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Jericho TrumpetFall 2002 Issue:
Governor Signs Compromise Budget -- Deficit Continues Into 2003On September 5, Governor Gray Davis signed the $98.9 billion 2002-03 Budget which the Legislature had approved in the early hours of September 1. Even though the budget reduces spending for only the second time in four decades, the resources generated by California's tax structure are not enough to cover the costs of its programs and services. The budget primarily uses program reductions, debt restructuring, temporary tax increases and loans to bridge the record $23.6 billion gap between expenses and anticipated revenues and provides for a $1.035 billion reserve. The current year's woes are primarily attributable to a significant decline in revenues related to stock options, capital gains income, and loss of personal income tax revenues due to the slowing economy. However, analysts are predicting that the gap will continue for several years-estimated to be between $10 and $15 billion next year-and suggest that there are structural problems with the state budget that need to be addressed. Both houses of the legislature are planning to convene special committees to look at budget reform. Budget reform will also be one of Jericho's issues since it so fundamentally affects all of the other issues. Budget Effects on JERICHO Priorities Gap-closing budget actions include $460 million in health and human service reductions. Money lost to these programs involve actual money from the General Fund and the federal dollars the General Fund money would have generated as "match". Although not as deep as those proposed in the May budget revision, social services lost $16.5 million from county administration of the Food Stamp program, Child Welfare Services program lost $50 million, and Adoptions was cut $5.2 million. Housing Programs Lose Momentum Housing programs will take reductions. However, the remaining amount of $165.5 million is still 30% greater than the 1998-99 level of $126.5 million but much less than the brief "spike" in state funding in 2000-20001 as the economy expanded. Several bills that the Governor signed are dependent on the passage of Proposition 46 which would issue bonds to increase affordable housing (See Prop 46 article). Supportive Housing, a program under the Department of Mental Health that assists homeless mentally ill individuals, received no funding in the final Budget. Also reduced are funding for the Integrated Services for Homeless Adults program by $10 million and eliminating state funding for Adult Systems of Care in mental health services. Farmworker housing is reduced by $3 million. The budget bill also deletes the provision triggering an additional $8.5 million reduction if Proposition 46 passes. Health Care, Social Supports Cut In October, 2001 Governor Davis signed into law AB 59 and SB 493-Express Lane Eligibility through School Lunch and Food Stamps-which makes it easier for uninsured children enrolled in other public programs to enroll in Med-Cal or Healthy Families. The 2002-03 budget eliminate $12 million ($6 million General Fund) to fund Express Lane. The Governor allowed for its implementation in July, 2003. The Governor supported a one month bridge for children transitioning from Medi-Cal to the Healthy Families Program (HFP), he did not accept the two-month appropriation in the budget. He also postponed coverage in HFP of parents. Elderly, disabled people as well as CalWORKS recipients will have to wait months for cost-of-living (COLA) adjustments that are mandated by law. ELECTION 2002 PROPOSITIONSJERICHO has not ordinarily taken positions on statewide ballot measures. This year, because of the importance of the Housing Bond (Prop 46) and the budget implications of Props 49 and 51, we are offering our judgment of their impact on low-income people. PROPOSITION 49 Prop 49 would increase annual grants for after-school care, mentoring and crime prevention from $95.3 million to a maximum of $550 million. The measure would require local programs to provide 50 cents for every $1 as is currently the case. Schools that have existing programs would be grandfathered in at their current levels. All schools would have a base level of funding and priority would be given to low income students. In California, the peak hours on school days for crime or when kids become victims of violence are from 2 PM to 6 PM. After School Programs have demonstrated that they reduce crime by and against children and improve attendance and academic performance. Statewide, only one in seven elementary and middle schools-and one in four targeted schools where kids are most at risk of school failure and becoming victims or perpetrators of crime-gets funding from the current program. There are at least 42,000 students on waiting lists for the programs in schools that do have funding. Why would JERICHO oppose this Proposition that promises so much good? The reason is that it provides no new money. The $450+ million dollar "increase" competes with medical care, housing, and mental health services for the same children. Without an increase in revenue on a consistent basis, we are pitting need against need. PROPOSITION 51 Proposition 51 would redirect 30 percent of the sales tax revenue from the sale and lease of new and used motor vehicles to be used for passenger rail and bus transit, traffic congestion relief and safety, environmental expenses, school bus purchases and modernization and bicycle and pedestrian projects. At first reading all of the above sound like good ideas. An analysis of the specific projects, however, reveals the exclusively special interest use of the funds. This initiative ties up the state budget with 17 new categories of required spending. The specific projects selected aren't even the higher priorities of regional planning groups. Some of the projects require future spending. JERICHO stands with the League of Women voters on this one with a NO vote. PROP 46 PROVIDES MAJOR BOOST FOR AFFORDABLE HOUSINGThe Housing and Emergency Shelter Trust Fund Act (SB 1227 Burton) as signed into law will be on the November 5 Ballot as PROP 46. This measure allows the state to sell $2.1 billion worth of general obligation bonds to fund 21 housing programs. (See Affordable Housing Overview). The bonds, backed by the state, would cost about $4.7 billion over 30 years with payments of about $157 million per year. If passed by the voters it will provide $910 million for rental housing for low income seniors, disabled, and families with children; $495 million for homeownership, including down payment aid for low and moderate income families: $390 million for emergency shelters and permanent housing with services for the mentally and physically disabled; $200 million for farmworker housing; $100 million for incentives for localities to approve affordable housing; and $5 million for code enforcement. The bond is predicted to produce 135,000 housing units, 276,000 full-time jobs and generate $42 billion in spending for home-related goods and services. EditorialBy Sister Simone Campbell In this pre-election issue of our newsletter, it is difficult to keep a focus on the California elections. The international reality is so disquieting with President Bush and his cabinet urging immediate war with Iraq, it is tempting to forget the State elections. Also, there seems to be a malaise on the part of some about this year's choice of candidates. I propose that it is in just such times that we must do all that we can to respond to the needs of the poor and marginalized by voting on November 5. We need all of the energy that we can muster. JERICHO wants to draw your attention to three ballot measures and urge a specific vote: YES on Proposition 46 Our position in favor of Proposition 46 (the Housing Bond Initiative) will not come as a surprise. The news pieces about the housing shortage in our state are legion. In our cities homelessness has increased and affordable housing is almost non-existent. However, our position on the other two propositions may be more surprising. I want to explain briefly our editorial position. While JERICHO strongly supports programs for children (Prop 49) and transportation solutions (Prop 51), we cannot support these two propositions for several reasons, but our key concern is that each one would dedicate funds from the state general fund without raising new revenue. Such a move might seem a benign action, but we maintain it would be a disaster in our state. What is not commonly realized by citizens of our state is that there are many mandated programs that do not come out of the general fund (prisons, education, etc.). The bulk of the State general fund goes to health and human services and it is in the general fund that the only flexibility for cuts exists. In this year of a $23+ billion shortfall, these human service sectors have already experienced significant cut backs because they were not mandated programs. It is note worthy that a broad based coalition of advocates (including JERICHO) were able to minimize the cuts this year. However in the coming years those reserves that were used to prevent the cuts will be gone. To mandate further diminishment of the general fund for after school programs and transportation needs (both potentially beneficial causes) at the expense of basic health care in our state is just plain WRONG. This pitting two goods against a huge need (health care) points out the current tragedy in our state -- the reluctance of lawmakers and the governor to address the gross inequities and inadequacies of the California revenue and tax structure. During the coming session of the legislature, JERICHO will work with others to develop the political will and the policy insights to address this destructive problem -- and looking to our membership for support and action. But in the meantime, let us do what we can for the poor of our State. Vote on November 5!! And please vote YES on Proposition 46 and NO on Propositions 49 and 51. A Brief Overview of California's Affordable Housing CrisisThis is the second in a series of articles looking at issues facing California voters. "By the time I pay for our apartment, child care for the two kids, and keep my car in gas -- I don't know how I would pay for health insurance. I can't even afford car insurance and that puts me against the law!" Working mom with two children California's housing shortage has reached crisis proportions. The lack of affordable housing is so severe that it threatens the health and welfare of thousands of Californians, as well as the state's long-term prosperity. Elizabeth is one of the four out of ten Californians who is a renter. She is also one of the million-plus low income renter households in the state's metropolitan areas that spends more than half of her income on rent. She -- and two-thirds of those other renters with annual incomes under $18,000 -- often have to choose between having adequate food, clothing, health care or child care. In 2002, the number of low-income renter households in the state's metropolitan areas exceeded low cost rental units by 2-to-1-a gap of over 650,000 units. California's home ownership rate is the fourth lowest in the nation. In 2001, only 58 percent of Californians owned their own homes compared to the national average of 68 percent. Federal Housing Assistance Several factors have contributed to the current situation. For the past thirty-plus years, the federal government has reduced its commitment to affordable housing. Few people realize that the $51 billion in subsidized housing budget authority provided in FY 1976, during the Ford administration, is almost twice as much as the Bush administration's request for FY 2002. Middle and upper income homeowners receive more dollars in subsidies than low-income people do in housing programs. Most people don't consider their federal mortgage interest deduction ($63.2 billion worth in 2001) a subsidy, but the US Treasury does. Homeowner mortgage interest deductions, property tax deductions, housing-related capital gains provisions, and investor deductions together constituted $121.1 billion worth of subsidy in 2001. No Easy Solutions A number of factors have contributed to the crisis in affordable housing. There is a tension between a statewide interest in the supply of housing and problems at the local level. The effects of Prop 13-which gave homeowners a break in property taxes-means that other home buyers now may pay 15% more for their house because of the fees that have replaced the taxes that supported local governments. Local communities must balance social equity with environmental protections and wildlife habitat, water supply, open space, growth limits, school overcrowding, noise and traffic congestion. The Not in My Backyard (NIMBY) syndrome has blocked many an affordable project. The often lengthy planning and review process increases the cost of housing and the multiplicity of funding sources needed to develop affordable housing is difficult even for professional developers. The Housing Element which every local jurisdiction is required to update every five years has no enforcement mechanism and efforts to create enforcement through AB this year were defeated. Prior to the Administration's major housing initiative in 2000, periodic housing bonds and tax credits offered to developers were the mainstay of the state's housing programs. The Department of Housing and Community Development asserts that, given current trends, the state will build less than 60% of the new housing needed over the next 20 years. Money, although not the only element in creating more affordable housing, is absolutely key. This is the reason Prop 46 is so important. Home | Newsletter | Fall 2002 Issue |
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