"There's mass confusion still at this stage."
That's what Governor Schwarzenegger said today about efforts to find precise estimates in both how much money California is getting from the federal stimulus package... and... how much of that money counts toward whether officials can pull the so-called budget "trigger."
Today's report from Legislative Analyst Mac Taylor takes a broad look at California's share of the federal stimulus pie. But it also addresses the specific issue of how much DC cash counts in the decision to either stick with... or scrap... about $948 million in budget cuts and another $1.8 billion in tax increases.
To "trigger off" those actions, the February budget agreement says California must be able to count $10 billion towards deficit relief between now and July 2010. And the LAO report reaffirms the official position of the Schwarzenegger administration: namely, that only about $8 billion of stimulus cash appears to count towards deficit relief. And that wouldn't be enough to pull the "trigger."
But the LAO presentation, during this morning's hearing of the Assembly Budget Committee, certainly didn't sound definitive when it came to the $8 billion estimate. "This was our best kind of shot at it," said Taylor.
Taylor and his staff said that they believe most of the $8 billion (actually $7.96 billion) is money available to offset state dollars spent in Medi-Cal services.
But when the question and answer session from legislators wrapped up, it was clear that a feisty debate is brewing as to whether to count more federal stimulus money towards deficit relief... thereby allowing some of the cuts and taxes to be set aside... or let the budget package stand as it is.
"I think taking for granted the $8 billion figure," said Assemblymember Mike Feuer (D-LA), "is a big mistake." Feuer went on to say that the Legislature should try to reach the magic $10 billion figure "any way we can," thus maximizing federal matching dollars that state government has often left unused.
But others said that pulling the trigger could only make the state budget's long-term problems worse. "Next year, and the year after, when we don't get that [one-time federal help]," said Assemblymember Diane Harkey (R-Dana Point), "we are still stuck, going like this with [state budget] expenses."
And still other legislators raised the question posted on this blog yesterday: what happens next week if the governor's budget director, Mike Genest, and Treasurer Bill Lockyer disagree on how much money to count towards the budget's "trigger" solutions? Exactly which federal dollars is the budget deal referring to when it sets $10 billion as the "trigger" threshold? And might a new drop in already anemic state revenues allow more federal money to be drawn in and used for K-12 education... thus getting the deficit relief estimate up to $10 billion?
"The [budget deal] language leaves some room for interpretation," said Legislative Analyst Taylor.
Which means next week's Genest-Lockyer meeting will be worth watching.
One final note: it's worth pointing out that before the budget deal was inked in the wee hours of February 19, the federal stimulus "trigger" amount legislators had penciled in was $9 billion. In other words, they were poised to write into law a lower threshold for rescinding some of the spending cuts and tax increases.
So what happened? For part of the answer, here's a quick quip from Governor Schwarzenegger today in remarks to reporters outside the Capitol:
What he's referring to: in exchange for the 27th and final vote in the state Senate for the budget from Sen. Abel Maldonado (R-Santa Maria), legislative leaders agreed to scrap plans for a 12 cents-per-gallon increase in the tax on gasoline.
Estimated value of that rejected tax increase over the next 17 months: $2 billion. Amount by which estimates now suggest the state will miss the chance to "trigger off" some of the budget solutions: $2 billion.
More on the overall LAO report, by the way, tomorrow morning on The California Report.
[NOTE: Earlier version of this posting pegged the original trigger amount at $8 billion. The paragraph in question has now been edited to reflect that the estimate was actually $9 billion. Regrets. --JM]