Senator Hancock-My Thoughts on the Budget

Dear Friend:

After a long, frustrating and heart-breaking three month battle, the Governor recently signed a spending plan to address the financial crisis in California. As the actual prospect of insolvency was very real, it is with both relief but also apprehension that I am writing to you today.

The final agreement includes almost $42 billion in cuts, revenue increases and borrowing, including $11 billion to close the gap projected for the remainder of 2008-09 and close to $31 billion to balance the 2009-10 budget. Specifically, the agreement includes a combination of $14. 9 billion in cuts, $12.5 billion in temporary increased revenues, $7.9 billion in federal funding from the economic recovery bill signed into law by President Obama on February 17, $5.4 billion in new borrowing, and $957.2 million of additional cuts from the Governor’s line-item vetoes.

With the signing of this spending plan, we may have avoided the financial collapse of our state government, but we paid a great price. As your State Senator, I want to share with you with my personal reactions to the budget, and its implications for all Californians.

Beginning the New Year with an unprecedented $42 billion budget defect, California faced one of the most threatening financial crises in our state’s history. The problems we face are rooted to one fact: the 2/3rds Vote.

California is one of only three states that require a 2/3rds vote to pass a state budget. This is not how a democracy normally functions. Forty-seven other states, the United States Congress, and every city, county and school district in California pass budgets with a simple majority vote.

The 2/3rds vote requirement has proved fatally dysfunctional for California, making it impossible in recent years to pass budgets on time or with accountability.

It has allowed Republican legislators to hold California’s budget hostage. Rigidly opposed to any form of increased taxes, Republicans withheld their votes. Obtaining the three Republican votes in the Assembly and the three in the Senate that were necessary to pass the budget came at a great price: deep cuts to education and social safety services, weakening of major labor and environmental laws, tax cuts for business, additional borrowing, and putting constitutional amendments on the state ballot that have nothing to do with the state budget. Anything the Republicans cannot get done through legislation, they get done using the budget negotiations.

In the midst of an economic meltdown, this budget will unfortunately lead to a less equitable California. Instead of progressive tax increases that benefit the average Californian, regressive taxes and borrowing have been implemented. Increased sales tax and uniform surcharges on income tax for all brackets favor the wealthy. Massive layoffs of our teachers, health care providers, and social workers threaten the promise of California and its ability to protect its citizens. Things must change.

We Need Three Changes in the Budget Process

- A simple majority to pass the state budget. Let the majority party negotiate a budget and be held accountable for that budget, like the U.S. Congress and all levels of local government. That is why I have introduced a constitutional amendment, SCA 5, which will require simple majority as opposed to a 2/3rds majority for passing our state budget.

- California should consider a two-year budget in which the second year of the cycle is devoted to program oversight and any needed adjustments, caused by economic changes.

- Lastly, when the budget is adopted, it should contain five and ten year projections of expenses and income, so advanced planning can be done realistically and carefully.

In this hard time there is reason for hope. People are beginning to understand that our budget system is organized in an inefficient and undemocratic manner. We need changes in our current system to protect and provide opportunity for California’s citizens. If we are to save our great state we must work together to protect it.

If you want to know more about SCA 5, please let my office know.

Sincerely,

LONI HANCOCK

Senator