Cutting A Deal, Heavy On The Cutting Part

As expected, lawmakers and Gov. Ahnold reached an agreement last night for California's budget, and the details are going to be a shock to the system for millions of Californians.

After weeks of often-cantankerous negotiations, state officials have come up with a compromise that few who receive government services will celebrate. While the state’s health insurance program for children, Healthy Families, remains, it was cut by $144 million, meaning thousands of children will probably be on a waiting list for the program unless a private foundation makes up the balance, as the Democratic-controlled Legislature hopes.

In-home services for the elderly and infirm were reduced by several million dollars, and Mr. Schwarzenegger, a Republican, achieved his goal of having caregivers and the recipients fingerprinted in the future with the goal of preventing fraud. While the governor wanted certain welfare benefits to be reduced from a five-year period to two years, the program was instead given an overall cut of $500 million.

Local governments will lose millions of dollars that are used to build housing, among other purposes, and the state plans to borrow roughly $2 billion in property taxes from localities, which would have to be repaid within three years. Lawmakers believe that cities and counties could in turn borrow against that borrowing; localities bankrupt or nearly so would be exempt.

One of the biggest sticking points was over the $11 billion already cut from public schools. The budget deal calls for roughly $650 million more in cuts.

Under California law, though, the state is on the hook to pay that money back, something it has not done in the past. So lawmakers have written legislation guaranteeing that the money goes back to schools. The governor had faced strong criticism from the state’s teachers’ union.

“We accomplished a lot,” Mr. Schwarzenegger said after the agreement was reached. “We made government more efficient and also we’re cutting waste, fraud and abuse.”

The governor also said, on his Twitter feed: “We’ll actually be having a CA Garage Sale at the end of Aug to auction cars and office supplies.” He will sign some of the items to increase their value.

As the REM song goes, "Everybody hurts". The scary part is that all this budget does is extend the problem down the road. That $11 billion plus has to be paid back to the state's school system at some point, as do the $2 billion raided from local governments. Nobody's going to be happy at the voting booth. We've gotten to the point where California's safety net, while not destroyed, has gaping holes in it that California Dems are hoping charities will help close. The reality is that thousands if not millions of Californians are going to suffer, and the next budget will be worse: How many people are going to see their local police, firefighters and child's schools slashed to ribbons and say "We've got to get of here." Better yet, how many of those soon to be unemployed teachers, cops, firefighters, case workers, home care aides and other state workers will have to leave and not come back?

Losing trained firefighters, cops and teachers to other states will be bad enough for lowering revenue forecasts the next time California has this battle. It's the people who can't leave, the people who don't have the resources to move, that will suffer the most. Keep a weather eye on California, folks. It's the big, big petri dish in this Great Recession experiment. The kinds of things that will take root and grow are not going to be pretty. Some of them are going to be an outright disaster.

And odds are pretty good they're coming to your state soon.