The Governor’s Vetoes Target Welfare Reform’s Success Stories

On Friday, October 8, the Legislature passed and the Governor signed into law a 2010-11 spending plan ending the longest budget stalemate in the state’s history. In addition to the spending reductions made by the Legislature, the Governor used his ability to veto an additional $963 million in General Fund spending from the budget. The Governor’s vetoes include a $256 million reduction that will end CalWORKs’ “Stage 3” child care effective November 1. The elimination of Stage 3 directly targets the success stories of California’s welfare-to-work system: parents who have transitioned off cash assistance into the workforce, yet whose income remains sufficiently low that they can’t afford the cost of child care.

Faced with the loss of state-supported child care, some unknown number of these parents will, inevitably slide back on to cash assistance, unwilling to leave their children home alone and unable to afford unsubsidized care. Others may lose their job in the state’s still struggling labor market due to absences and other instability caused by the loss of stable child care arrangements. For those who lose a job, the prospects are grim. As we documented earlier this year, unmarried women with children have been hard hit by the Great Recession, experiencing a higher level of unemployment than their married counterparts and a significant drop in their weekly work hours. The Governor’s elimination of child care for some 55,000 children will make a bad situation even worse.

The belief that budgets are about values and choices underlies the work of the CBP. California’s massive budget shortfall and ongoing budget problems posed tough choices for lawmakers and the Governor. While families struggling to make ends meet were a loser in the recent budget agreement, there were some clear winners: a retroactive tax break narrowly crafted to fit the circumstances of a single wealthy taxpayer that will cost the state in excess of $20 million and another ongoing tax break that will cost $100 million at full implementation targeted at out-of-state companies that sell “intangibles” into California that may actually create an incentive for California-based businesses to shift jobs and investment out of state.

As more details become available, the CBP will continue to examine the impact of the new spending plan on Californians, their communities, and future years’ budgets.

— Jean Ross