Looking Back: Our Nominees for the Five Worst Budget and Policy Choices of 2009

It is that time of the year when there are “10 best” and “10 worst” lists for everything from movies to politicians, followed quickly by the often much less publicized New Year’s resolutions. Today, we take a look at our nominees for the five worst budget and policy proposals made during 2009.  On Monday, we’ll list our five resolutions for moving California ahead in 2010.

A central principle of our work here at the California Budget Project is that budgets are about values and choices – the choices that we, through our elected representatives – make about how to allocate our collective resources for the common good. Tough budget years – and 2009 will go down in history as one of the toughest ever – make for tough choices. However, several policies stand out in our minds as particularly bad decisions that, in some cases, will make future budget years even tougher. And some will contribute little or nothing toward closing the immediate budget gap, while compromising the well-being of Californians and/or the services they depend on. Our nominees for the five worst are:

  1. The massive corporate tax cuts included in the February budget agreement. The Legislature’s decision to include billions of dollars of tax cuts in the February budget agreement brings to mind all sorts of trite homilies, such as “when you’re in a hole, stop digging.” We don’t think that a spending plan that cut wages for homecare workers (see below) and cut funding for schools, while providing some of the state’s largest and most profitable companies with tax breaks of tens of millions of dollars per year, reflects the values of most Californians. The loss of badly needed revenues will prolong the state’s budget crisis and likely result in even deeper cuts in programs from health care to education.
  2. The recommendations of the Commission on the 21st Century Economy (COTCE). The COTCE proposals would cut taxes for the wealthiest Californians, while increasing taxes for low- to middle-income families and small businesses. They would also place more than half of the state budget in the hands of a risky, untested tax that has been roundly criticized by a number of the nation’s leading tax policy experts. We hope that the Legislature and the Governor will leave the Commission’s report on the shelf and move forward with common-sense proposals that do respond to a 21st century economy, such as collecting sales taxes owed on internet sales, imposing an oil severance tax, and extending the sales tax to selected services.
  3. Eliminating so-called “statutory” cost-of-living adjustments for cash assistance grants, higher education, and other state services. We’ve previously documented the impact of the state’s failure to fund cost-of-living adjustments (COLAs) for county-administered human services programs. The fact is that a dollar today doesn’t buy what it did a year or more ago. The state has repeatedly suspended COLAs for cash assistance grants and human services programs. Eliminating future COLAs removes the Legislature’s obligation to consider the impact of inflation on the families, seniors, and programs that are affected by “flat funding.” It will, over time, result in a ratcheting down of the standard of living for millions of state residents and cuts to the programs and services, including higher education, that they rely on.
  4. Cutting the wages of In-Home Supportive Services (IHSS) workers. The February budget agreement cut the state’s payment toward the wages of some of California’s lowest-paid and hardest-working individuals, the homecare workers who assist the frail elderly and people with disabilities through the IHSS Program. The courts have blocked enactment of the reduction, but the fact that this cut was even contemplated brings us back to our opening comment that budgets are about values and choices. Cutting the pay of low-wage workers runs counter to the values that we believe most Californians hold.
  5. Shortening the time limit for cash assistance through the CalWORKs Program below the federal cap and simultaneously reducing funding for programs aimed at moving families from welfare to work. The July budget agreement limits adults to 48 cumulative months of cash assistance in any 60-month period (adults would be allowed to go back on aid for up to a year after a one year break in assistance). The same agreement reduced funding for employment services aimed at helping individuals overcome barriers to work and gain the skills they need to succeed in the workforce. The 1996 federal welfare act – and the state’s subsequent enactment of the CalWORKs program – limited cash assistance. It also understood that many families would need help to move from welfare to work and that providing that help was a good investment for the long term. Changes to the state’s time limits provide no savings in the short run to help balance the budget, but represent a step backward for thousands of the state’s most vulnerable families.

Narrowing down the list to five was tough. Runners-up include funding cuts for the University of California and California State University systems that resulted in enrollment caps at a time when California needs more, not fewer, college educated workers; deep cuts to foster care and child welfare programs that are already under added pressures as a weak economy increases stress on fragile families; diverting funds from public transit at a time when the need to address climate change and congestion will require more, not less, resources; and the deep cuts to California’s public schools at a time when demographic and economic challenges are placing more challenges than ever on the state’s classrooms.

We’re hoping 2010 ushers in some better policy and budget choices. Best wishes to all our supporters and readers for a happy new year.

— Jean Ross

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