May 15, 2012; Source: Contra Costa Times

Earlier this week, the NPQ Newswire took note of the rapidly cratering financial picture of the state of California, with multi-billion dollar deficits ballooning beyond anyone’s expectations.  Now Gov. Jerry Brown has identified what the consequences will be.

On Monday, Brown presented his revised “day of reckoning” budget. Although it included increased taxes for the wealthy and an across-the-board increase in sales taxes for the rich and the poor, the budget also included $8.3 billion in budget cuts aimed at reducing the projected $15.7 billion deficit ($6.5 billion higher than predicted in January).

What gets cut? Social service programs for the poor, health services for the poor, and state support for public education.

The Contra Costa Times summarizes Brown’s proposed budget excisions: “cuts to hospitals and nursing homes to reduce Medi-Cal costs; barring colleges and universities that can’t meet minimum performance standards from taking part in the Cal Grant program; reducing state workers’ pay by 5 percent through contract renegotiations; and using assets that used to belong to local redevelopment agencies.” The Times also noted a possible $5.5 billion cut in state funding for K-12 schools and community colleges (if tax hikes fail on November’s ballot), which get approximately 40 percent of the state’s general fund revenues. Proposed cuts also include a reduction in the state’s welfare-to-work program (CalWORKS) and a seven percent cut in the state’s In-Home Supportive Services program for home health care attendants for the elderly and disabled (apparently, the administration wanted a 20 percent cut, but state courts rejected that idea).

The governor’s budget proposal has even caused dissension within the Brown administration.  Attorney General Kamala Harris voiced opposition to Gov. Brown’s plan to divert $410 million from the state’s share of the mortgage settlement into the state’s general fund. “The state Department of Justice stood firm for over a year against the nation’s largest banks on behalf of California homeowners harmed by the foreclosure crisis,” Harris told the Times. “While the state is undeniably facing a difficult budget gap, these funds should be used to help Californians stay in their homes.”

And, as the NPQ Newswire has noted (see here, here and here), Gov. Brown’s plan to close as many as 70 state parks is part of the proposed budget savings, despite opposition from Democratic state legislators. Some 16 to 36 state parks might be kept open as a result of charitable donations and nonprofits stepping in to manage them, but that hasn’t been formally approved yet.

Are there lessons here for nonprofits? Probably many, but one to note is that the fiscal problems of state governments and the budget solutions proposed by governors and legislatures don’t break down in neat Democratic/Republican ideological divisions. The problems of some states like California are so severe (perhaps partially due to various initiatives and referenda passed by voters over the years) that the mix of tax increases and program cuts will rub up against legislators from both parties. Gov. Brown says that he is proposing cuts in programs to the poor only because they are necessary to “right the ship of state.” The solutions that many states are trying, like Brown’s proposed diversion of the mortgage relief funds, are too often quick fixes, one-offs that may do something in the short term, but fall far short of righting the ship.—Rick Cohen