‘Schedule’ Gets Blame for New Budget Delay
Gov. Arnold Schwarzenegger and state legislative leaders were “unable to coordinate their schedules” for a meeting Sunday evening that could have ended the state’s budget crisis.
The possibility of a fix for a fiscal calamity that has chopped state services and left California paying its bills with IOUs may be important, but apparently not important enough to force some of the state’s leaders to deal with some inconvenience or even, God forbid, take an earlier plane flight to Sacramento.
The meeting was supposed to be the icing on the long-awaited cake, a chance for Republicans and Democrats to join the governor in finally signing off on a deal to close the state’s $26.3 billion budget gap.
Instead, on Sunday afternoon the governor abruptly postponed the slated “Big Five” session, with Schwarzenegger’s aides saying that Assembly Speaker Karen Bass was in her Southern California district and would not be able to return to Sacramento until at least 8 p.m.
The Three-Month Budget
My favorite reform proposal is California Forward’s suggestion of a two-year budget for the state. I find this idea hysterically funny because it’s so out of step with fiscal reality. California no longer even has a one-year budget.
We’ve moved to a four-month budget.
The legislature negotiated a budget in September, another budget in February, and is negotiating one now. For all the angst about the July budget, I wonder how much it really matters. For all the rhetoric about balancing the budget for real this time, it’s clear that the $24 billion or $26 billion of “solutions” that will be part of any deal will be made up of borrowing, gimmicks and other fictions. It’s a safe bet that – barring an unexpected reversal in the world’s economic fortunes — in another four to six months, the legislature and governor will have to come back and negotiate another budget.
New Tax on Hospitals Will Push Health Costs Higher
It’s hard to imagine a worse time to support a new tax on hospitals, but legislation being considered in the state Senate will do just that.
The proposed hospital tax in AB 1383 (Jones; D-Sacramento) is being portrayed by supporters as staving off budget cuts. In fact, this new tax will be passed through to patients with private health coverage or who pay out-of-pocket. The tax will not only hit Californians in the midst of the worst recession in six decades, but it will exacerbate already out-of-control health care costs.
Although some hospitals would be able to use the proceeds of the tax to leverage more federal funding, many others from throughout California would receive no benefit whatsoever, and would be forced to raise rates for private patients.
What’s Going On in the California Job Market?
The latest state unemployment numbers were released last Friday, July 17. The unemployment rate stayed at 11.6%, consistent with the revised 11.6% rate for May. However, as usual, the key indicators of California’s employment situation were elsewhere: in the nonfarm payroll numbers, the sector breakdowns, and the breakdowns by counties. These all showed a state economy that is dead-in-the-water relative to hiring.
Here are the 5 key points:
1. Hiring in California has not turned around, and net job losses continue to mount: Between November 2008 and February 2009, the state saw widespread job shedding. In February 2009, alone, the state lost 119,000 jobs. In March, the net job loss was 62,100, suggesting that we may have begun to turn the corner. The last three months, though, job losses have increased, rather than decreased, and June showed a net loss of 66,500 jobs.