January 30, 2004

Editorial:

Proposition 57 and 58 a Bad Deal for Minority Communities

We are combining Propositions 57 and 58, because one without the other does not matter. In this election, the fate of Prop 57 is dependent on Prop 58, and vice versa. Budget/bond issues are, inherently, difficult to understand and with the co-dependency of the two, these Propositions are even more confusing for the common man or woman.

Proposition 57 is the Economic Recovery Bond Act (Bond Act, put on the Ballot by the Legislature - Majority Approval Required), put forth by Governor Arnold Schwarzenegger to balance this year’s budget, asks “Should the state of California borrow $15 billion through the sale of bonds to provide financing for California’s budget deficit?” The bond authorized by this measure would be used in place of the deficit-financing bond authorized last year by the Legislature. Proposition 58 must also be approved for it to take effect.

To put it simply, the state has been spending more than it has been bringing in for several years now, and it is now time to pay the piper. Former Governor Gray Davis had hoped to pay off the deficit by increasing the car registration fees and through a $10.7 billion bond approved last year.

After the recall election, Schwarzenegger, who had tapped into the anger over the car registration fee, delivered on his promise to rescind the fee and instead has proposed his $15 billion bond to cover the shortfall.

The bond will be repaid by one quarter of a cent (1/4 of 1¢) of state sales tax which equals about $1.2 billion each year. It will take between 9 and 14 years to pay off this bond (compared to 5 years for the $10.7 billion bond).

This may be a simplistic view of the budget crisis that the state faces, but with most of us, when we are spending more than we make, we stop spending and pay only for those things that are necessary, like mortgage payments, utilities, food, etc. And when we go to the credit card to try and get ourselves out of debt, the opposite happens, we find ourselves in greater debt and we end up paying high interest rates. Well, the state is pretty much in the same shape.

Governor Schwarzenegger has proposed spending cuts, but the cuts are biased and are not shared by all interested parties. The Governor is asking the poor and minority communities to bear the brunt of the budget cuts, which means that basic services such as dental health, prostate cancer programs and educational programs, to name just a few, will not be available and will cost the poor and minority communities more out of pocket monies for basic needs. So, now the Governor is asking these people to pass a bond, which will be another burden for these low-income communities.

At the same time, the Governor is not asking the wealthy, big business or the influential to tighten their belt. Emblematic of this situation is after Governor Schwarzenegger proposed higher fees for education, and the elimination of basic health services for the poor and minority communities, he approved an increase in spending for his office and state legislatures. Where is the belt tightening in that? This re-affirms the attitudes of those that have who will continue to live high off the hog and the have-nots, who will have to manage with even less.

The Governor has been stating that Armageddon will ensue if this bond is not passed but in reality the $10.7 billion bond will become reality, and the state will have to look deeper as to where further spending cuts can be made.

We recommend a NO on PROP. 57 and send the budget back to the Governor to take a good hard look at cutting the budget where there is true excess and to restore those safety net services to the poor and work to ensure that every student who wants an education can afford an education.

Proposition 58. The California Balanced Budget Act — State of California (Legislative Constitutional Amendment - Majority Approval Required.) Should the state Constitution be amended to require that the state adopt a balanced budget and provide for mid-year adjustments if the budget falls out of balance? Should the Constitution also include state budget reserve requirements and limits on future borrowing to finance budget deficits?

Prop 58 does not add anything new. A balanced budget requirement is already on the books. Each year, the Governor must present a balanced budget to the Legislature. The difference is that the Legislature must now enact a balanced budget. And the State must set up a reserve fund for budget shortfalls, but there is already a budget reserve setup.

Prop. 58 is a knee jerk reaction to tough times. Let us not forget that it was just a short time ago that the state had a budget surplus, that was until energy deregulation and the dot-com colapse.

In as much, we recommend a NO on PROP. 57, logic would then dictate that if Prop 57 is defeated, Prop 58 is null and void, and we would then recommend a NO on PROP 58.

Standing alone this proposition may have some talking points, but that it is tied into Prop 57, we are left with no alternative but to oppose his proposition.

We recommend a NO on PROP 58.

Letters to the Editor Return to the Frontpage