Jan. 10
Pasadena Star News on Gov. Brown’s budget:
Once again, Gov. Jerry Brown has stressed the need for restraint in unveiling his proposed 2017-18 state budget.
The $122.5 billion General Fund budget proposal released Tuesday anticipates a $2 billion budget deficit - even after the passage of tax increases in November - and rolls back some spending increases to help the state budget achieve balance.
“I don’t think it makes any sense or is even decent to pretend we have money when we don’t,” Brown said at Tuesday’s press conference.
Brown properly began his press conference, as he has in years past, by putting the budget in context, in large part to help quell the desire of legislators who already are clamoring for greater spending.
Noting that years of balanced budgets are routinely followed by years of massive shortfalls, Brown’s proposal reflects a revised revenue forecast that is $5.8 billion less than anticipated for fiscal years 2015-16 through 2017-18.
Even with the passage of Proposition 52, which extended hospital fees; Proposition 56, a new tobacco tax; and Proposition 57, prison reform expected to yield savings, the budget still yielded a $2 billion deficit.
In other words, voter-approved tax increases, hospital fees and significant criminal justice reforms only served to lessen the state’s budget woes.
To address the deficit, Brown proposes curbing Proposition 98 appropriations, eliminating the authority to spend roughly $900 million on one-time obligations, and limiting spending proposals.
Above all, the budget plan stresses the importance of preparing for the possibility of future economic uncertainties, including the prospect of a recession. “While rebalancing the budget is the immediate task at hand, the state must continue to plan for and save for the next recession,” the budget proposal argues.
There are clearly significant issues on the horizon that the state will have to deal with that should spur the Legislature to proceed carefully, among which are the state’s debts and liabilities.
According to the state budget, there are $236 billion in retirement costs related to state and University of California employees. In December, the board of the California Public Employees’ Retirement System voted to use more realistic investment return assumptions than they had before. The California State Teachers’ Retirement System may soon follow, leading to higher costs that will need to be accounted for.
At some point, the state will also have to commit itself to doing something about its estimated $78 billion in deferred infrastructure maintenance costs. “Annual maintenance and repairs are billions of dollars more than can be funded annually within existing revenues, the budget proposal notes.
Brown’s budget leaves much to be desired. The plan is austere relative only to what the Legislature would dream up.
Brown calls for the perpetuation of the cap-and-trade program beyond 2020, and makes no mention of halting the perpetually indefensible high-speed rail project.
But his proposal has roughly the right idea. The state cannot go on a spending spree at a time like this, has to prepare for the possibility of trying times ahead, and should focus on working with existing resources. Failure to heed this will only compromise future budgets, programs and obligations.
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Jan. 7
The Press-Enterprise on the high rates of imprisonment:
As national imprisonment rates continue to fall, so too does crime, according to data collected by the Pew Charitable Trusts.
Between 2010 and 2015, the national imprisonment rate declined 8.4 percent while property and violent crime rates fell a combined 14.6 percent. During this time period, 31 states saw reductions in both crime and imprisonment. This includes California, which experienced a sharp 25.2 percent reduction in imprisonment rates along with a 1.1 percent reduction in property and violent crime rates.
“The lack of a consistent relationship between the crime and imprisonment trends reinforces the findings of the National Research Council and others that the imprisonment rate in many states and the nation as a whole has long since passed the point of diminishing public safety returns,” Pew’s fact sheet on the data explains.
According to the Bureau of Justice Statistics, the United States closed out 2015 with the lowest prison population since 2005, with just over 1.5 million prisoners. Of those in state prisons, just over half, 53 percent, were serving sentences for violent offenses as of year-end 2014, the last year for which data is available. In federal prisons, nearly half are serving time for drug offenses.
Nationwide, crime remains at historic lows. As Pew notes, even after a significant uptick, the violent crime rate at the end of 2015 remained half of what it was in 1991. The national property crime rate has similarly declined more than 50 percent since 1991.
That California’s experience is in line with that of the rest of the country is significant given the range of reforms the state has pursued in recent years.
In 2011, the U.S. Supreme Court found the state prison system overcrowded and unable to provide for adequate medical and mental health services, and ordered California to reduce its prison population. State lawmakers passed AB109, known as “realignment,” to comply with this request, shifting responsibility for non-serious offenders to county jails.
Though crime slightly increased in 2012, there’s no evidence AB109 was particularly responsible for it, and crime then proceeded to fall to all-time lows throughout the state in 2013 and 2014.
In 2012, voters approved Proposition 36, which reformed “three strikes” laws, requiring a life sentence for a “third strike” be reserved for serious crimes. In 2014, voters approved Proposition 47. Prop. 47 reduced a handful of offenses from felonies to misdemeanors, contributing to population declines in not only state prison but also county jails.
In 2015, crime increased statewide, both in raw numbers and overall rate. Still, both remain a far cry from what they were in every preceding decade. According to data from the California Department of Justice, the violent crime rate in 2015 stood at 426 per 100,000 people; the number was 439.3 in 2010 and 526.9 in 2005.
Similar patterns hold for property offenses in California, which is notable considering nonviolent offenses are what have been most impacted by reforms. In 2015, the property crime rate stood at 2,620.4 per 100,000; it was 2,630.1 in 2010 and 3,321 in 2005.
As tempting a solution as incarceration is, we have to keep in mind that incarceration is a costly venture that generally fails to bring long-lasting benefits.
Despite a budget greater than $10 billion, the state’s correction system has generally failed to “correct.”
We’ve experimented enough with mass incarceration for more than enough time to learn that longer-term investments in crime prevention and rehabilitation are needed.
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Jan. 10
San Francisco Chronicle on the impacts of repealing Obamacare:
How does California draw up a state budget when Washington Republicans may yank away billions in revenue? That’s the biggest what-if question for Gov. Jerry Brown as he sketches an early season spending plan.
The pledge by Donald Trump and Republican lawmakers to repeal the 6-year-old Affordable Care Act puts California at the financial brink. No state has embraced the federal plan as avidly, with some $16 billion in federal money going to enroll nearly 4 million residents.
Take this money away - as killing the Affordable Care Act would do - and the state budget caves in. Small wonder that state leaders are digging in so publicly to defend Obama-era initiatives that may come undone.
The uncertainty over Washington’s direction is leaving Brown in never-never land. He’s proposing a $122 billion general fund budget - one that keeps state spending at nearly the present level - while he and budget architects in the Legislature await the outcome of Washington’s political brawl. When and if the federal health plan vanishes, it will mean a brand-new budget and major consequences that will spill red ink across the spending picture.
By law, Brown is offering a preliminary budget plan that is fine-tuned in May before taking effect in July after the Legislature approves it. In normal years, it’s a chance to frame the picture before bargaining begins between the governor and Legislature over a spending plan. But the Washington storm cloud fostered by Republican control of the White House and Congress will be the largest factor in coming months.
In his budget, Brown is playing up his now-customary stinginess. California’s roulette wheel tax system that leans heavily on the wealthy is proving a problem once more, he said. It was churning out money last year with more expected, but tax payments are dipping, possibly because talk of Trump tax cuts is leading asset-rich taxpayers to postpone selling.
If this trend continues, the state could run a nearly $2 billion deficit, the governor said. To avoid that, he’s trimming back an increase in school funds, tabling $400 million in affordable housing aid and postponing repairs to state buildings. But these cuts would be tiny if the Affordable Care Act disappears.
There is some cushioning. The state has $8 billion in a rainy day account. Brown has promoted this savings kitty to blunt wide swings in tax collections, though a thorough rewrite of revenue rules would be better. Also, in November voters approved a tobacco tax and an extension of an extra tax on the wealthy. The timing and impact of federal health care cuts is far from certain with Republicans feuding and no clarity about what might replace the plan.
But for now, California is living in limbo, “riding the tiger” of an unpredictable tax system, as Brown said, and wondering how big a hit federal health care funds will take.
A budget quandary
California’s budget doesn’t exist in a vacuum. Here are the unknowns shaping a spending plan that starts on July 1:
-Affordable Care Act: If Republicans repeal it and halt the money flowing to California, the budget stands to lose upward of $16 billion.
-Tax revenue: The state’s booming economy is yielding billions in extra taxes. Or is it? Gov. Jerry Brown suggests the income stream may be tailing off. An $8 billion rainy day fund could patch things.
-New programs: More housing? Road repairs? These plans stalled last year and could go forward - or die again - if the budget picture sours and lawmakers feud.
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Jan. 6
East Bay Times on fracking regulations:
The Environmental Protection Agency’s final report on the impact of fracking on water supplies finds more danger than previously acknowledged - but there’s no way a Donald Trump administration is going to toughen the minimal federal regulations now in place.
The president-elect already promised the industry last fall that he would try to end regulation of fracking, which involves injecting water and chemicals into the ground at high pressure to force oil and gas from rock formations.
Trump’s choice to direct the EPA, Scott Pruitt, has a long record of opposing regulations on all drilling.
That means California has to act to protect its water supplies. Valuable as fracking is to the U.S. economy, it’s not as important as safe water. Nothing is, at least in this state.
Fracking now accounts for 40 percent of the oil and 67 percent of the natural gas produced in this country. It has substantially reduced consumer prices and has transformed the nation into the world’s largest producer of oil and natural gas.
It isn’t going away. Nor should it: The EPA found that most operations are well run and pose no risk to water supplies. But where risks exist, protecting water has to come first.
California already has the toughest fracking regulations in the nation thanks to Sen. Fran Pavley, who just termed out of office. When her legislation passed in 2013, she said further research might call for tighter restrictions.
Gov. Jerry Brown and the Legislature need to study the EPA report and update the state’s regulations.
The scientists’ conclusions back away from a previous finding of “no evidence that fracking systematically contaminates water supplies.” They now say there is the potential for contaminating drinking water under certain conditions.
Specifically, the report warns of using groundwater for hydraulic fracturing when and where supplies are low or declining. That sure sounds like California, where fracking takes place in particularly dry regions.
The EPA warned against injecting hydraulic fracturing chemicals into inadequately reinforced wells that allow gases or liquids to move into the groundwater. It also cautioned against disposal or storage of fracking wastewater in unlined pits, which can contaminate groundwater.
California discovered in 2015 that it had hundreds of these pits - many of them unlined - that threatened the purity of water supplies. Pavley tried to ban the practice, but the Legislature stalled, and regulation of the storage facilities has remained weak. Unlined pits now clearly have to go.
Fracking can be done in ways and places that do not threaten water supplies. Renewable energy has to be the nation’s ultimate goal, but in the interim, domestic supplies are better than reliance on dangerous parts of the world - if they can be accessed safely.
California should be a model for states that protect their water supplies when the federal government won’t.
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Jan. 6
San Diego Union-Tribune on UC system tuition hikes:
The leaders of the University of California system - unsatisfied with funding provided by Gov. Jerry Brown and the state Legislature and interested in ambitious new initiatives - are seeking significant tuition hikes. For the 2017-18 school year, the 10-campus UC system wants a 2.5 percent increase in in-state tuition, to $11,502, and a 5 percent increase in the student services fee, to $1,128.
But the governor and lawmakers should oppose any increases until they get meaningful answers to a meaty question: How does the UC system justify the explosion in its number of administrators?
In 2000, according to a 2015 Los Angeles Times report, UC had about 50 percent more faculty members than administrators and managers. But the number of administrators and managers passed the number of faculty in 2011, and, as of 2015, there were 10,539 administrators and managers and 8,899 tenured or tenure-track faculty. By contrast, in 2014, in the 23-campus California State University system, there were 10,099 tenured or tenure-track faculty and 3,726 administrators and managers, according to a California Faculty Association study.
So UC needs nearly three times as many administrators for its 238,000 students than CSU does for its 460,000? Why? UC officials say the biggest growth has been in UC’s self-supporting system of medical centers. They also say increased enrollment has required adding administrators and managers. But that still doesn’t explain why UC needs more than twice as many such officials now as it did in 2000.
Charles Schwartz, a retired UC Berkeley professor who has studied UC finances for a quarter-century, notes that there has been huge growth in UC employees in the supervisor category, especially on the staffs of chancellors, deputy chancellors and deans. Who, Schwartz asks, are they “supervising”?
The proliferation of college bureaucrats has not been limited to UC; it follows a national pattern. Johns Hopkins professor Benjamin Ginsberg’s 2011 book, “The Fall of the Faculty: The Rise of the All-Administrative University and Why It Matters,” coined the term “deanlets” to describe those in the job category that Schwartz cited.
Scholars who have studied the subject think they’ve zeroed in on what’s causing this: the political science theory of empire-building. Leaders believe their organizations gain more prestige and power the bigger they get. They resist attempts to scrutinize whether the growth is sensible or defensible on the grounds that of course they know best.
That certainly sounds like the UC under President Janet Napolitano. Even though state leaders are so frustrated with the murky financial reporting from their flagship university system that they’ve ordered seven audits of UC since 2012, UC glides along, impervious to its obligations to elected leaders and taxpayers alike. Last year, UC even issued an official “accountability report” largely focused on its accomplishments instead of concerns about administrative bloat or vague financial statements.
Brown and the Legislature should not tolerate this irresponsibility. The state budget is their lever to force change. Let’s get on with it.
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