U.S. budget ax hangs over California

George Skelton of Los Angeles Times outlined California's current state budget. According to Skelton, California's current state budget is not $85.9 billion. The real state budget includes:

• Special funds ($34.2 billion) (state)
• Bond money ($9.4 billion) (state)
• Federal largesse ($79.2 billion), representing 38% of total state spending.
• Grand total: $208.7 billion

California is getting “a nearly $209-billion spending program while putting up less than $130 billion itself.” According to state Assembly Budget Committee Chairman Bob Blumenfield (D-Woodland Hills), "If it were not for federal spending and the stimulus package, the recession in California would have been dramatically worse. The impact on schools and state services would have been devastating."

Much of the federal funds come with strict rules attached or "pass through" money, where federal money automatically passed on by Sacramento to local entities. The state does take a 2.5% administrative fee.

Where does the federal money go?

• Health and human services receive $41 billion. Of that, about $29 billion —almost twice what the state puts up — goes for Medi-Cal, California's version of Medicaid healthcare for the poor.
• CalWorks welfare program gets $3.2 billion ($1.1 billion more than Sacramento kicks in).
• Employment Development Department receives $19.7, practically all of it for unemployment insurance benefits.
• Department of Education receives $6.9 billion for K-12. Of that, $2.2 billion pays for poor kids' lunches, $1.7 billion provides other services for low-income students and $1.2 billion helps fund special education. There's also $700 million for child care and after-school programs. And there's money to lend to new charter schools.
• University of California pulls in $3.5 billion and the state universities $1 billion, mostly in research grants.
• Caltrans receives ~$4.3 billion, much of it for highway construction. The feds generally pay 88% of an interstate project.
• Emergency Management Agency gets ~$1.1 billion. Virtually all of it is shuffled out to local entities for disaster aid, homeland security, hazard mitigation, public safety and victim services.

All programs are in jeopardy. It's a good bet much of their federal funding will be trimmed or terminated in the future. Already, Sacramento has trimmed down the general fund roughly 6% from from $91.5 billion last year. It's about 17% lower than three years ago.

State Senate Budget Committee Chairman Mark Leno (D-San Francisco) says: "My greatest concern is that [the cutting] may have a recessionary impact on the overall economy and cause more damage…Many economists look back at 1937 when the Great Depression had a second dip and Congress did just what it's doing now. It retrenched on government spending."

Article was originally published in Los Angeles Times on 8/4/2011.