County and Schools Scramble to Anticipate State Budget Cuts

Gov. Arnold Schwarzenegger sent shockwaves throughout the state on January 10 with his proposals to close a $14.5 billion budget gap, with many of these plans being mid-fiscal year moves as opposed to the more traditional changes that occur in July. While these waves are surely making their way to Santa Barbara, where the county is already experiencing financial difficulties and the Santa Barbara School District has been a financial quagmire for years, officials are trying to determine the ramifications of the grim announcement from Sacramento. One thing they know for certain: Area services will be affected. “No matter what, in a downturn, everybody’s going to absorb from the state,” said County Auditor-Controller Bob Geis.

Officials across the county are meeting and gathering information to determine the impacts, though it is too early to know how the proposed cuts will affect most areas. One anticipated blow is a delay in gas-tax money the state pays back to counties. This possibility would be especially problematic, said county budget director Jason Stilwell, because the county is depending on the money to balance this year’s road funds budget. Several departments are also analyzing how certain medical programs will be hit by costly reductions.

Schwarzenegger’s plan calls for 10 percent reductions to nearly every state agency, an idea Assemblymember Pedro Nava deemed “very bad.” While it appears to be even and simple, Nava said, “It will wreak havoc in ways we can’t understand or appreciate.” For example, Nava pointed out, millions of dollars in federal matching funds for capital projects and in healthcare could be lost should state funds be cut in those areas.

Locally, county staff is scheduled next month to present the Board of Supervisors with the findings of its research in response to the governor’s budget proposal. This year is different, however, because Schwarzenegger has declared a fiscal emergency, Geis explained. (When the state borrowed bonds to escape a similar deficit in 2004, a stipulation stated that should a similar situation arise, a fiscal emergency must be declared.) However, no one is familiar with the process from this point forward because it has never happened before. The emergency declaration means state lawmakers will have to vote within 45 days on many of the proposals the governor has set forth. If no action is taken, the Legislature is frozen from doing work elsewhere. “This is the first step in a very long process,” Nava said, explaining that while the amount of cuts is alarming, the budget process takes months of negotiating. Nave said he expects the budget to look quite different come the May revision.

The budget proposal is expected to hit local school districts hard. The governor’s 2008-2009 budget provides $55.6 billion in Proposition 98 funding for kindergarten through junior college students, which, compared to Schwarzenegger’s revised current fiscal year proposals, is a reduction of about 2 percent, or $1.1 billion. Overall, school funding would drop by $4.4 billion. Eric Smith, the school district’s interim assistant superintendent of business services, was in Sacramento at a workshop on the governor’s budget and unavailable for comment in time for this story. But Superintendent Brian Sarvis said the potential funding cuts, the largest in history for education, would surely mean program cuts for the district. He stopped short of saying it would mean layoffs for employees. “We’re quite concerned about it, and it would be devastating to our schools,” he said. State Superintendent Jack O’Connell, a former Santa Barbara County school board member, called Schwarzenegger’s proposed cuts an “education evisceration.” “The reason voters passed Proposition 98 was to provide stability, predictability, and growth for our schools so our classrooms would not be at the mercy of swings in the state budget as they are today,” O’Connell said in a statement.

Schwarzenegger’s budget also includes plans to close 48 of the state’s 279 state parks and beaches. Only one of those-La Pur-sima Mission State Historic Park, with 170,306 annual visitors-is in Santa Barbara County, but many others could have local implications. State beaches in south San Luis Obispo County such as Monta±a de Oro and Los Osos Oaks are all quite popular with surfers, beachgoers, and campers, and are all threatened by closure.

Some, including the top budget analyst in the state, have suggested that the Legislature offset some reductions by raising taxes, reducing tax breaks, or raising fees. While Nava said that neither he nor any of his colleagues in Sacramento are interested in raising taxes, he admitted that phasing out tax breaks where they are no longer needed and mending tax loopholes could lessen the problem. Nava said he hopes the governor, who often vetoes bills that allow local jurisdictions to raise fees, would allow them an avenue for producing revenue.