higher education either.

The priorities have become out of whack over the years.

Thirty years ago 10 percent of the general fund went to higher education and 3 percent went to prisons.

Today almost 11 percent goes to prisons and only 7 1/2 percent goes to higher education.

Spending 45 percent more on prisons than universities is no way to proceed into the future.

What does it say about a state that focuses more on prison uniforms than caps and gowns?

It simply is not healthy.

I will submit to you a constitutional amendment so that never again do we spend a greater percentage of our money on prisons than on higher education.

The way we get this done is to find more cost-effective ways to run our prison system and allows private prisons to compete with public prisons. Competition and choice are always good.

California spends $50,000 per prisoner.

By comparison, the ten largest states spend $32,000.

They spend less, and yet you do not see federal judges taking over their prison health care.

Why do we have to spend so much more than they do?

If California's prisons were privately run, it would save us billions of dollars a year.

That's billions of dollars that could go back to higher education where it belongs and where it better serves our future.

Choosing universities over prisons: this is a historic and transforming realignment of California's priorities.

If you have two states and one spends more on educating and one spends more on incarcerating, in which state's economy would you invest?

I ask you to make the right choice for California.

Another major item is this: federal funds have to be part of our budget solution because the federal government is part of our budget problem.

When President Clinton was in office, California got back 94 cents on the dollar from the federal government. Today we get only 78 cents back.

Texas gets 94 cents. Pennsylvania gets $1.07. Alaska, with all its oil, gets back $1.84 for every dollar. New Mexico gets $2.03.

This should be more fair and equitable.

We are not looking for a federal bailout, just federal fairness.

Californians carry a special burden since we are a border state.

The federal government alone controls immigration policy. It alone controls border security.

While acknowledging its responsibility, the federal government is not even funding a 50-50 split of the costs of undocumented immigrants.

We can no longer ignore what is owed to us, or what we are forced to spend on federal mandates.

We are currently owed billions of dollars by the federal government for various programs.

We need to work with the feds so that we can fix the flawed formula that demands that states spend money they do not have.

Now Congress is about to pile billions more onto California with the new health care bill.

While I enthusiastically support health care reform, it is not reform to push more costs onto states that are already struggling while other states get sweetheart deals.

Health care reform, which started as noble and needed legislation, has become a trough of bribes, deals and loopholes.

You've heard of the bridge to nowhere. This is health care to nowhere.

California's congressional delegation should either vote against this bill that is a disaster for California or get in there and fight for the same sweetheart deal Senator Nelson of Nebraska got for the Cornhusker State. He got the corn; we got the husk.

Now, another priority relating to the budget is pension reform.

The cost for state employee pensions is up 2,000 percent in the last ten years, while revenues have only increased by 24 percent.

The pension fund will not have enough money to cover this amount, so the state -- that means the taxpayer -- has to come up with the money.

This is money that is taken away from important government services.

This is money that cannot go to our universities, our parks and other government functions.

Now, for current employees these pensions cannot be changed -- either legally or morally.

We cannot break the promises we already made. It is a done deal.

But we are about to get run over by a locomotive. We can see the light coming at us.

I ask the legislature to join me in finding the equivalent of a water deal on pensions, so that we can meet current promises and yet reduce the burden going forward.

These are serious issues we face.

Every year, in spite of whatever challenges are before us, I stand up here and tell you how much I believe in California's future.

I tell you how much I believe in the dream.

Some people think, "Ya, ya, ya, that's just Arnold being optimistic."

But I am not alone in believing these things.

Time magazine recently did an article about California that sounded like one of my speeches.

I would like to read you a few sentences. Time wrote:

"(California) is still a dream state. In fact, the pioneering megastate...is still the cutting edge of the American future -- economically, environmentally, demographically, culturally, and maybe politically.

It is the greenest and the most diverse state, the most globalized...when the world is heading in all those directions.

It's also an unparalleled engine of innovation, the mecca of high tech, biotech and now clean tech.

In 2008, California's wipeout economy attracted more venture capital than the rest of the nation combined."

So... now do you believe me?

California has the means and the mindpower to solve its problems.

Sometimes we are just too close to the problems to see the positives, and we need to step back.

A couple months ago I was in Iraq visiting our men and women in uniform, and of course many of them were from California.

They have seen and experienced some hard things.

Many have served tour after tour after tour. As a result, some have lost homes, spouses, limbs and lives.

Too often our soldiers bring back the enemy with them in their heads.

We are seeing a lot of post traumatic stress syndrome. The suicide rate is disturbing.

California has more returning veterans than any other state, so our state, as well as the federal government, has a special responsibility.

You will see that in our agenda.

We have a fundamental obligation to anyone who has shed or risked blood for this country.

That is a priority.

Their sacrifice is extraordinary and never fails to inspire me.

And if you look to the gallery, you will see some Californians wearing the uniform of our country who have just returned from Iraq and Afghanistan.

To each of you, I say, "Welcome home."

No matter how big the problems are that this state faces, no matter how harsh things may seem to us in the months ahead those Californians in uniform will tell you that this is still the greatest place to come home to, the greatest place to pursue a better life.

Just ask them how often they dreamed of being back home here in the Golden State.

Ladies and gentlemen, in closing, we in this chamber must fulfill our sacred trust to keep California a great place to come home to, for our men and women in uniform and for generations of Californians yet to come.

Thank you very much.

Reaction to Governor's State of the State Speech

Sen. Gloria Romero:

"Today we heard Governor Schwarzenegger commit to California's economic recovery by protecting our public education system. I am encouraged by his message underscoring the importance of reforming allocating our budget dollars to education rather than incarceration. This is the type of transformative thinking we need to ensure that California remains the Golden State. The Governor also committed to signing the Race to the Top legislation that we have been working on since President Obama issued his challenge back in July. I am happy to report that in this marathon of a race for real and bold education reform, today we will cross the finish line and deliver him this Race to the Top legislation that will allow California to Stand and Deliver on the promise of a quality education for all."

Sen. Sam Aanestad

"It was a very good speech in my opinion. He was emotional. He looked relaxed. His priorities are straight. He wants teamwork. He believes in creating jobs, jobs, jobs. He believes in cutting bureaucratic red tape for key construction projects and exempting green technology from the state sales tax. These are issues that Senate Republicans can support."

Sen. Roy Ashburn

"The new home buyer tax credit should be extended as Governor Schwarzenegger has proposed," Ashburn said. "It is imperative that we focus on job creation this year and this program has not only generated thousands of jobs but raised consumer confidence, and produced badly needed revenues for vital state services, as well."

Sen. Dave Cogdill

"Apologies to Yogi Berra, but it's déjà vu all over again. The state's budget challenges once again will take center stage this year and I applaud the Governor for approaching solutions to the state's chronic fiscal woes with the same tenacity as his first years in office.Ensuring more Californians receive paychecks rather than unemployment checks should be the Legislature's top priority because it is the most effective and responsible way to climb out of this recession.For years, Senate Republicans have been calling for California's fair share of federal tax dollars. Whether it's due to the burdensome costs of housing illegal immigrant prisoners or Washington, D.C. attaching strings to state funding, California taxpayers send significantly more to the nation's treasury than we receive in return. Make no mistake about it - 2010 will be a tough year but it's our duty to act decisively and enact permanent reforms to end the state's continued fiscal roller coaster."

Sen. Dave Cox

"The State of California is facing a $20 billion deficit. The Governor and Legislature must focus on ways to help bring back jobs for Californians. Assembly Bill 32 must be repealed to spark jobs creation. While an infusion of federal dollars is helpful - and the federal government should pay for its costs of social programs and mandates - federal funding alone will not solve the state's ongoing financial woes.The difficult decisions must be made now. There are no easy choices. We need a real budget process this year. Every program must be examined. We must change what we have been accustomed to doing. The current process is clearly not working. As I implored in various correspondences with legislative leaders, each and every Senator must be accountable for the budget. This means that every member of the Senate must sit on the budget committee and a budget subcommittee. By forcing all lawmakers to focus on the budget and the services that are offered by the state, Senators will gain a deep level of understanding for each program and its effectiveness."

Sen. Bob Dutton

"I support Governor Schwarzenegger's call to make private sector job creation and regulatory reform a priority in 2010. The only long term solution to this state's continuing budget crisis is to create a healthy economy - one that allows for private sector jobs to grow and expand. To do that we must do everything we can to eliminate the unneeded and unnecessary regulations and hurdles that have caused California to be the most expensive place in the nation to do business. I look forward to working with the governor to bring commonsense back to California government."

Sen. Tom Harman

"Jobs, jobs and more jobs. California needs jobs and today the Governor gave us a roadmap for putting Californians back to work. If we can get people back to work and get away from the notion that big government is good government there is actually a chance to turn this state around."

Senate Republican leader Dennis Hollingsworth

"In the past year, our state has furloughed employees, issued IOUs as payments, and watched its credit rating drop to the lowest in the nation while unemployment rose to one of the highest. Controlling our state spending and ending the regulatory barriers that prevent job growth need to be the focus of our state elected officials in 2010. Succeeding at those tasks will revive our state economy."

Sen. Bob Huff

"California is in shambles. Our unemployment rate is the highest it has ever been, and businesses are being fatally strangled by the onerous regulations being imposed on them by the state. I believe the Governor realizes the severity of the situation and I agree with his assessment that the budget is "California's Katrina." I approve of his action to call a special session on the budget, and I commend his efforts to stem the bleeding of jobs. No longer can lawmakers sit back and simply wish more jobs into place. Instead, we must set aside our own self-serving interests and take meticulous, calculated steps to reform the way government works.Without a doubt, the biggest challenge California faces in 2010 is the inevitable collapse of our fiscal house. We are hamstrung by a budget crisis that dwarfs all other issues, and state lawmakers must set aside their comfort in the continuation of the status quo. I have faith that this year will be the year to bring jobs back to California. It's time to roll up our sleeves and get dirty. Democrats and Republicans must strive to work together on the major issues facing California, and I look forward to working with the Governor on the bold reforms he outlined in his address regarding a realignment of universities and prisons. I will, however, ensure that these priorities do not sacrifice the safety of the public."

Sen. Abel Maldonado

"I am glad to see that the governor has made job creation his top priority. Every aspect of his speech--from job training and tax credits, to education funding, to receiving our fair share of federal money, and helping our veterans transition to civilian life--will all stimulate job growth and economic recovery. We must commit ourselves as a Legislature to putting California back to work. We must ensure that the federal government pays us the money that is owed to us so we can pay our bills and pay for federal mandates.I look forward to working with the governor and the Legislature on carrying out the governor's aggressive agenda this year."

Sen. George Runner

"The Governor hit the nail on the head when he said job creation is California's number one priority. Unfortunately, he rests too much hope on creating 'green' jobs, which do nothing to help the majority of employers or the unemployed. He should focus more on removing the burdensome hurdles created by government. The Governor must keep in mind that government does not create jobs; small business owners and entrepreneurs do."

Sen. Tony Strickland

"I commend the Governor for putting jobs first. Job creation should be our number our first, second, and third priority. The legislature needs to focus on bring jobs to this state."

Sen. Mark Wyland

"California's number one focus must be job creation and developing incentives for businesses to stay in our state. I agree with much of the Governor's plan to get California's economy back on track, especially the idea of streamlining excessive regulations that are often a major cause of business relocation and job creation in other states. Further, while I support sales tax exemptions for green tech manufacturing equipment, this benefit must be applied to every business sector, as it is in virtually every other state in the nation. The Governor and the Legislature must champion any legislation that reduces regulations that further hamper California's business climate. That's why I've called on the Governor and our Legislative Leaders to stop hearing all unnecessary legislation this year while we concentrate on controlling our spending and taking action to stem job losses and create more jobs in California."

Assembly Democrats

Assemblyman Mike Eng

"Overall, I was pleased with the Governor's seventh and final State of the State address this morning. I found the main focus of his address - job creation and strengthening our economy - to be fitting and well received by the Legislature. Most importantly, he said he was serious about working closely with the Legislature in order to fix our budgetary challenges. I just hope he is serious this time.Year after year, the Governor's extremely partisan and unrealistic budget proposals have not only been proven to be gimmicky and ineffective, but they have added to the public's frustration with Sacramento. If he really wants to solve California's budget problems, he really has no choice this time but to work closely with the Legislature, be straightforward with the electorate and make sure that his proposed solutions don't become next year's problems, again."

Assemblywoman Noreen Evans

"I welcome the more collegial tone the Governor set in his State of the State address today, but I am very skeptical about many of his proposals. I hope the governor's collegial tone today will foster a more collaborative relationship with the Legislature. We all need to work together. But actions will speak louder than words. The governor rolled out many radical proposals with precious few details. For example, it is very hard to imagine how privatizing the state's prisons will save the state's schools. The governor made huge claims about what his ideas can achieve if enacted. But he must first prove that real benefits are to be gained.The brightest spot in his speech today was his promise not to cut education. I applaud the governor for prioritizing education. At the same time, I fear the governor's choice of words today will become his refrain for destroying life-saving and sustaining services in California. Saying 'we have no choice' is not leadership. It's an excuse for avoiding hard decisions about priorities. And, there is no greater priority in this state than its people. They will be my priority."

Assembly Republicans

Assemblyman Anthony Adams

"While last year the Legislature made progress in reducing the deficit, it was only the tip of the iceberg. Now, we must continue finding honest and responsible solutions to closing the state's budget deficit. There are no more gimmicks left in the bag, the Legislature must make the tough choices this year necessary to get California through these difficult times. With California facing double-digit unemployment numbers, finding and attracting jobs to get people back to work has to be the state's top priority. By encouraging job creation, the state will have the resources it needs to fund the important budget priorities shared by working families."

Assembly Republican leader Sam Blakeslee

"California cannot cut or tax its way to prosperity. California's economic recovery depends on jobs. Californians need jobs and the state needs the resources they provide to fund our classrooms and protect essential services. We agree with the Governor it is time to streamline bureaucracies, rationalize a dysfunctional regulatory system and put a stop to frivolous lawsuits. These reforms will help return jobs and prosperity to California."

Assemblyman Ted Gaines

"Californians have faced some of the harshest times in recent memory, and the Legislature simply cannot afford to impose billions in new taxes and spending that are driving jobs away. It is essential that the Legislature make the tough choices now to close the deficit and do whatever it takes to bring back jobs to Californians.I share the Governor's commitment to reach a bipartisan solution on the crucial budget decisions that must be dealt with immediately to solve our state's spending problem, ensuring we don't face the same crisis in the future. I will continue working tirelessly with the Governor and my colleagues to find a solution that does not rely on tax increases, includes job-creating tax incentives, calls for regulatory reform and will not further the burden on hard-working California families."

Assemblyman Cameron Smyth:

"I'm excited about the opportunity to work with Governor Schwarzenegger on his California Jobs Initiative. The Governor's renewed commitment to business retention and tax relief for first time homebuyers compliments an aggressive agenda that Assembly Republicans will be rolling out over the coming weeks to put California jobs first. Getting people back to work and encouraging investment within our state are the first of many long-term solutions necessary to restore California's status as the Golden State."

Assemblyman Mike Villines

"There is no question that California continues to face serious budget problems for 2010. Because of this, it has never been more important for the legislature to work together to bring revenue in line with spending and get our budget priorities straight. Like the Governor, I agree that our top priority should be California jobs and passing policies that attract and retain jobs in California. Getting Californians back to work is the best way to get our state back on track. The Governor rightfully focused on the teamwork that led us through the recession in 2009 and I know that this continued bipartisan cooperation will bring us through the challenges of the coming year."

Constitutional Officers

Controller John Chiang

"A year ago, I told the Governor and Legislature that without their courage and collaboration in fixing the budget, there would not be enough cash in the treasury to pay for hard-working Californians' tax refunds through the spring, and local governments would be hung out to dry. Our cash crisis last year was a shameful chapter in California's history and a dark reminder of the consequences of a government's reluctance to make tough decisions quickly. We are a year older, and I hope we are a year wiser. Although the deficit is a third of the size of what we faced last year, the one-time solutions and accounting tricks in the last budget pushed more problems into 2010. There are no easy cuts to now bare-bone programs, and federal stimulus funds are drying up.I hope we have learned that the best prevention against future payment delays and IOUs is for the Governor and Legislature to quickly provide lasting, responsible budget solutions. I look forward to updating the State's cash outlook for the year as soon as I have the opportunity to test the cash flow data in the Governor's budget proposal."

Party Officials and Advocacy Organizations:

John Burton, chairman of the California Democratic Party

"For the last three years the budget has been balanced on the backs of the aged, the blind, the disabled, the poor and those who are without a strong voice in Sacramento. Our sincere hope is that the governor's call for teamwork extends to members of his own Republican Party in the legislature. California Republicans should at least consider, if not agree to, a tax on oil company profits instead of insisting on what amounts to wholesale divestment from California."

Carmela Castellano-Garcia, president and CEO of California Primary Care Association

"California's health centers are happy that Governor Schwarzenegger has decided to prioritize job creation and economic stimulation in his final year in office. We hope that his budget proposal on Friday will reflect that health centers are economic engines in our low income communities and save this state millions of dollars each year by giving the unisured and under-insured a medical home outside of our costly emergency rooms."

Russell S. Gould, Chairman of the UC Board of Regents

The Governor's call for shifting state priorities toward higher education is an insightful and essential action. With his higher education proposal, the Governor has acted to take what could be a monumental step forward for the state. As Chairman of the Board of Regents of the University of California, I look forward to exploring the details of the Governor's idea with my colleagues and to working with the Governor and the Legislature to advance the cause of adequate higher education funding. Securing the funding of higher education is securing the promise of California. The trend of chronic disinvestment in the University of California and the California State University systems must be reversed. The road to a stronger economy and a brighter future for California runs straight through its great public universities.

Frank Mecca, Executive Director of the County Welfare Directors Association

"The Governor says he wants to create jobs, but devastating cuts to the social safety net have killed jobs and dimmed the employment prospects for tens of thousands of California families and children. The Governor's cuts to child care and support services for CalWORKS families will diminish the chances of finding work for almost 40,000 families, and his threatened elimination of the In-Home Supportive Services program will put 350,000 people out of work instantly and increase California's unemployment rate from 12.3 to 14.2 percent. The Governor's 2009 veto of $120 million in services to foster youth will make his goal to reduce prison costs an even higher hurdle; the transitional services he single-handedly eliminated are what often makes the difference in leading a child who ages out of foster care toward employment and a productive adulthood, rather than a life on the streets or in jail.If the Governor's rhetoric is to match reality, he and the Legislature will have to hold the line against more cuts to the services that displaced Californians need to get back to work and to a tattered safety net that is the only thing keeping millions children fed, out of harm's way, and enabling hundreds of thousands of seniors and people with disabilities to live safely in their homes."

Alissa Ko, President of the California Young Democrats.

"In a state that used to be the embodiment of the American Dream, we now allocate more money to our prisons than our schools, offer corporate tax breaks while raising tuition on all California college campuses, and see CalWorks on the chopping block when more people than ever have need of it. Our legislators need to stand up to the Governor, letting him know that this is not acceptable. In a situation where everything that can be cut has been cut already and there's no fat left to trim, revenue enhancing options must be found."

Ron Nehring, chairman of the California Republican Party

"Too many Californians are hurting because the state's economy is still lagging way behind the nation's, with higher unemployment and slower growth. The Governor made it clear that improving California's economy is his top priority in 2010 by promoting economic growth and the job creation that comes with it. Solving the state's current budget crisis starts with fixing the health of California's economy. Increasing the number of available jobs, supporting small business development, and allowing for more shovel-ready projects to actually get their shovels in the ground will finally create the positive economic results that Californians desperately need. With California already at the economic brink, we don't need more job-killing policies from the Democrats. This is a critical time for all Californians and, hopefully, the Democrat legislators will stop taking their orders from the public employee unions and special interest groups that willingly stand in the way of opportunity, and realize that higher taxes and more red-tape will end up destroying the dream that made California great. We support the Governor's efforts to re-establish California as a business-friendly environment and help make the Golden State golden again."

Art Pulaski, executive secretary-treasurer of the California Labor Federation

"At a time when California families are desperate for real leadership, Governor Schwarzenegger showed once again that he isn't up to the task. The last thing our state needs is more of the same: policies that favor wealthy corporations at the expense of the middle class and economic recovery. Working people deserve a better plan than our Governor is giving us. Schwarzenegger's plan to balance the budget on the backs of working people while giving a free ride to corporations and the wealthiest Californians will bankrupt the state and prevent economic recovery. The Governor's tax reform proposals would shift the burden of funding state services from the wealthiest 1% to the middle class, while decreasing revenue overall. Real reform would close corporate tax loopholes that bleed billions of dollars away from state services every year."

Anthony Wright, executive director of Health Access California

"The Governor's speech was anti-jobs and anti-health care. The most effective way to create jobs is invest in Californians, and in their health and in services to help all of us get through a tough time. The investment's impact would be multiplied because of federal matching funds, further helping our economic recovery. Yet the Governor proposed tax cuts and credits that would force even deeper reductions in health and human services, resulting in not just more lost jobs but also lost federal matching funds needed for our economy. And the Governor opposed a health reform that would actually provide significantly more money for California families, our health system, and our economy."

Mark Yudof, President of the University of California

"This is a bold and visionary plan that represents a fundamental restoration of the values and priorities that have made California great. I am extremely pleased that the Governor understands how vital it is to return the University of California and the California State University system to solid financial footing. Over the long term, the Governor's proposal will provide California's public universities with much-needed stability to plan for the future and to maintain affordability, access and excellence. In the short term, however, there are still critical budget shortfalls that will require the attention of the Governor and the Legislature.Our public universities have been powerful engines of economic growth and social advancement in the past and will be even more vital in the knowledge economy of the future. Any money spent on them should never be seen as a cost, but as an investment in California. I am delighted that Governor Schwarzenegger recognizes the need for our state to invest again in education and innovation. I look forward to working with the Governor and with the Legislature to see that this proposal reaches the ballot so that the people of California may have a voice in their own future."

Allan Zaremberg, CEO of the California Chamber of Commerce

"Governor Schwarzenegger's commitment to creating private sector jobs and improving California's economy is the key to solving the state's chronic budget crisis. The Governor's job proposals are an important step forward in generating the kind of revenue California needs to fund essential programs like education and healthcare. The Governor's job creating proposals mirror the priorities of all Californians and help restore their hope of an improved quality of life."

State and Federal Representatives

Senator Feinstein
Senator Boxer
U.S. Representative Pete Stark

Suggested topics for Federal representatives include:

  • improving funding Special Education (AUSD services provides exceed reimsbursement by over $5 million a year)
  • improving funding for No Child Left Behind (AUSD has no real estimate of costs with compliance with the Federal legislation)
Governor Schwarzenegger
State Senator Hancock
Assembly Member Sandre Swanson

Suggested topics for State representatives include:

Prior Year References

2003 State Budget Crisis
2004 State Budget Crisis
2005 State Budget Crisis
2006 State Budget Crisis
2007 State Budget Crisis
2008 State Budget Crisis
2009 State Budget Crisis
2003 AUSD Budget Issues
2004 AUSD Budget Issues
2005 AUSD Budget Issues
2006 AUSD Budget Issues
2007 AUSD Budget Issues

Send mail to mikemcmahonausd@yahoo.com with questions or comments about this web site.
Last modified: January 10, 2010

Disclaimer: This website is the sole responsibility of Mike McMahon. It does not represent any official opinions, statement of facts or positions of the Alameda Unified School District. Its sole purpose is to disseminate information to interested individuals in the Alameda community.