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Here We Go Again. . . New Players, Same Game, Same Rhetoric, Same Budget Crisis

By Vernon Billy - December 5, 2008

Earlier this week, the California Legislature opened its new legislative session and swore in thirty-nine new legislators.  While Monday was largely ceremonial – including the elections of the new Speaker and Senate Pro Tempore, and daylong receptions – the chronic budget deficit plaguing the state loomed over all the fanfare.

Governor Schwarzenegger, apparently wanting to impress upon the new legislators the seriousness of the state's fiscal situation, held a press conference during the scheduled time of the swearing in ceremony.  For the second time in less than two months, the Governor called a Special Session of the legislature to address the budget crisis.  The Governor once again warned the legislature and the public that the state would run out of money in early 2009 unless the state acts quickly to close the two-year, $28 billion budget deficit.

What was the response to the Governor's call for action?  Newly elected and veteran Democrats restated their caucus position.  They will not support a "cuts only" budget that doesn't include new revenue.  Republicans continued their no tax pledge, and rejected any call for tax increases.

Despite these seemingly immovable positions, many around the Capitol suggest that the Vehicle License Fee (VLF) will be one of the main revenue generating pieces that will be put back in play, while some new form of spending cap may be negotiated to appease Republicans.

For K-14 education, the ongoing budget quagmire presents even more threats to funding.  Unfortunately, the longer the state goes without taking action to enact budget cuts and revenue generating proposals, the greater the need to make even deeper cuts.

And, while many in the education community are advocating for no cuts to schools, the legislature's failed pre-Thanksgiving budget package did include approximately $2.5 billion in K-14 cuts. This package got nowhere due to the Republicans' objections to the tax increases in the package – not because of the education cuts that made up the bulk of the cuts in the package.

Given the bipartisan support of these cuts, it is safe to assume that Proposition 98 funding will soon endure some level of reduction.  The unknown questions are simply "when," "where" and "how much?"

The pre-Thanksgiving budget package provides some insight as to the direction of the Democrats in enacting education cuts.  The proposal called for the sweeping up of some unallocated funds, counting almost $500 million of the 2008-09 Proposition 98 over-appropriation towards prior year Settle Up payments, and then achieving the remaining savings by cutting approximately 28 K-12 categorical programs and cutting roughly $93 million from community colleges.

According to key legislative staffers, the logic behind the categorical reductions was to protect school districts' discretionary funding, while also providing some flexibility by reducing maintenance reserve requirements, authorizing the flexible use of unexpended categorical carryover funds, and eliminating the twenty-four month textbook adoption requirements.

Many of these same concepts will probably be included in the next budget proposal that surfaces sometime after the legislature receives a briefing from the State Treasurer and finance experts in a Joint Session of the Legislature this coming Monday, December 8th.

In other words . . . New Players, Same Game, Same Rhetoric, Same Budget Crisis.

Editor's Note: Vernon Billy  is a managing partner of Education Media Group, LLC and the President of Governmental Solutions Group, LLC, a policy consulting and legislative advocacy firm.