Monday, June 22, 2009

California’s Solution to $24 Billion Budget Gap Is Going to Bring Some Pain

With a massive debt of $24 billion, there is no doubt California is going to have to make some major cuts in order to break even again. Unfortunately not all of these cuts can be small, and no matter what action the state takes there are going to be people who are affected. The New York Times wrote a great piece examining this issue, and I’ve included a snippet of their article below.

While Democrats struggle to preserve programs for the state’s neediest residents through one-time accounting maneuvers and by passing some of the pain to smokers and oil companies through fees and taxes, Republicans are holding the line on new taxes and trying to force large cuts that will have an effect on policies like health care for children in poor families and the early release of thousands of prisoners.

Lawmakers passed a budget for both 2009 and 2010 in February, but the legislation, which covered 17 months’ worth of spending, was dependent on the passage of several ballot propositions that voters overwhelmingly sank in May. As a result, the state’s budget gap expanded.

In response, Gov. Arnold Schwarzenegger threatened to allow the government to come to a “grinding halt,” rather than authorize more borrowing to cover shortfalls, and proposed $16 billion in cuts. Those cuts would largely be carried out through the state’s programs for the poor: the Healthy Family Program, the health insurance program that covers more than 900,000 children; the main welfare program, known as CalWorks, which provides temporary financial assistance to poor families; and Cal Grants, a college financial aid program.

Continue reading this story at NY

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