Key provisions of the state budget agreement

Spending on welfare, child care, home care, Medi-Cal, prisons, courts and state employees would be reduced. For now, education is relatively untouched.

Chris Megerian and Anthony York

Los Angeles Times

Gov. Jerry Brown and top Democratic lawmakers announced Thursday that they had reached a deal on state spending. Here are some key elements of the budget agreement:

Social services

Spending on welfare, child care and home care for the elderly and disabled would be reduced. There would be stricter requirements and time limits placed on welfare recipients, but those close to finishing job-training programs could get exemptions. Monthly welfare checks would not be reduced. State-supported child care would be sliced 8.7%. In-Home Supportive Services, which allow some elderly and disabled residents to avoid being moved into nursing homes, would be reduced by about $90 million. That cut means beneficiaries would receive 3.6% fewer hours of care.

Health programs

The budget includes more than $1 billion in cuts to Medi-Cal — the insurance program for the poor — and other state health programs. The bulk of the savings, $663 million, would come from a plan to move 1.4 million low-income seniors and people with disabilities who receive benefits from both Medicare and Medi-Cal into managed care. The budget also is banking on an improving economy to lower the state's healthcare costs. It assumes hundreds of thousands of people will go off Medi-Cal as they or family members return to work. Since 2008, Medi-Cal rolls have swelled to nearly 8 million people, up from about 6 million before the recession began. The budget also includes about $88 million in reduced reimbursements to private hospitals and nursing homes. Although the federal government has rejected most of the Brown administration's requests to have the poor pay a share of their healthcare costs, the budget does include patient co-pays for a few services, including non-emergency visits to an emergency room and certain prescription drugs. It also calls for poor patients with AIDS to pay more for their medication. Lastly, the budget phases out the Healthy Families program for children, shifting them into Medi-Cal.

Prisons and courts

To save billions over the next few years, officials want to close a prison, end contracts with private out-of-state facilities and cancel some construction projects. They also plan to shift staff to reduce costs, hold inmates in less expensive housing and continue sending low-level offenders to county jails instead of state prisons.

As for the state court system, the budget would slice $300 million from the trial courts. Up to 38 construction projects would be halted because of an additional $240 million in cuts. California Supreme Court Chief Justice Tani Cantil-Sakauye has said the cuts could lead to more courtroom closures, depriving residents of access to the judicial system.

State workers

The budget aims to cut compensation for 182,000 state workers by 5%, saving $402 million. That includes nurses, engineers, administrative workers and Highway Patrol officers. Brown has pledged to negotiate the cuts with public employee unions, and so far has reached agreements with six of the 21 bargaining units that represent state workers.

Education

The governor and lawmakers have opted to leave the financial fate of the state's public schools, community colleges and universities in the hands of voters. Brown hopes to place an initiative on the November ballot that would hike sales taxes and upper-income taxes. The measure would raise $8 billion in the next budget year, according to administration figures, and leave schools relatively untouched by this year's budget ax. If those taxes are rejected, a series of trigger cuts would go into effect, including a $5.5-billion reduction to public schools and community colleges. The trigger cuts include $250-million reductions each to the California State University and University of California systems. Education leaders say tuition increases would be likely if Brown's initiative were rejected. Lawmakers also have proposed eliminating dozens of earmarks for specific programs within the state's public K-12 system, deciding instead to send block grants from Sacramento.

State parks

To prevent dozens of state parks from closing July 1, lawmakers shifted money within the budget to keep natural and historic sites open to the public. The budget would increase park funding by tapping federal funds for water improvements and motor vehicle registration fees. It also encourages the state to collect entrance fees at more parks and seek additional contracts with private companies to operate things like concession stands.

CALIFORNIA’S NEW ELECTORAL REFORMS: HOW DID THEY WORK?

Eric McGhee and Daniel Krimm 

Public Policy Institute of California (PPIC)

Results as of 9 a.m., 6/8/12

New electoral reforms were designed to shake up the status quo.

California voters recently adopted two ambitious electoral reforms that first took effect in the recent primary election. One reform is the establishment of new district boundaries for the state Assembly, state Senate, and U.S. Congress, drawn by a citizens’ commission. (Ten years ago, the state legislature drew the lines and largely protected incumbents in the process.) The other reform is a new “top two” primary system that combines all candidates on a single ballot for all voters, with the two candidates who receive the most votes, regardless of party, advancing to the fall election. Both reforms were intended to change the makeup of the state legislature to increase its accountability to voters and its ability to reach consensus on major issues.

The new districts have disrupted established incumbents …

The reforms are more complementary than reinforcing, with each having its own effect. The redistricting has disrupted established incumbents. There are fewer safe seats, and the average incumbent had a district that was 45% new territory. In races for the U.S. Congress, incumbents were forced to run against each other in two districts, and there was the largest number of open seats—nine—since 1992. The number of open Assembly seats, 35, was also well above average for the last decade. Only the number of open Senate seats—nine—was within typical bounds.

… while the top-two primary has altered traditional patterns of competition.

More incumbents faced primary challenges from within their own party this year than they have on average in the last five election cycles (42% vs. 18%). Redistricting does not fully explain this change, because incumbents in districts that changed a great deal were not substantially more likely to face a challenge than those in districts that did not change so much. Instead, the top-two was probably the stronger cause, since it gives primary challengers a better chance of appearing in the fall election. Indeed, almost all of the increase in primary challenges occurred in seats where the odds of a same-party runoff were the best. The top-two also discouraged competition from minor parties, who are no longer guaranteed a spot on the fall ballot: districts with no minor or independent candidate were up (72%, up from 53%). Districts without a candidate from one of the major parties were also more common this year (16%, up from 7% over the last five elections).

The reforms led to closer outcomes.

The average vote margin was 22 points between first- and second-place finishers and 11 points between second and third. By comparison, when the results of past primary elections are tabulated for a single ballot, as in the top-two, both margins are larger—suggesting that past races were not as competitive. Why might the top-two increase competition? Two possibilities: a greater number of competitive candidates and increased opportunity for voters to cross party lines. Today, in 59% of the races, one candidate has already received more than 50% of the vote. This number would also have been larger in the past.

The political establishment suffered some defeats, but mostly saw victories.

All incumbents who ran this year advanced to the fall campaign, and all but four finished in first place. Likewise, 101 of 113 non-incumbent candidates endorsed by the major parties advanced. There will also be 28 same-party runoffs, which fell almost entirely in safe seats. The one exception is Congressional District 31 in San Bernardino County, which has more registered Democrats than Republicans but will advance two Republicans (Gary Miller and Bob Dutton) to the fall campaign. Finally, there were 37 “no party preference” candidates who rejected both party labels; five of them advanced to the fall election, all in seats considered safe for either one of the major parties. 

The reforms have disrupted old patterns of competition  

District	Assembly (80 seats)		Senate (20 seats per election, 40 total)		U.S. House (53 seats)
	2012	Average 2002–10	2012	Average 2002–10	2012	Average 2002–10
Open seats	44%	37%	45%	49%	17%	5%
Same-party competition	63	46	45	39	79	51
Same-party incumbent challenge	33	8	27	2	52	31
One major party absent	14	6	25	12	17	7

Source: California Secretary of State.

Notes: “Open seats” refers to districts where no incumbent is running. “Same-party competition” is the percentage of districts where at least one major party has at least two candidates. “Same-party incumbent challenge” is the percentage of incumbents running for reelection who face a challenge from within their own party. “One party absent” is the percentage of districts where one major party has no candidate.

Competition was fiercer and will continue to the fall election in more places 

  

District	Assembly (80 Seats)		Senate (20 seats per election, 40 total)		U.S. House (53 Seats)
	2012	Average 2002–10	2012	Average 2002–10	2012	Average 2002–10
Same-party runoffs	23%	11%	10%	15%	15%	7%
Winner > 50%	50	70	80	77	66	88
Average gap between 1st- and 2nd-place finishers	19	28	20	30	28	39
Average gap between 2nd- and 3rd-place finishers	8	16	19	19	14	17

 

Source: California Secretary of State.

Notes: Comparison numbers for 2002–2010 were calculated as if the results of those contests had been combined on a single ballot, as they were for the top-two primary. “Same-party runoffs” refers to the percentage of districts where two candidates of the same party will face each other in the fall. “Winner > 50%” is the percentage of top vote-getters who received more than half the vote. “Average gap” is the gap in vote share between the first- and second-place finishers, and second- and third-place finishers, respectively. The gap in vote share between the second and third place finishers shows share of votes required to change the top two finishers.

Contact: mcghee@ppic.org

Download this summary by clicking http://www.ppic.org/content/pubs/jtf/JTF_ElectoralReformsJTF.pdf

In the Wake of the Great Recession, Wealthy Families Bounce Back, While Middle-Income Families Fall Further Behind

Sam Sellers, Research Assistant

The California Budget Project

Recently released data from the Franchise Tax Board (FTB) illustrate that the wealthiest Californians started to recover from the Great Recession in 2010, while middle-income Californians continued to lose ground. The average income of middle-income Californians reached a more-than-two-decade low in 2010, according to the FTB data. That year, the middle fifth of California taxpayers earned $34,621, on average, more than $800 (2 percent) less than in 2009, after adjusting for inflation, and nearly $7,000 (17 percent) less than in 1987 – the first year for which data are publicly available. In fact, the average income of middle-income Californians has declined every year since 2004, after accounting for inflation.

In contrast, the average income of the wealthiest Californians, which lost purchasing power during the Great Recession, has started to bounce back. Between 2009 and 2010, the average inflation-adjusted income of the top 1 percent of taxpayers grew by an astonishing $250,000 (21 percent) – to over $1.4 million. This substantial increase in the aftermath of the recession partly reflects strong growth in investment earnings, which make up a large share of the incomes of the wealthy.

These trends indicate that the gap between the incomes of the wealthy and those of middle-income Californians began to grow again in 2010, after narrowing briefly during the downturn. This is troubling. Some experts suggest that widening income gaps could make it harder for low-income children to move up the income ladder as adults because the rungs of the ladder are farther apart. And as we illustrated in a CBP report on inequality released last fall, mobility up the income ladder is far less common than many people realize. Two out of five US children who grow up in families in the bottom fifth of the income distribution remain in the bottom fifth as adults. In addition, children who grow up in low-income families in the US are less likely to move up the income ladder as adults when compared to children in many other industrialized countries.

The continued decline in the incomes of middle-income families is also a troubling trend – one that could have significant consequences for the pace of California’s economic recovery. Consumer spending is a key driver of the economy. But with their incomes losing purchasing power, many middle-income families cut back their spending in recent years, according to national data from the US Bureau of Labor Statistics. Middle-income families tend to spend a large share of their incomes. This means that as their earnings increase, so does their spending, which helps to spur job creation and fuel economic growth. With declining incomes for middle-income families, our economy is likely to grow more slowly.

Given the continued struggles of middle-income Californians in the wake of the most severe economic downturn since the Great Depression, policymakers should avoid more devastating budget cuts to programs that help families make ends meet. As policymakers work to close the state’s budget gap before the constitutional deadline at the end of this week, we urge them to take a balanced approach that preserves the public services and structures that provide the foundation for a strong economy.