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Written by: Elizabeth Larson

Published: 19 February 2009

Gov. Arnold Schwarzenegger congratulated legislators for passing the budget package to address the state's $42 billion budget deficit.

“I am extremely proud of the members of the legislature, both Republicans and Democrats, who had the courage to stand up and put the needs of Californians first,” he said. “Rather than approaching this unprecedented crisis with gimmicks and temporary solutions, we took the difficult but responsible steps to address our entire $42 billion budget deficit and pass historic bipartisan reform measures.”

Schwarzenegger said it's a “difficult” budget, but, he added, “we have turned this crisis into an opportunity to make real, lasting reforms for California.”

State Sen. Patricia Wiggins, who represents Lake County in the state Senate, said the budget will help the state address its budget with a view toward the future.

“This budget, which includes spending cuts, revenue increases and borrowing, is not a pretty budget, but it’s a necessary budget,” she said. “It’s a budget which spreads the burden across the people and businesses of this state, but it’s also a budget which includes economic stimulus and government reforms.”

Wiggins said the budget addresses the state's short-term deficit problem while paving the way for long-term solutions such as economic growth and job creation.

“And if we receive our fair share of economic stimulus funds from the federal government, we will be able to reduce some of the borrowing and spending cuts, and lower some of the taxes, that we approved earlier today,” she said.

The budget deal makes moot a lawsuit filed against State Controller John Chiang last Friday by numerous counties – Lake among them – in reaction to Chiang's announcement that he would begin withholding payments to counties due to the state's budget crisis, as Lake County News has reported.

Chiang said the move was necessary because there wasn't enough cash left in the state's bank account to pay all of its bills. He stated that he was forced to delay $3.3 billion in payments to local governments, state contractors and taxpayers this month.

Chiang said Thursday that the long-overdue budget deal won't immediately fill the state's treasury.

“The Department of Finance has promised to provide us within a week with the data we will need to update our cash flow analyses and determine how to manage the state’s payments through the end of the fiscal year,” he said. “Once this budget plan provides the needed cash in the treasury, my office will work around the clock to get delayed payments out the door.”

County Chief Administrative Office Kelly Cox said local officials are still trying to figure out how the budget ultimately will affect local jurisdictions.

Paul McIntosh, executive director of the California State Association of Counties, told Lake County News on Thursday that 37 bills – that, stacked up, were about 1 foot thick – made up the budget package.

One of the biggest areas of concern was a proposal that arose during the budget negotiations that called for delaying payments for mental health, CalWorks and several other benefits program services to counties for a period of seven months, as Lake County News has reported.

“That is not in this budget package,” said McIntosh.

There may, however, be some payment deferrals in June and July, he added.

“It's much more amenable language to counties than was originally proposed,” said McIntosh.

There also are plans for a May 19 special election, which will feature six different propositions related to the budget. McIntosh said those propositions include proposals to divert monies from Proposition 10, which imposed a cigarette tax, and Proposition 63, a mental health services fund measure; a spending cap; and a proposition that would look at the state lottery.

The special election is estimated to cost counties $80 million, said McIntosh. Counties are asking for language to be included in the legislation so they will be reimbursed for the costs of the election, as they were last year's February presidential primary.

McIntosh said the budget includes cuts in health and human services, particularly to program recipients, and some county administration cost reductions.

“We're grateful that the Legislature has solved this issue,” McIntosh said.

Although the Legislature doesn't have the power on its own to change the budget process, McIntosh said there is a building recognition that the process is “absolutely ridiculous.”

He said a petition is circulating to change the vote percentage needed to pass a budget from the two-thirds currently required to 55 percent.

McIntosh said counties and the state have a dysfunctional relationship that goes back 30 years, to the passage of Proposition 13.

Proposition 13 shifted total fiscal responsibility to the state, and removed a great deal of power from Boards of Supervisors when it comes to deciding how funds are spent. McIntosh said that, as a result of Proposition 13, only about 10 percent of county budgets are now discretionary.

As for the calls from some people that a constitutional convention is in order, McIntosh said to be careful what you wish for. The concern, he said, is that some interests might try to take over that process.

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