February 4, 2010
At a hearing yesterday that lasted well into the evening, the Senate Budget and Fiscal Review Committee reviewed revenue-raising options that could be used to help close the budget gap. We offered some basic principles and potential options, as did the Legislative Analyst’s Office (LAO). The Department of Finance presented the Governor’s proposed tax cuts that, it is worth noting, aren’t “scored” in the Governor’s Proposed Budget. That means that enactment of his proposals, most notably the expansion and extension of the homebuyers’ tax credit, would further widen an already gaping budget gap.
In light of support for continuing the credit offered by several senators at the hearing, it is worth reminding readers of what we’ve written about the homebuyers’ credit here before. Budget Bites readers and lawmakers may also wish to read the Riverside Press-Enterprise editorial that appeared Tuesday entitled “Tax Posturing” which notes that the fact that buyers “snapped up” tax credits doesn’t mean that they were an effective or appropriate tool for stemming construction industry job losses:
“But a tax break on home sales misreads the factors behind those job losses. New home construction fell because land values and housing prices tanked. Developers could not build new homes cheaply enough to compete with the flood of inexpensive foreclosed houses coming on the market. Foreclosed homes, for example, accounted for 41 percent of the houses sold in California in December…No tax break on home sales will change those conditions. And where is the sense in urging new home construction when the state already has a surplus of vacant houses?”
As I noted at yesterday’s hearing, the first thing you should do when you are in a hole is to stop digging.
–Jean Ross
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Housing, State Budget | Tagged: homebuyers tax credit, State Budget | 
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Posted by cbporg
February 3, 2010
For the second straight year, Governor Arnold Schwarzenegger has proposed scaling back or completely eliminating the state’s Healthy Families Program. Healthy Families provides health, vision, and dental benefits to children whose family incomes are too high for them to qualify for Medi-Cal. The Governor’s recent proposals would result in 203,300 children in families earning more than $36,620 — 200 percent of the poverty line — losing coverage. The remaining 680,000 would lose their vision benefits, meaning they would no longer be able to see an eye doctor or fill a prescription for eyeglasses. In the worst case, the Governor’s proposals would completely eliminate the program, leaving all 880,000 children currently enrolled without health coverage. Ironically, just a few short years ago, this Governor had proposed universal children’s coverage in his comprehensive health reform proposal.
There are quantifiable impacts to the Governor’s proposals, such as the fact that the state would lose nearly $826 million in federal matching dollars for the $222 million in state dollars saved by whittling down, and eventually eliminating Healthy Families. This means that the impact of the Governor’s proposed cut on the California economy would be more than triple the amount of the state savings.
Beyond the dollars, there are also the impacts that cannot be easily counted, such as the lost opportunities for children who, without eyeglasses, will not be able to see the chalkboard. Without proper treatment of health conditions, others may find it difficult to concentrate in class. The Managed Risk Medical Insurance Board, which administers the Healthy Families Program, has studied the impact of the Healthy Families Program. It found that after two years, newly enrolled children initially considered “at risk,” with the lowest parent-reported health status, saw improvements in their physical health. More dramatically, however, the study reported that these children showed sharp improvements in their ability to pay attention in class, as well as their ability to keep up with school activities.
Tightening the vice on the Healthy Families Program, and thereby limiting children’s ability to be healthy and productive, comes at a time when policymakers are discussing ways to improve academic performance for all children. As we begin our discussion of the state’s spending priorities, it will be important to consider not just the dollar savings of today, but the investment we could make in tomorrow.
– Hanh Kim Quach
Comments Off | Health | Tagged: children, health coverage, Healthy Families Program, MRMIB, State Budget | Permalink
Posted by cbporg
February 2, 2010
California’s families are reeling from the most severe recession since the Great Depression. With more than 2.2 million Californians unemployed and another 1.5 million underemployed, a growing number of families are seeking assistance from critical supports such as food stamps and Healthy Families to help make ends meet. In a new CBP report released today, Proposed Budget Cuts Come at a Time of Growing Need, we find that:
- The number of Californians receiving food stamps jumped by more than 900,000 between October 2007 and October 2009 – a 43.0 percent increase. In contrast, Food Stamp enrollment rose by just 6.4 percent between October 2001 and October 2003, as unemployment continued to increase in the wake of the 2001 downturn.
- Nearly half a million additional Californians enrolled in Medi-Cal for health coverage between May 2007 and May 2009 – the most recent period for which complete data are available. The rise in Medi-Cal enrollment paralleled the increase in the state’s unemployment rate – a trend that’s not surprising given that the loss of a job also often means the loss of health coverage.
- The number of children seeking health coverage through the Healthy Families Program increased by approximately 97,000 between July 2007 and July 2009. From July to September of 2009, a temporary enrollment freeze due to budget cuts substantially reduced the number of children with coverage through Healthy Families. However, enrollment has begun to rebound since the freeze was lifted.
These findings underscore the vital role that government plays in people’s lives – particularly now as workers and their families face the toughest economic climate in decades. Public dollars play an important dual role when the economy is weak: They help families who are struggling because of the recession make ends meet and they help boost the economy by increasing families’ spending power. As policymakers work to close the state’s budget gap, they should seek to avoid deep cuts to critical supports. We recommend that policymakers take a balanced approach that combines prudent spending reductions, additional revenues, and continued federal aid.
– Alissa Anderson
Comments Off | Health, Human Services & Child Care, State Budget | Tagged: Healthy Families, Medi-Cal, State Budget | Permalink
Posted by cbporg
January 28, 2010
I suppose I shouldn’t be surprised about voters’ lack of knowledge of where the state gets its money and how that money is spent. Urban legends about the budget abound on both the left and the right. Still, the findings of the Public Policy Institute of California’s (PPIC) new poll were a bit surprising. Nearly half (49 percent) of the Californians surveyed by the PPIC answered that prison spending accounted for the largest share of state spending. Perhaps even more surprising, only 16 percent correctly answered the question with K-12 education. While corrections spending is on the rise and school spending has declined, the state still spends more than four times as much on schools as it does on prisons and corrections.
Californians were almost as confused about where the state’s dollars come from, with slightly more than a quarter correctly answering the personal income tax, which, in fact provides over half of the state’s general purpose revenues.
Only 6 percent of Californians and 8 percent of likely voters correctly answered both questions. Yet, nearly three-quarters of those surveyed believe that the voters should decide major questions of how the state raises and spends its money at the ballot box.
Based on these findings, we’d posit that there’s a significant need for increasing voters’ knowledge of the basics of public finance: How the state raises money, where that money is spent, and the rules that govern budgetary decision-making. That’s a fundamental part of our mission here at the CBP and clearly we’ve got our work cut out for us.
– Jean Ross
Comments Off | State Budget, State Taxes | Tagged: corrections, Education, PPIC, State Budget | Permalink
Posted by cbporg
January 27, 2010
Until last night, 2010 wasn’t shaping up to be a very good year for those of us who believe that public policies are critical to building strong families, communities, and economies. With health reform and climate policies potentially stalled in Congress and yet another massive budget shortfall here at home, there wasn’t a lot to cheer about.
Yesterday, Oregon voters gave us something to cheer about. Voters approved Propositions 66 and 67 by wide margins. These measures increased tax rates on high-income Oregonians and imposed a modest hike in corporate taxes.
Pundits, politicians, and pollsters debate public preferences as to how the budget should be balanced. But as the old saying goes, the only poll that really matters is the one on election day. And yesterday, Oregonians decisively demonstrated their support for schools, health care, and other services and the taxes needed to pay for them. Thank you, Oregon, for giving us something to cheer about.
– Jean Ross
Comments Off | State Budget, State Taxes | Tagged: Oregon, Proposition 66, Proposition 67, State Taxes | Permalink
Posted by cbporg
