LA Times editorial: Balancing California's budget
The state must make many painful cuts, but health and human services should be preserved.
June 8, 2009
Gov. Arnold Schwarzenegger is right: California is out of time. The state must cut $24 billion in expenses or find some new money -- or both -- and must do it before the month is out. The cuts will hurt people. In that, there is no choice. But there is choice in which services are cut, how deeply and for how long. Here are some principles that Sacramento, and the people, should follow in making their decisions.
* Avoid default. In recent months, some critics have openly cheered the possibility that California would go bankrupt, allowing some trustee or higher authority to "right-size" the state government or, in the alternative, to save some programs currently on the chopping block. It doesn't work that way. States can't get bankruptcy protection, but they can default on their obligations, and if this state does that, virtually all the cuts now contemplated will take effect, plus more besides. The state's credit, already crippled, will become nonexistent; investors will shun many states besides this one -- and local governments as well. The world's eighth-largest economy will suffer longer, and ramifications for the world will be severe. Default is not an option. Avoiding painful cuts is not an option.
* Don't just say no. Sacramento must take every reasonable suggestion seriously, and when lawmakerspreserve programs, they must justify the costs. We must recognize that, in some cases, California must be penny-wise and pound-foolish, because it needs the pennies right now. We must be open to removing a function from government, even one with benefits and supporters.
* Cut health and human services last -- not just for humanitarian reasons but because these cuts more than others simply produce paper savings while multiplying costs, transferring them to counties and worsening outcomes. For example, a person who loses Medi-Cal and can't go to the doctor's office will delay treatment until he or she must go to the emergency room, where costs are higher and chances of recovery lower. A family that loses CalWorks welfare-to-work aid, training and job placement will turn to county general relief, which pays for about two weeks of rent each month; the family becomes homeless, and the costs return in jails, mental healthcare, drug addiction and hospitals. When health and human services funding remains intact, it brings with it federal matching funds. Cutting a dollar in state services eliminates $2 to $10 in funding.
(More here.)
June 8, 2009
Gov. Arnold Schwarzenegger is right: California is out of time. The state must cut $24 billion in expenses or find some new money -- or both -- and must do it before the month is out. The cuts will hurt people. In that, there is no choice. But there is choice in which services are cut, how deeply and for how long. Here are some principles that Sacramento, and the people, should follow in making their decisions.
* Avoid default. In recent months, some critics have openly cheered the possibility that California would go bankrupt, allowing some trustee or higher authority to "right-size" the state government or, in the alternative, to save some programs currently on the chopping block. It doesn't work that way. States can't get bankruptcy protection, but they can default on their obligations, and if this state does that, virtually all the cuts now contemplated will take effect, plus more besides. The state's credit, already crippled, will become nonexistent; investors will shun many states besides this one -- and local governments as well. The world's eighth-largest economy will suffer longer, and ramifications for the world will be severe. Default is not an option. Avoiding painful cuts is not an option.
* Don't just say no. Sacramento must take every reasonable suggestion seriously, and when lawmakerspreserve programs, they must justify the costs. We must recognize that, in some cases, California must be penny-wise and pound-foolish, because it needs the pennies right now. We must be open to removing a function from government, even one with benefits and supporters.
* Cut health and human services last -- not just for humanitarian reasons but because these cuts more than others simply produce paper savings while multiplying costs, transferring them to counties and worsening outcomes. For example, a person who loses Medi-Cal and can't go to the doctor's office will delay treatment until he or she must go to the emergency room, where costs are higher and chances of recovery lower. A family that loses CalWorks welfare-to-work aid, training and job placement will turn to county general relief, which pays for about two weeks of rent each month; the family becomes homeless, and the costs return in jails, mental healthcare, drug addiction and hospitals. When health and human services funding remains intact, it brings with it federal matching funds. Cutting a dollar in state services eliminates $2 to $10 in funding.
(More here.)
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