notes on budget from 2 conf calls

Posted in CA Budget by SCHA-LA on July 29, 2009

Okay … so yesterday could only have been worse if my wife had told me that she wants a divorce.  Fortunately, she didn’t, but that may well have been because I stormed out of the house and went to the library to read the last 400 pages of HP7.

Before I go on, let me just state that it was a perfect storm. It’s ‘that time of the month’, it’s 100 degrees where I live, and it’s methotrexate day. Did I mention that my laptop crashed as soon as I got home, and that’s why I didn’t get this out last night? Maybe it’s a good thing. I had time to sleep on it. Or rather, I had a sleepless night of worrying about my computer instead of worrying about the budget.

The governor signed the budget, as we all know. That’s the end of Prop 36 and basically HIV social services.

I was on this ‘invitation-only’ conference call hosted by Bismarck Obando (the CA Director of External Affairs) and Michael C. Genest (CA Director of Finance).  What a pair of knobs. I actually had to get off the call early because there was so much bullshit and double-talk that I couldn’t stop throwing up long enough to write it all down. Because I was pacing, and muttering, I can hardly read my handwriting, so this is my best effort:

On the one hand, Genest talked about enacting the “largest tax increase in the State’s history, in February”), and then on the other, “Zero tax increases”.

He said that they had to come up with $24 billion in “solutions”.  Please – I think this is the most offensive part. At least give the people of California – especially the people from whom you just cut their lifelines – the dignity of calling things what they actually are.  Defunding day support for Alzheimer’s patients is a “solution” to … what? Dropping thousands of children off medical care is a “difficult solution” to what? Do we really want people living with Alzheimer’s, AIDS, and children under the age of 5 (among others) to support the weight of the 8th largest economy in the world so that multi-millionaire actors and others don’t have to pay taxes? Apparently we do (as long as they don’t have to see it, of course – so thank god for the prison industrial complex!)

He added that this budget deficit was “not solved in a fiscally pure way” (he referenced page 4 in the 52 page “CA State Budget, which one can download at It “left temporary solutions”, including $8 billion which we have on loan from the feds, which will need to be replaced by 2011.

Then, taking a page from Obama’s campaign, they started rambling on about hope. Not in that exact language, though. Instead, he said “[the] economy will start to turn in the 4th quarter” (10/09). He immediately added, “as yet we haven’t seen any hard signs of that recovery”. I might add: or soft signs… or any signs. But, one can hope, right?

We are going to start 2010 “$7-8 billion in the hole”.

“We have not seen the worst of the budget crisis” (reminder: what about the economy starting to turn around? Or is that so 30 seconds ago?)

This was funny. I’m no accountant, but I have seen the Sopranos, so I feel at least as informed as the Director of Finance. The State is going to “borrow” from local government (Prop 1A, which I thought was voted down), but they are “hoping” (again with the hope!) to “make it virtually invisible” [to local governments]. $2.2 billion disappears and no one notices? Sounds like the money they lost in Iraq all those years ago. But back to the topic. The State, with its impeccable credit rating, is making a “rock solid guarantee” to the local governments from whom it is stealing. They can get their money back: “AS A LOAN”.

Let’s move to page 6, where we are informed about “Expendable solutions”. In other words: people whose voices absolutely do not factor in to the budget.

This is the part where we learn that the legislature fucked up and committed what might be an unconstitutional act in submitting the budget, forcing our sweet governor to play the bad guy. Pay no attention to that man on YouTube behind the giant knife telling people that they need to “lighten up”.  Now it is clear: the reason he was forced to veto what he did is because the “tax increase card” was played in February – really! They said that! The “tax increase card”. They addressed (and they really said this too) “$24 billion in PROBLEMS”. Problems like children needing medical care? Like drug dependent individuals needing substance abuse treatment? Like teachers needing salaries? Anyway – back to the problems…

There was a “handshake deal” which would have left a $917 million reserve”. That reserve was “small, but in the last session, some ‘solutions’ weren’t approved” which resulted in the “blue pencil”. Luckily for us we have such a hero as our governor. He “fulfilled his constitutional obligation”, despite the legislature failing to do that by submitting an “imbalanced budget”.

Here’s the take home message part of it all:

The governor “didn’t want to do most of them”. “He had no choice”. He had to “restore a prudent reserve”. Here is the kicker – not to be confused with “the congress made me do it”: When asked how he decided what to line item out of the budget, we learned that “The governor vetoed what he could” [veto and sustain]. That’s “pretty much what this list is”.

All these years, apparently, taxes have been weighted on high income earners and this just isn’t right. They may earn a lot, but it goes up and down. That’s why we have such fluctuations. Sounds like a call for flat tax to me – which, of course, disproportionally impacts the poorer segments. [That was me, by the way, not the government wankers]

Even though on page 18 of the budget, it’s referred to as a “$509.6 million reduction” to CalWorks, what they actually did is to “beef up” the program.

They are going to start pursuing tax reform. Never saw that one coming. Hmmm.

They also want to deal with the “gold-plated pension system” for State employees. At this point we learned that Genest (or was it Obando) had his own problems:  his wife was complaining to him! Well! That’s sharing the pain…

We learned that this administration is “spending less than when Pete Wilson was in office”.  Since when is fucking Pete Wilson the standard-bearer?

We learned that “corrections spending has really gone wild in the past few years” – and how expensive being under federal receivership is. The $785.5 million in cuts haven’t really been “fleshed out”. Oh, as an aside, I learned that there is actually a group called Citizens Against Homicide. (interested? Their website is

On a positive note, we are “eliminating $35.1 million General Fund for various Community Clinic Grants” (page 23 of the budget). Expanded Access to Primary Care (EAPC) which is partially funded through a tobacco tax will retain that $10 million in tobacco money.

Bill Pearl of asked if the governor supports ending a partial tax release for ship bunker fuel which is environmentally disgusting and costing the state revenue. The governor has “no formal position”. Good to know.

With regard to child welfare and Medi-Cal, a conference call participant asked, if cost of living increases are gone, how can counties continue to adhere? The governor has “not had that discussion internally”. Good to know.

With regard to the cuts to Alzheimer’s day care resources, it was asked “How will programs be phased out?” We were told that the governor is “not really prepared” because the legislature “spared these programs” so he didn’t “make a plan”, but since it was a “last-minute veto” there has been no preparation. Good to know.

So, at this point I had to disengage because I was going into fucking spasms.

Plus, I had another conference call, this one with Michelle Roland from the State Office of AIDS.

Here is what I got from that call:

First, there are 2 good items and 2 bad items. Let’s start with the good:

Surveillance was not vetoed. The only reduction is $1 million (from $7.7 million from general funds) which we can meet through some other mechanisms, leaving no impact. I believe she said what the mechanisms were, but I was, at this point, trying to pull over so I could listen to the call in the car and not drive at the same time – just in case…

The other good item is ADAP. There were “significant general funds reductions” but we will compensate with other funds. There was a $25.5 million (new) reduction to ADAP from general funds but there is “special money” so we – at this time – don’t need to change the formulary or anything like that. But this special money will only meet the need for a short period of time. We need to plan for the future.

And the bad news:

Care and support are now getting $0 general funds. This includes EIP, case management, TMP, and housing (RALF). What are we left with? HRSA and HUD/HOPWA. We will have 50% of the budget we did have.

Prevention, counseling & testing also gets $0 general funds support. That leaves us with 20% of the resources we were working with. There are no specific details on what’s going to happen – hopefully by the end of the week.

Significant reduction in state support: 18 jobs will go away.

CSP is Ryan White funded, so not an issue.

We can use rebates for Maintenance of Effort, so we shouldn’t lose Ryan White funds over the next few years due to lack of MOE. [As an aside, apparently MOE was “not an issue” in the budget discussions from very early on because they think that the feds won’t require it. What is that thought based on? Who knows.]

TMP was 100% general-funds supported and is now getting 0%. The current plan is to allocate support money to enable local jurisdictions to determine how to spend it the best way. Nothing concrete here yet.

Things to know: Ryan White money can be used for core medical & case management. It either can or can’t (I couldn’t hear!) be used for lab tests.

The vouchers are no longer available.

She said that we should be able to administer Medi-cal waivers through the state, but not sure.

Case management will be under the ‘care and support package’.

In actuality, “around $83 million” was cut, including cuts to ADAP and other programs.

Prevention and testing: this years budget was $41 million combined general funds and federal. Now we are left with just federal, which is $9 million. In other words, we have 20% of the budget remaining.

So… where does that leave us? WHO THE FUCK KNOWS? how much of this did I get right?


With the Governor’s announcement today of additional line item cuts totaling $656 million, determining the long-term impact of drastic budget cuts will be a top priority for local governments, schools and universities and direct service health organizations.

JOIN US this Thursday, July 30 from 6:00-8:00 PM, for a panel discussion on The Future of California. Your attendance is a demonstration to the Governor and legislative leaders that slashing funds for education, our social safety net and those most vulnerable is not the future we want.

Demand more, let your voice be heard. RSVP today, space will be limited (

State Senator Gilbert Cedillo

“The Future of California:
A Post-Budget Analysis”

A panel discussion featuring

Moderator: Joe Mathews, New America Foundation
Hon. Gilbert Cedillo, California State Senate (D-22)
Hon. Robert Hertzberg (Retired), California Forward

Dr. Dowell Myers, University of Southern California

Dr. Robert Ross, The California Endowment

Thursday, July 30, 2009
6:00 PM – 8:00 PM
The California Endowment—Yosemite Room
(1000 N. Alameda St., LA 90012)
Free Parking

RSVP to or (213) 612-9566

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