California Budget Crisis Diaries: Budget gaps are catching up

California Budget Crisis Diaries

Gov. Arnold Schwarzenegger applauded California Insurance Commission Steve Poizer for rejecting workers' compensation rates Monday. (AP Photo/Rich Pedroncelli)

Budget gaps are rearing their ugly heads once again as it grows nearer to the January release of the new budget for next fiscal year. On a brighter note, Gov.  Arnold Schwarzenegger and other state leaders are fighting for businesses and protecting the initiative process in California.

Workers’ Comp: California Insurance Commissioner Steve Poizner on Monday rejected a second call by the Workers’ Compensation Insurance Bureau to hike rates by 22.8 percent for policies enacted after Jan. 1. He reasoned that such a rate hike would negatively affect California’s businesses and employers as the state works to rebuild its economy.

Most leading insurance companies abide by the commissioner’s decisions, but they are not obligated to do so.

“This effectively is a tax on every employer in the state of California to cover the cost of workers’ compensation insurance. As rates go up, it will definitely make our unemployment grow worse,” said Poizner in a conference call with the Los Angeles Times.

Schwarzenegger released this statement Monday:

“As we continue our efforts to rebuild California’s economy, it’s important that we aren’t adding additional and unnecessary costs on employers and I applaud Commissioner Poizner’s decision today. Throughout my Administration, I have worked tirelessly to reduce workers’ compensation insurance rates and the bipartisan reforms that I championed have found success in identifying waste and fraud in the system to create a positive business environment in our state while protecting injured workers.”

Voters against budget reforms: The results of a Los Angeles Times/University of Southern California poll on state budget reforms was released on Monday. The proposed reforms, which represent California’s best chances to end its perpetual budget crisis, were soundly rejected.

There are three reforms being discussed that would overhaul the structure of California’s budget:
• Changing the California Constitution to lessen the two-thirds majority needed to pass the budget.
• Taking the burden of the state income tax off of the rich, and distributing it more evenly, in order to lessen the blow of economic recessions on tax revenue.
• Making changes to Proposition 13, a 30-year-old initiative that limits the amount of property taxes that can be collected, passing certain burdens from local governments to the state.

According to the poll, 54 percent are still in favor of keeping the two-thirds majority to pass the budget, 44 percent oppose distributing income tax more evenly and 62 percent would not want to change Proposition 13.

Budget gap: Schwarzenegger announced Monday that California’s budget this fiscal year will likely be short $5 billion to $7 billion, even after all the fiscal wrangling done to try and control it.

When the $7.4 billion deficit estimated for next year’s budget is factored in, California would be facing at least a $12.4 billion hole when next fiscal year’s budget is released in January. That’s about 15 percent of the $85 billion general fund budget.

In speaking with The Fresno Bee, Schwarzenegger said, “It will be tougher because I think the low-hanging fruits and the medium-hanging fruits are all gone. I think that now we are going to the high-hanging fruits, and very tough decisions still have to be made.”

Schwarzenegger to receive award: The Citizens in Charge Foundation, a voters’ rights group focused on protecting California’s ballot initiatives, is honoring Gov. Schwarzenegger this month with their John Lilburne Award, for working to protect and defend the First Amendment petition rights of Americans.

Schwarzenegger recently vetoed a series of bills that the Citizens in Charge Foundation said would  have limited California’s open initiative process, California Assembly Bills 6, 436, and 1068, as well as Senate Bill 34.

The bills would have mostly affected the ways that petitions could be organized and signatures gathered.

“The People of California often exercise their important role in government oversight through the initiative, referendum and recall process,” said Schwarzenegger. “I cannot support a measure that places an undue burden on reform-minded Californians.”

Steven Bartholow is SDNN’s multimedia editor and political reporter.

Tags: 1068, 436, assembly bill, budget, California, compensation, crisis, initiative, insurance, poll, proposition, reform, SB34, Schwarzenegger, SDNN, strategic energy initiatives, worker's comp

This entry was posted on Tuesday, November 10th, 2009 at 2:15 pm and is filed under California Budget . You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.