Budget Update. February 6, 2009
Dear Colleagues:
For the past few weeks, there has been little solid information to report on the state budget process. Big Five leaders have been meeting almost daily. Publicly, they have been saying very little, other than to comment that negotiations are going well. It is notable how little information has been leaking out of Big Five negotiations—even to members of the Legislature. You have probably seen newspaper articles describing how this secrecy has become a source of frustration for legislators who are feeling left out of the process.
This unprecedented level of discipline by the Big Five is seen by many as an indication that state leaders understand that time is truly running out for them to address the budget crisis. The state’s cash crunch is now having real-world impacts—billions of dollars of public construction projects are frozen and the State Controller is beginning to delay some payments, including tax returns, some Cal Grants, and certain vendor claims. Further delay would truly be devastating in terms of shutting down programs, services, and local governments. Were the state to default on payments to bondholders, the damage to the state’s credit worthiness would impact the state’s ability to borrow and raise the associated costs for years to come. Given these high-stakes consequences, the Big Five are being careful to avoid leaks that could mobilize special interests and blow up a pending deal.
Yesterday, Senate pro Tem Darrel Steinberg commented that Big Five negotiations were “coming to a close” and that both houses would meet next week to vote on a budget plan. Senator Steinberg was careful to note that there was not yet a “deal” given that some issues were still unresolved. Still, this is the most concrete indication of hope for a budget resolution that we have seen since the Governor first declared a fiscal emergency in November.
At this time, no details are available about the details of the pending deal. There have been rumors about a “hard spending cap” being part of the deal. Overall, it is clear that significant cuts and new revenues will also be part of the package. No specifics related to the community colleges are known. As soon as we have any information, I will provide an update.
Changing topics, there has been much activity around the proposed Federal Economic Stimulus package. While there is still great uncertainty about what the final package will include, it is clear that it will provide a significant one-time infusion of revenues to states for a variety of purposes. Major items include investments in public infrastructure, backfilling cuts to public education, and targeted tax breaks. California Community College leaders, including Chancellor Jack Scott, trustees, CEOs, faculty representatives, and others will be traveling to Washington D.C. next week to weigh in on the stimulus proposal. The attached Word document includes a set of talking points that our representatives will be using next week as they meet with members of Congress and Administration representatives.
DOWNLOAD: Talking Points February 2009 DC Trip
More updates will follow as the situation develops.
Regards,
Erik Skinner
Vice Chancellor for Fiscal Policy
Chancellor's Office
California Community Colleges
1102 Q Street, Sacramento, CA 95814-6511
phone: 916-323-7007
fax: 916-322-4783