State Leaders Reach Budget Agreement

The California legislature finally approved an $87.5 billion spending plan this morning, ending a record-long 100-day budget stalemate. What are the key elements of the budget agreement? And, how does the plan address the state's long-term financial problems?

Guests

Tony Perry, San Diego Bureau Chief for the Los Angeles Times.

Bob Kittle, Director of News Planning and Content for KUSI.

John Warren, editor and publisher of San Diego Voice & Viewpoint.

Read Transcript

GLORIA PENNER: Finally, it's more than three months overdue, but a budget has been delivered in Sacramento. Should we break out the champagne and cigars or just breathe? I'm Gloria Penner, coming up on the Editors' Roundtable, is California now out of the woods and what did it take to get the votes? Also part of the business community supports the City of San Diego's Prop D sales increase measure, part doesn't. Why the split and how will you vote? Plus, a downtown location for a permanent homeless shelter is closer to becoming a reality. Are there any obstacles left? All that's next on the editors' round table. First the news.

I'm Gloria Penner, I'm joined by the editor of These Days in San Diego. Today, we'll celebrate a new bottom for California, more than three months late. We'll comment on the increasing contentious Prop D debate, engage in a new homeless center is really heading for San Diego's downtown. The editors with me today are Tony Perry, San Diego bureau chief for the LA Times. Tony, how are you?

TONY PERRY: I'm lovely.

GLORIA PENNER: Yes, you are. But how are you?

TONY PERRY: I'm fine.

GLORIA PENNER: Okay. And Bob, director of content and use planning for KUSI. Did I get that right?

BOB KITTLE: You got that right.

GLORIA PENNER: Oh, took me weeks. And John Warren, editor and publisher of San Diego's of Voice and Viewpoint. John, it's good to see you.

JOHN WARREN: Thank you, Gloria.

GLORIA PENNER: Our number is 1‑888‑895‑5727. You'll want to make a note of that because we're inviting you to join the conversation. Well, early this Friday morning the California state senate bit the bullet and passed the final bill in a budget package which is more than three months overdue. Once the governor signs the legislation, the unpaid bills stacking up at the controller's office can be paid, and the dreaded IOUs avoided. On third degree, it was announced that the budget compromise negotiated by the governor and legislative leaders were approved by the assembly, so Tony what does our final billion look like.

TONY PERRY: Final budget looks like something built on gimmicks as my comment George Skelton, the dean of the Sacramento columnist said. This is a budget built on gimmicks with one time fixes and rosy projections of how much money is gonna come from the feds and other things but it is after all a billion, and we will survive. And everybody got a little bit of what they wanted. The governor got his pension reform a little bit. The Democrats saved welfare. The GOP said no new taxes so we will survive. The structural problems that create this annual demolition derby in Sacramento remain. The need for a two thirds, the ‑‑

GLORIA PENNER: Explain that. Need for a two thirds.

TONY PERRY: We need two thirds vote to pass a budget in Sacramento. One of the few states in the in addition with that. That allows the minority to block things and leads to a lot of trading and swapping and vote sharing and all the rest of it at the end. There is, of course, as you know a proposition on the November ballot that would take that down to a majority. We'll see how well that will do. But we have got ourselves a budget and we move on till next year and the drama then continues.

GLORIA PENNER: I was listening closely to what you said, Tony. And what you said, and I'm gonna address this to John, was that everybody got something. A little bit, the govern got something, the Democrats got something, and yet there was a $19 million budget gap. It seems to me something had to give in order for some people to get something, other people had to get nothing.

JOHN WARREN: Well, I think the key to this, and Tony put his finger on it when he said gimmicks, you have a lot of projections built into the budget that aren't necessarily guaranteed to be realized for instance, the budget includes $5.3 billion in federal funds and yet only 1.5 billion has actually been committed and they're assuming that the rest of the money is gonna come. So it's got holes like that trout the whole program. And that's where the problem lies. When you start trying to decide whether there's a $19 million or $200 million gap, it's a question of whether you believe the projections.

GLORIA PENNER: Okay. Well, at this point the projection, as you know, are ‑‑ and some of the legislatures saying, we can start next year with a $10 billion gap because of this. And I'm just wondering, Bob Kittle, what's in it for the people of California? What do we quiet out of it? We've heard about the governor’s getting something, Democrats know ares. What be us?

BOB KITTLE: The voters get a continual ‑‑ continuing dysfunctioning government in Sacramento. But we were off in our discussion here by a factor of about a hundred when we were saying it's a $19 million gap.

GLORIA PENNER: Billion.

BOB KITTLE: It's 19 billion, of course.

GLORIA PENNER: Right.

BOB KITTLE: And this budget only really covered about 40 percent of that $19 billion gap, the rest is just smoke and mirrors. So what the voters got out of it was no new taxes on top of this weak economy so that's a plus. But we do have this staggering amount of over spending in a recession. We have a budget that is tied up in a political gridlock with the Republicans and the Democrats not compromising on hardly anything. So we have more dysfunctional government essentially.

TONY PERRY: Some folks got some nice little birthday presents. The timber industry, cable television, software companies. They got nice little tax breaks zipped in there at the. End, the travel agency business tried for that, didn't get it. So when government sort of has favors to pass out, watch the folks that zip in at the very last and we'll talk a lot bit more about this later, but watch those folks that come in at the very last minute. It happened this year as it happens every year. The people with lobbyists who can wait out in those halls and know who's in that secret meeting, they come out just fine.

GLORIA PENNER: Yawn.

JOHN WARREN: I'd like to give two examples of this, for instance, a budget assumes a $200 million in savings from inmates and parolees. That's pure speculation. Then it announces $75 million from fewer in‑home supportive service recipients, and yet the Democrats ‑‑ the governor wanted to really take money out of that area, and yet the Democrats made a deal with him which has cut back. So how do you guarantee money from the areas? They were entitlements, number one, and you have people still having needs that are coming on line, and to add to this, the budget to the whole budget ‑‑ well, are the governor still has a line item veto in his happened, which will allow him to go back in, I would believe, and to make some additional changes. And so this is why this whole thing becomes smoke and mirrors and the gimmick that we're talking about.

TONY PERRY: And public education got hit. I'll only tip tow up to this, because I haven't seen this morning's numbers but as of 24 hours ago, they were talking a nearly $3.5 billion cut for education, which gives back to the slogan of the folks who are pushing revenue measures both for San Diego and North County on their school district voters, "Money Sacramento can't take away from us." Because Sacramento does nickel and dime education when they get a chance.

GLORIA PENNER: Our number is 1‑888‑895‑5727. I'd like to know when our listeners are frustrated by the state legislature, the delay in passing this budget, and from what you've heard so far this morning and what you've probably read in the newspapers or heard on radio or television. From what you know, are you pleased with the billion that California now has? And that in some aspects will affect you. 1‑888‑895‑5727. Where are the cuts being made? Tony talked about public schools. What about state worker pay? That was up for grabs wasn't it, Bob?

PLAINTIFF: Well, this budget does assume far too optimistically that there will be reductions in benefits for state workers of the furloughs that the governor had imposed and were held up in the courts have now been approved by the state Supreme Court. So there will be some reduction in salary through furloughs, that is unpaid at as off that state workers will have to take. There were cuts in social services. There was a cut in K through 12 education, a slight increase in funding for higher education. The cuts came in little pieces here and there. The cuts only added up to about 40 percent of the $19 billion deficit. The rest of it is assumed through higher revenue, wind fall from Washington, Barack Obama will shower billions on the State of California, which is the assumption, none of which is gonna happen.

GLORIA PENNER: That's something I want to pursue a bit. That there is an expectation of $5 billion from the federal government. Is that at all realistic?

BOB KITTLE: No, it's not realistic. I mean, until last week they were only estimating ‑‑ projecting 1.2 billion, I believe it was from the federal government, and they just upped the number to five billion to help close the budget gap to paper. This is a classic get out of town budget. Let's get out of town and run for reelection and hope nobody notices.

GLORIA PENNER: Okay. Well, of course people will notice, I guess. Or maybe they won't notice and that's even sadder, isn't it? What about the public schools that you were talking about, Tony? Through billion dollars?

TONY PERRY: That's the figure that was being tossed around 24 hours ago was 3.5 billion, but you have to be careful on that. A lot of that is considered cut because the increase will be less than it was going to be. So there's nothing more complex than school financing. School financing is best done at the local level, unfortunately under prop 13 we no longer can do that. But now we have in at least two places, as I say, ballot measures asking voters and school districts to approve some spending increase on the slogan, money Sacramento can't take away.

GLORIA PENNER: Okay, well, let's hear from our callers who want to get ‑‑ to be part of this conversation and we'll start with Javier in vista. Javier you're on with the editors.

NEW SPEAKER: Yes.

GLORIA PENNER: Yes, go ahead please.

NEW SPEAKER: Oh, I just wanted to comment that as a student at Palomar college, with the legislature deciding on a cut for education, it's hurting us as students because we're seeing an increase in students attending community college. And our classes are being cut. We're around at 34000 students and with this increase in students that's more students and less classes so that's affecting everybody at our campus from students to administrators, faculty, and that's what I wanted to comment.

GLORIA PENNER: Thank you very much for your comment. John?

JOHN WARREN: Well, two things educationally, number one, on the K through 12 it's 1.3 billion in deferred payments in terms of next year. So that's the way it's kind of a smoke scenario because you're not taking the money, you're just not making a payment, and therefore that debt service is set aside. But to Javier, I want to make the observation that it was just a few weeks ago that we received an infusion for the community colleges in terms of some additional dollars that came forth that allowed them to add numbers back. And so I think this is gonna be a seesaw snare Joe. But Javier and his colleagues are not really voters and so they in reality will always be secondary in terms of this balancing act.

GLORIA PENNER: Why aren't they voters? I don't understand, you know?

JOHN WARREN: Well, I say they're not voters because those who are old enough to vote, this was a change with Barack Obama, but so many of the young people who were in community colleges are not interested in voting and don't vote. And they're just getting a touch of this tax reduction scenario in terms of not finding classes. So history shows statistically they don't vote as a result of that.

GLORIA PENNER: So you're saying that if they were voters that there might have been a different as a result.

JOHN WARREN: Well, I hate to contradict myself, on the one hand I want to say yes, but then when I looked at November 2nd is coming, and we keep returning to office the same people who Defendant's Exhibit give us a budget the last two years cycle ‑‑

TONY PERRY: Has anyone ever lost their job or being slow on a budget?

JOHN WARREN: No.

TONY PERRY: We all do the drum beat every year, it's this late, it's that late. And it makes for lots of headlines, but do the voters ever ‑‑

GLORIA PENNER: This year isn't there a proposition on the ballot that would basically dock the legislatures if they don't pass the budget on time?

TONY PERRY: Proposition 25.

GLORIA PENNER: And this would be a permanent amount of money? They don't get it back even after nay pass the budget. So they lose per diem and they lose part of their salary. We have time for another call early before we go into our break. It's hear from Colin in San Diego am Colin you're on with the editors.

NEW SPEAKER: Yeah, I'm actually a mail in voter so I already cast my vote.

GLORIA PENNER: Ooh that's early.

NEW SPEAKER: Yeah, but I just wanted to say, I pretty much voted to keep the two thirds requirement in place. And you know, every time it comes up I'm gonna do that until the redistricting commission is put into place, so if that fails, then I think the two thirds requirement is required basically because ‑‑ otherwise you just end up with one party control rail roading the rest of the state and we're seeing a lot of bad economic effects from the parties that are in control.

GLORIA PENNER: What do you think about Collins' point of view, Bob Kittle?

BOB KITTLE: I think it's a very astutely observation, Colin, to connect the redistricting reform with the two thirds requirement. And for this reason: Under the gerrymandered districts that the legislature creates, you lock in ‑‑ or we're locked in at the start of this decade, a permanent democratic majority because seats were carved up to give so many to Democrats and so many to Republicans with fair redistricting, where there are no competitive districts you at least have a fair shot at one party having a voice in the legislature, not totally dominating it.

GLORIA PENNER: We have to go into a break, Bob, but I just want to point out there is also a proposition on the ballot that would basically take redistricting out of the hands of the new commission, and give it back to the legislatures.

BOB KITTLE: Yes.

GLORIA PENNER: So the voter ‑‑

BOB KITTLE: A huge step backyard.

GLORIA PENNER: Voters are gonna have a chance on that one as well. We're gonna take a break now. We'll come back right after the break. This is the Editors' Roundtable, I'm Gloria Penner.

I'm Gloria Penner, this is the Editors' Roundtable, and we are talking about the budget package was wrapped up this morning just a couple of hours ago, and it should be on the governor's deck, he's expected to sign it within a few days, and the state at least temporarily will be out of the budget hole. And we're talking about that, we're getting really an interesting variety of opinions on this from our listeners, and I'd like to hear now ‑‑ oh, first let me tell you who is at the table today. From KUSI, we have Bob Kittle from San Diego Voice and Viewpoint, John Warren, and from the LA Times, Tony Perry, that's our Pam. And I'm delighted they're all with us. Now let's hear from Peter in El Cajon. Peter you're on with the Editors Roundtable.

NEW SPEAKER: How is everybody today?

GLORIA PENNER: Oh, I'm gonna speak for my colleagues here. We are all just fine. And they look terrific.

NEW SPEAKER: All right. Very good. I have a question. Don't you think that number we have a problem in our country where we have a lot of dead money in our society so we don't have money there to invest in our schools and the other things that we need in our communities?

GLORIA PENNER: By dead money will you explain?

NEW SPEAKER: What I mean is money that is sitting on the side lines waiting to invest that's in the hands of wealthy people that's just not in circulation.

GLORIA PENNER: Well, John Warren.

JOHN WARREN: The reason it isn't is because the school age population is decreasing, and there are fewer people with children or grand children in will 62, so therefore the population with the money is further removed from concern about education.

GLORIA PENNER: But I think he's also saying that they're holding their money on the side.

JOHN WARREN: Okay.

GLORIA PENNER: They're not putting it into equities, stocks, bonds, businesses, real estate.

JOHN WARREN: $2 trillion at least, I believe, sitting on the side.

GLORIA PENNER: Yeah. Okay, well, thank you very much, caller, an interesting observation. The Schwartzenegger legacy has been at least on the govern's mind for the last year, I would say. Will that legacy include what might result in another budget mess next year before he leaves office? Bob Kittle.

BOB KITTLE: Well, to use a German word, Schwartzenegger's legacy is kaput. His legacy will be of turning a bad situation in Sacramento into a worse situation and handing off either to Meg Whitman or Jerry Brown a bigger fiscal crisis than he inherited.

GLORIA PENNER: Tony, what did the govern and the legislature gain by delaying this budget three months.

TONY PERRY: I don't know that they gained anything. What they did was they exhibited divided government, which apparently people like. And I think we need to give them some credit. These are serious men and women with serious differences. A lot of people will say oh, they were playing game, well, yes, there's a lot of finagling here and there, but these are people with diametrically opposite views of how government should function and what role it should play in our lives and we see that rolely, we're gonna discuss Prop D. And we see that here. I think we need to put aside the idea ‑‑ I think we ought to have the budget due on October 1st. What they call, let's dumb down the system, and not go through this. Of my good know, it's late it's late it's late. Just put a later deadline on this thing. You know, most people do not get a district service or a state check. And so I think most Californians have learn to live with this process. And they're not boiling mad about it. They're not gonna vote out their assembly man or their state senator. So to a certain degree, this has become an insiders' game. We're the classic insiders issue we're not to assume that the rest of the country or the rest of the state is as up in arms about this as we are.

GLORIA PENNER: Okay, John, you uponed to make a comment, then we're 81a move onto Prop D.

JOHN WARREN: Very briefly, most people do not understand what democracy and representative government really means, and I think that's the problem. Tony put his finger on it what he said, it is a philosophical difference between the parties it's not about whether we take care of the elderly or do we really care about the people who need schools, it's all about those who have say no more, and those who don't have say we want more. And it comes down to who's gonna muster the greatest numbers regardless of the merits of either side.

BOB KITTLE: It's the worst form of government, save all the rest.

JOHN WARREN: Yes.