“…One small bit of good news is that Democratic leaders from the State Senate and State Assembly have agreed on a budget proposal to close the state’s $19 billion budget gap.  The proposal includes adding a $1 billion tax on oil extraction (California is currently the only oil-producing state without such a tax), delaying $2 billion in corporate tax cuts, and possibly extending the 2009 tax increases on income and vehicles that were set to expire in 2011.  This proposal would maintain funding for Medi-Cal, In-Home Supportive Services and the welfare-to-work program, bringing in significant federal matching dollars to the state….”

 State Budget: Overdue and Underfunded
Article by California National Organization for Women (NOW), July 1, 2010

Here we are, at the beginning of California’s new fiscal year, and once again our state has no budget. Only six times in the past 25 years has California managed to meet the constitutionally mandated budget deadline. And once again, our lack of a budget is making the state’s economic situation worse than ever, costing us $52 million each day.

The Governor has addressed this by instructing State Controller John Chiang to pay state employees the minimum federal wage of $7.25/hour until a budget is signed, although Chiang has brought a legal challenge and is likely to refuse to institute the pay reduction. Salaries of elected officials and their staffs will not be paid until a budget is in place, and payments to vendors will be suspended, as will some payments to local governments and schools.  Needless to say, this sudden stoppage of money will do nothing but worsen the state’s economic distress. Small vendors who rely on state contracts will be unable to pay employees, and in the current climate of tightened lending may be unable to get the loans necessary to keep their doors open.

One small bit of good news is that Democratic leaders from the State Senate and State Assembly have agreed on a budget proposal to close the state’s $19 billion budget gap.  The proposal includes adding a $1 billion tax on oil extraction (California is currently the only oil-producing state without such a tax), delaying $2 billion in corporate tax cuts, and possibly extending the 2009 tax increases on income and vehicles that were set to expire in 2011.  This proposal would maintain funding for Medi-Cal, In-Home Supportive Services and the welfare-to-work program, bringing in significant federal matching dollars to the state.

Of course, no budget agreement that relies on any revenue increases can move forward without significant support from Republican legislators. As legislators return to their home districts for the summer recess, the “big five” – leaders of both parties in the Assembly and Senate, and the Governor – remain behind to continue negotiations toward a budget compromise. Now is the time to remind your state legislators, and the leadership of both parties, that we need a state budget that works for California families, without cutting severely needed services to our most vulnerable populations. 

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