Disability home gets IOU, hopes for helpful bill to pass

Noah Homes, a San Diego residential center for people with developmental disabilities, will soon receive a state-issued IOU amounting for $185,000.

With the failed attempts by the state Legislature to pass a balanced budget before the end of the fiscal year, starting Thursday, California Controller John Chiang will have to issue $3 billion in IOUs for the month of July. But, Noah Homes CEO Molly Nocon hopes a bill proposed by Assemblymember Joel Anderson (R-El Cajon) will be passed to help deter some of the IOU burden.

The bill would allow IOU recipients to use IOUs as payment for any obligations owed to the state, which could include state taxes, payroll taxes or any licensing fees.

“Those with developmental disabilities always seem to be the first ones hurt,” Nocon said. “It’s very likely legislators will pass this bill. I have hope that they are listening more and more because the situation is so desperate that they have to be willing to listen to out-of-the box ideas, or even just regular ideas.”

For Noah Homes, which operates on roughly $220,000 a month, the passage of AB 1506 could make a big difference, Nocon said. Nocon said the center’s payroll taxes are estimated at $500,000 a year, and one-third of that amount goes directly to the state. Additionally, the center has to pay DMV and licensing fees that cost about $10,000 a year. So, Nocon said, the bill wouldn’t solve all problems for the center, which would lose more than half its payment this month, but it would certainly help.

Nocon said Noah Homes isn’t waiting around and will apply for a credit line. The center, which opened in 1983, has only received a 3 percent increase in funding the past 10 years, despite the rise in costs of operation, Nocon said. But, because of the state’s budget crisis, the added money has been withdrawn.

“We’ve come to realize they [state legislators] just can’t be depended on,” Nocon said. “We have to figure out funding for ourselves.”

Nocon said if the center receives credit from banks, it could survive up to six months. Meanwhile, Noah Homes is also looking for ways to receive funds through federal economic stimulus funds or grants, or private donations.

Noah Homes’ possible closure would be difficult for nearly 20 of its residents who no longer have family members.

“A third of our population [in Noah Homes] is who we consider orphans,” Nocon said. “That means about 20 residents will have no place to go if we shut down.”

Nocon said the situation is worst for smaller group homes, which assist about six people with developmental disabilities at a time.

“Those homes are living from paycheck to paycheck,” she said. “So if the state issues just IOUs, they have to close after 60 days.”

Others affected by the state’s budget crisis also hope for reprieve.

Gloria Freeman, president of Staff USA, whose state contracts represent 80 percent of her business, also hopes Anderson’s bill passes.

“I have already laid off five employees in preparation of IOUs,” said Freeman during a press conference Wednesday. “That’s why it’s important to pass AB 1506, so that we can mitigate these impacts.”

“For many businesses like mine, AB 1506 could be the difference between life and death.”

Anderson, who recently told SDNN that it is unfortunate the budget is never passed on time, said Californians cannot abandon bills like its government.

“While California may get away with piling up debt and then skipping out on its bills, the rest of us cannot,” he said. “Businesses with state contracts, which are already operating on a slim or no profit margins, will go under. For that reason, AB 1506 deserves bipartisan support.”

Nocon said she has an alternative idea. She said the state should re-evaluate government-operated homes for the disabled, as they spend nearly $50,000 more than houses run by Noah Homes. She also said most specialists agree that a large number of residents in the government-operated-homes don’t need to be there and that spending could be tighter.

Nocon also said she wishes legislators would consider more cuts at the top of the government rather than from services.

“We hope they will begin to listen and understand that this population cannot speak for themselves,” she said. “The cuts just have to happen at a higher level. It’s always been assumed that cuts at the bottom have been the case, or for those with developmental disabilities because they’re not a part of the voting bloc.”

The necessity to issue IOUs comes after the state Legislature failed to pass a “stopgap plan” Tuesday night, the last day of the fiscal year. On Wednesday morning, the Governor’s office estimated that shortfall grew to $25.3 billion (originally it grew to $26.3 billion but the Governor has said he’ll tap into $1 billion worth of reserves) and may grow another $7 billion. Schwarzenegger officially declared California in a state of emergency the same day, which was his only way out of the California Balanced Budget Act, a five-year-old law that requires a balanced budget be signed by the end of the fiscal year.

Hoa Quach is the SDNN political editor. She can be reached at Politics(@)SDNN.com

Tags: California, deficit, fiscal crisis, recession, Schwarzenegger, SDNN

This entry was posted on Thursday, July 2nd, 2009 at 4:06 pm and is filed under Health, Local News, Politics & Government. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.