Feb 18

Written by:
2/18/2008 11:16 PM 

Senator Denise Ducheny's Frank Talk About the State Budget
February 8, 2008
California State University, San Marcos
Before a crowd of fifty academics, State Senator Denise Ducheny spoke of the sobering realities of the state budget and our public policy options.  Ducheny put the current crisis in perspective with the last state budget crisis, in the early 1990's.  Then, the economy slumped from the loss of defense contracts and the bursting of the dot-com bubble; this time, it is the collapse of the housing industry and the sub-prime market.  Then, like now, revenues fell sharply below expectations and the legislature could not act quickly enough to reduce the budget before the bust. 

Ducheny outlined what she termed structural problems in state financing.  California's progressive taxation has ten percent of the population paying fifty percent of the taxes, tying the interests of state government to the fortunes of its wealthiest families.  The legacy of Prop. 13 was the defunding of local government of schools through the capping of property taxes, leading to awkward backfilling of local budgets by state funds.  The Vehicle License Fee (VLF) refund came in for special attention in her talk.  The VLF was in place for decades when it came under attack.  VLF funds, generated by an approximately 2% charge based on vehicle cost, were used for local government.  Now they can only be changed by constitutional amendment, resulting in more state-to-local backfilling.

The Senator also discussed online tax exemption (the federal government has blocked state collection of sales taxes), Indian gaming compacts (helpful but with more impact in the future than the present), and the overall demands of state government (which are ranked in order of funding as: K12 and community colleges – 40% of the budget; Health & Human Services – 30%; prisons – 10%; UC & CSU – 6%).  Senator Ducheny described California as having a “1960's tax structure in a 2001 environment.”

She had supportive words for higher education.  UC & CSU are driving forces for economic prosperity.  They are training the future leaders in all sectors of the economy.  But higher education is not being spared in the budget cuts, and simply trying to push the cuts to some other program is not successful.  Ducheny urged CSU to do “impact lobbying” -- talk to legislators and business leaders about the real effects of budget cuts.  The Governor's 10% cut solution is not realistic (it affects the neediest sectors of the population disproportionately and does not provide long-term solutions).  Government must educate the public about the real meaning of government services.  In turn, the public must push government leaders to make real changes.

Current discussions about budget cuts are collegial, but limited.  Republicans and Democrats are looking for consensus cuts – where they can agree to reduce programs.  At some point, they will run out of easy cuts and the hard work begins.  In the 1990's, Governor Pete Wilson was able to bring us out of the budget crisis by using a 50/50 solution – equal amounts of tax increases and government cuts.  Moreover, he was able to deliver the votes of Republican legislators for the package.  Governor Schwarzenegger does not have the support of his own party, which makes it more important to influence the Republicans by their constituents.  Senator Ducheny believes that there are solutions to the current crisis, but they require structural changes which work in the long-run and not just slash and burn attacks on state services.

The California Faculty Association sponsored the talk, but concern about the budget cuts cross campus community lines.  President Haynes and other administrators were part of the audience.  Lobbying in Sacramento will be intense as the CSU family tries to protect itself from catastrophe.

By Brian Young, CSUEU