Governor Warned California Lawmakers: Refrain from Massive New Spending

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Governor Brown – Photographer: Steven Styles/Belator Media

Back in May 2016, Governor Jerry Brown urged lawmakers to refrain from any massive new spending programs, due to the possibility of an economic slowdown or recession.

“Right now, the surging tide of revenue is beginning to turn,” Governor Jerry Brown said,  at a press conference where he announced a revised $122.2 billion state budget and potential deficits ahead due to expiring tax increases.

Perhaps the governor’s admonitions for less spending were prophetic, given President Trump Administration’s executive order to cut off funding to sanctuary cities. State democrats have decried the idea and some media outlets report that lawmakers may be considering withholding state tax revenues from Washington DC if federal monies are withheld from The Golden State.

On top of the usual state expenses, the governor’s bond accountability web-page has posted an alarming need for $500 billion to be spent on California’s deteriorating infrastructure:

California faces over $500 billion in infrastructure needs to meet the demands of a population expected to increase by 23 percent over the next two decades.

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Photographer: Steven Styles/ Belator Media

In November 2006, the voters approved the first installment of that 20-year vision to rebuild California by authorizing a series of general obligation bonds totaling $42.7 billion, however, the same bond accountability website also points out that “if California is to maintain its highly valued quality of life and continue its economic growth” that the consequences will be the governor proposing an additional $42.3 billion of bonds to fund infrastructure improvements over the next decade.

In spite of this apparently ‘immediate’ need for infrastructure spending–and Governor Brown’s May warnings for fiscal conservancy–several 2017 legislative bills, from both Assembly & Senate appear to call for even more spending while simultaneously thumbing their nose at the federal government. SB562, for example, which would revamp the state’s health care, would add billions to the state’s budget annually by more than doubling the current Medi-Cal caseload, even more if Trump withhold federal funds, which pay a little over half of MediCal’s current annual cost.

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Photographer: Steven Styles/ Belator Media

Another costly plan, unveiled earlier this month by state Democrats, is to make tuition & living costs free for state college students.

“California is taking the boldest step in the nation for making college debt-free,” Assembly Speaker Anthony Rendon, D-Paramount, said in a recent press conference.

The cost for the ‘free college’ program would come at a price tag of $1.6 billion per year, phased in over five years and would be paid for using money from the state’s General Fund, lawmakers say. Proponents say existing tax revenues will cover the cost, but other projections to provide universal college came in at a much higher cost of $3.3 billion annually.

Question: Can California afford to pick a fight with Uncle Sam?

California receives more federal money than any other state.  According to the California Budget & Policy Center, more than 1/3 of California’s annual budget is made up of Federal Funds:

The current state budget includes nearly $96 billion in federal funds for 2016-17, the fiscal year that began last July 1. This is more than one-third (36 percent) of the total state budget, which also includes more than $170 billion in state funds for the current fiscal year. – Fact Sheet, December 2016 · By Scott Graves

Just under one third of federal funds allocated to California, or $102 billion, go to retirement benefits, including Social Security payments and veterans benefits. Less than one third, or $99 billion, was spent on non-retirement benefits, like Medicare, food assistance, and unemployment insurance.

2nd Question: if federal funds are indeed withheld from California, then who will cover the shortfall for our current spending, let alone all the new spending pending in the legislature?

Article by L. R. Styles. Photographer: Steven Styles/ Belator Media

California’s Progressive High Cost of Living

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Photographer: Steven Styles/ Belator Media

California is widely-considered to be a “deep blue” state, a veritable bastion of liberal and progressive thinking, with corresponding legislation and the federal funding to back it up.

Despite a plethora of publicly-funded programs–California is one of the most expensive states to live in … especially for those in the lowest income-brackets.

According to 2015 US Census data, 15% of Californians live below the poverty line… but, according to the California Poverty Measure (CPM), that number is closer to 21%.

Even more disconcerting: according to a 2015 study by the United Way SCA, the US Census figures don’t even begin to cover the daily cost of living here in California; the aforementioned study estimates that 1/3 of California households cannot cover basic monthly costs.

One in three California households (31%) do not have sufficient income to meet their basic costs of living. This is nearly three times the number officially considered poor according to the Federal Poverty Level. Source: United Way SCA 2015 Study

The high cost of living in California is most notably reflected in the amount of money folks spend on food per month:

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Photographer: Steven Styles/ Belator Media

a typical household of 2 adults & 2 children spend $879 a month on average, according to MIT’s Living Wage Calculator for California ; the same calculator puts the necessary annual income (before taxes) for the same family at $57,986. According to the Department of Numbers, an ACS survey shows the median per capita income for California was $31,587 in 2015.

Not surprisingly, California receives the highest dollar amount of federal funds of any US state; in FFY 2012-13 (the most recent publicly-available stats I could find) the state received $343 billion from the US government.

A little over 2.2 million households utilize 2 housing assistance programs to pay their monthly rent and approximately 4.2 million Californians receive supplemental nutrition benefits (Food Stamps). Putting that in perspective locally, according to an article by the Sac Bee The Sacramento Housing and Redevelopment Agency currently receives money enough to offer housing vouchers to over 12,000 households. According to a fact-sheet by CPPB.org 115,738 Californians were homeless in 2014.

Money generation, however, doesn’t appear to be an issue in The Golden State.

California is widely-regarded as the 6th largest economy in the world, with a mind-blowing $2.44 trillion dollars GDP annually, according to The Bureau of Economic Analysis’s report on state growth. And yet as of December 2016 EDD reports that only 18,165,400 California residents are currently employed, in a state of just under 40 million people.

Given the trillions of dollars being generated by the state’s economy, it is no small question to ask how California’s monies–both state & federal–are being spent.

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Included in Governor Brown’s 2017 Budget was the above pie chart. According to the chart, Education–both elementary & higher–gets 54.5% of all state spending. With that kind of money, the average taxpayer would expect California to be on the Top Ten List regarding student performance…. but, no:

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According to the above image, from a 2016 poll of test scores, and from Wallet Hub’s 2016 findings, California’s in the bottom 10 worst school systems in the nation.

Noble intentions aside, for many taxpayers California’s high cost of living has yet to justify its expense.

Article by L. R. Styles. Photographer: Steven Styles/ Belator Media

Underneath the CA Capitol

(S) CA Capitol Book Store Shoot (17 of 1)Within the halls of the California Capitol Building in Sacramento state legislators, lobbyists, staffers, guards and visitors roam the mosaic-tiled floors among the many pieces of framed art, statues and historical artifacts on display.

Completed between 1861 and 1874, the Neoclassical structure sits at the west end of Capitol Park and, according to figures obtained by Politifact.com attracts over 1 million visitors each year. s-ca-capitol-book-store-shoot-4-of-1

Underneath the echoing steps, whispering tourists, marble statues and decorative murals is an area of the state park known as the “Capitol Basement.” On one side of the basement–tucked under a quaint, brick archway–resides an oddity unique to California, a gift shop run by a local non-profit, the sales of which benefit art programs for adults with disabilities.

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The shop is one of the few official purveyors of California seal-themed items and offer a plethora of such from key chains, to T-Shirts, cigar boxes and marble paperweights.

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Run by DDSO, the cozy store harbors a wide variety of California history books, kids games, gifts… and a historical placard depicting the tale of “The Crack.”

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Also in the Capitol Basement is the California Capitol Museum, located in basement Room B-27, next to the Basement Theater (where free films are shown daily) as well as a cafe-style restaurant /espresso bar (Rush Cafe) and a large bronze statue of President Reagan.

Little-known fact: an organization or constituent can request to reserve portions of the Capitol Basement for “special events” by obtaining the sponsorship of a legislative member.

Article by L. R. Styles, Photographer: Steven Styles/Belator Media

Will Single-Payer Healthcare Work For California? (SB562)

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Photographer: Steven Styles/ Belator Media

SB562 is a California Senate Bill authored by CA Senators Lara (D) and Atkins (D), also known as ‘The Healthy California Act’. Proposed right before the new legislation deadline passed on February 17th, SB562 aims to “replace private medical insurance with a government health care system covering all 38 million Californians — including its undocumented residents).”

This bill is the latest in a rash of legislation aimed at transforming state health system into Single-Payer systems. The term “single-payer” describes the funding mechanism, referring to healthcare financed by a single public body from a single fund, not the type of delivery or for whom physicians work. Canada adopted just such a system approximately 25 years ago, a publicly-funded insurance program where costs are controlled and both hospitals and doctors are private. It is called single payer because there is only one “payer”; there is no alternative program, such as private health insurance that Canadians can turn to.

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Photographer: Steven Styles/ Belator Media

Question: is this legislation even necessary for California? According to a Forbes article by Tim Worstall, Medicaid is already a single-payer system with multiple providers:

“The Feds pay for (mostly) everything but it’s all the hospitals and doctors out there that provide the treatment in return for the government’s cash. The US does have a single payer, single provider, health care system, that run by the VA. This is not, to put it mildly, regarded as a model for the health care for everyone else to follow.” – Tim Worstall, Forbes

California legislators have attempted passage of a single-payer bill before–as early as 1994, and the first successful passages of legislation through the California State Legislature, SB 840 or “The California Universal Healthcare Act” (authored by Sheila Kuehl), occurred in 2006 and again in 2008. Both times, Governor Arnold Schwarzenegger vetoed the bill.

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Photographer: Steven Styles/ Belator Media

Single-payer legislation has failed to pass in other states, most recently in Colorado. During the 2016 November election, about 80% of voters cast ballots against ColoradoCare measure Amendment 69 according to a tally by the Denver Post and despite heavily-publicized rallies in its favor by single-payer advocate Bernie Sanders. Fears of rising costs seem to have quieted calls for change in Colorado.

Regarding California’s costs (of the current health-care system) the state’s share of Medi-Cal costs breaks down into percentages based on a set formula, according to the LAO (Legislative Analyst’s Office) 2016-2017 Analysis of Medi-Cal Budget:

“For most families and children, SPDs, and pregnant women, California generally receives a 50 percent FMAP—meaning the federal government pays one–half of Medi–Cal costs for these populations. However, a subset of children with higher incomes qualify for Medi–Cal as part of the state’s CHIP. Currently, the federal government pays 88 percent of the costs for children enrolled in CHIP and the state pays 12 percent. Finally, under ACA (Affordable Care Act), the federal government will pay 100 percent of the costs of providing health care services to the newly eligible Medi–Cal population from 2014 through 2016. Beginning in 2017, the federal cost share will decrease to 95 percent, phasing down to 90 percent by 2020 and thereafter.”

In his 2017 budget, Governor Brown identified a net increase in General Fund costs relative to the June 2016 budget package, including $1.8 billion in costs related to Medi–Cal. In 2016, the governor allocated $19.1 billion General Fund for Medi–Cal, an increase of $1.4 billion—or 8 percent—above the estimated 2015–16 spending level. (The Governor’s budget assumed total annual Medi–Cal caseload of 13.5 million for 2016–17, an increase of 2 percent over revised 2015–16 caseload.)

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Photographer: Steven Styles/Belator Media

According to the California bond accountability website—established by Governor Schwarzenegger– California’s population expected to increase by 23 percent over the next two decades.

The Golden State currently relies on about $22 billion in federal funding annually to cover private insurance subsidies linked to plans purchased through the state’s health insurance exchange; the federal government also pays for a provision of the law that greatly expanded Medicaid — a health care program for the poor, known as Medi-Cal in California. The percentage of Medicaid costs paid by the federal government is known as the federal medical assistance percentage (FMAP).

According to the California State Senate website, SB562 has been printed and may be acted upon on or after March 23, 2017.

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Article by L. R. Styles – Photographer: Steven Styles/Belator Media