State Controller John Chiang reported today that the state has fallen $1.5 billion behind on projected revenue. The state budget passed back in June has built in automatic cuts that would take place in the event that actual revenue doesn’t meet projected revenue. Those cuts would affect K-12 education, higher education, public safety programs, and in-home supportive services.
All of these areas of the budget, and many more have already seen drastic cuts in funding over the last four fiscal years. The budget cuts that occurred just this year have already resulted in mass layoffs in Sacramento County. Higher education in California, including schools in the Sacramento area like Sacramento State and UC Davis, have had to continually raise tuition and offer less financial aid making it harder and harder for low-income students to acquire a college education. As the state continues to miss revenue projections, the automatic cuts to education and public safety become more imminent.
And the state’s budget isn’t the only problem. There is also still an issue of funding the state pension system. Governor Brown just a few weeks ago proposed a 12 point plan to address the pension funding issue. That plan involved cutting benefits, requiring state employees to pay more into their pensions, and to move new state employees out of their defined benefit plans and into a hybrid defined benefit/defined contribution plan. But the Legislative Analyst’s Office (LAO) gave Brown’s proposal sour reviews. The LAO questioned whether the government could legally mandate that employers and current employees. The LAO also noted that the Governor’s plan completely ignores the financial shortfalls that exist in the state’s teacher retirement plan. Finally, the LAO thinks the proposal is a very bold starting point for legislative negotiation.
So it seems that Governor Brown and the legislature still has a long way to go to solving California’s fiscal woes. How will Sacramento area employment and education suffer if the automatic cuts are enacted? If the pension funding problems aren’t addressed what benefits will remain to future retirees? And if future state employees don’t have the ability to retire securely, what does that mean about the availability of and allure of state jobs? The Sacramento area, just like any other area of California, has a lot of the future riding on state officials’ ability to solve these massive economic questions.