A FISCAL TSUNAMI STRIKES CALIFORNIA

Projected State Budget Deficit
Of
$27.8 Billion for Next Two Years

By James L. Frayne
Legislative Director
November 25, 2008

California Governor Arnold Schwarzenegger has called a fourth legislative special session to address the immediate dire California state budget crisis. Specifically, he proposes cuts to public safety of $250 MILLION (Yes, a quarter of a billion dollars) through the 2008-2009 budget period. (See attached chart for specifics.)

The nonpartisan Legislative Analyst projects a state revenue shortfall this fiscal year of $11.2 billion, and $13 billion in 2009-2010. The Legislative Analyst further projects that state will run out of cash in February 2009 and be unable to meet all of its obligations for the balance of the year. The Governor proposes to address 50 percent of the shortfall by increasing taxes, such as an additional 1.5 percent in sales tax and increases for certain products and services, and the other 50 percent through budget cuts.

This special legislative session will wrap up at the end of November with some 34 lame duck legislators who will be replaced December 2, 2008, when the 2009-2010 legislative session will commence with the swearing in of new legislators in the State Capitol. Predictions are that the Governor’s special session will result in “no major” action on the budget deficit, although there may be movement on the other important nonfiscal issues.

Across California, cities and counties are facing the same revenue losses as the state and are confronted with budget cuts for public safety and probation. Sacramento, County, as an example, has had its probation budget reduced by $2.3 million (following a cut in June 2008 of $7 million). Orange County’s proposed budget cut for probation is $8.2 million. Fresno County, because of budget cuts, was compelled to release 117 juveniles before their sentences were finished. These are only a few examples of the serious budget shortfalls affecting probation across our great state. When the newly elected legislators convene in 12 days, how will they resolve this “fiscal tsunami?”

We met with Democrat and Republican leaders last week in the State Capitol. They expressed their utter dismay at the overwhelming challenges of the fiscal crisis confronting California and the rest of the nation. Together, we must put forth our best effort in working with state and local leaders to prevent a fiscal meltdown, which would result in untold suffering, hardship, and danger to Californians. I feel confident our government leaders, with the assistance of public and private employees, their organizations, and their leaders, will be able to find solutions.

God Speed!!!