February 2006
For Catholic Diocesan Newspapers

Steve Pehanich
Executive Director
Catholic Charities of California

Budget, Future Growth to Dominate California Politics in '06

Food or heat? Medicine or rent? These are choices the poor must make whenever they pay the bills. And this year's proposed California budget will not make those choices any easier.

Budgets include more ethical and moral decisions than virtually any other governmental action. Through them elected officials make thousands of decisions on our behalf.

Catholic social teaching urges us to evaluate financial choices—personal or governmental—by how they impact the vulnerable members of society. A preferential option for the poor asks us to favor actions that help the people who need help the most.

So how does the proposed 2006 California budget of $98 billion measure against that criterion?

Not well. In fact, assistance programs are the only areas slated for major cuts. Two of the tougher reductions: assistance for child care expenses to help welfare recipients who start new jobs and cost-of-living-adjustments for the blind, disabled and elderly.

Our welfare system is designed to move people into work. That's why the state subsidizes child care for people who go to work, school or job-training class. During a three month period last year, $114 million allocated for this purpose was not used, so the Governor has cut the program by that amount this year.

A three-month slowdown is hardly enough to make such a drastic change—it's a mere glitch in statistical terms.

Worse yet, the budget also fails to provide cost of living adjustment (COLA) for the blind, disabled and elderly. Even though funds are available for COLAs from the Feds, the Governor will not accept that money because it would mean the state has to match it.

Larger deficits in the past have meant even worse cuts to social programs. But at a time when a recovering economy means greater revenue than expected, why continue to make cuts to programs that help those who already have so little?

The poor must continue choosing between food, medicine, heat and other basic needs. As so often is the case, they are lost in endless policy debates and political posturing that rewards more powerful groups.

Overshadowing much of the conversation this year, the budget includes provisions for the Governor's Strategic Growth Plan, a series of massive renovation and construction plans for transportation, education, public safety and other systems.

The effort is reminiscent of California's post-WW II growth boom. The Governor is calling for $222 billion in bonds over 10 years, but compromise with Democrats and election year horse-trading may change that.

While I am concerned about the pork-barrel potential of such a plan, preparing for the future is a good and necessary government function. My final decision on the plan's merits will depend on how all Californians fare—rich and poor alike.

For example, the Governor does not include any funds for affordable housing—a conspicuous hole for those concerned about the poor. Alternative proposals in the legislature address this oversight and housing may yet be included.

There are some hopeful notes in the 2006 budget too: a proposal to raise the minimum wage and funding to help legal immigrants complete the citizenship process.

In hopes of undermining a Democratic push to both increase the minimum wage and to index it so that it keeps pace with rising costs, the Governor proposes a modest increase from $6.75 to $7.75 per hour.

Most minimum wage earners are adults, disproportionately Latino, and employed in the leisure and hospitality industry. The research shows that moderate increases in the minimum wage do not translate into job loss as many believe.

Amid a turbulent and often vicious debate on how to compassionately reform our immigration system, the budget includes $1.5 million for the Naturalization Service Program.

Catholic Charities and the California Catholic Conference have pushed for years to fund this program, which has been reduced or omitted from recent budgets. Inclusion in the Governor's first draft is welcome.

As for the future, the budget does pay down on state debt, but it still has about a $6 billion operating deficit and projects three more years of the same.

So many programs are on autopilot—about 80% of the budget—that neither the Governor nor the legislature can significantly alter the structural deficit. To do so would require a fresh and painful look at the tax structure in California. It's also why the budget must make so many cuts in human services programs—it's one of the few areas not off limits.

Politicians, unfortunately, don't appear likely to touch the hot button tax issue now or anytime in the foreseeable future. After all, it's someone else's food or rent decision?

Steve Pehanich is the executive director of Catholic Charities of California. He supports public policy and other initiatives for the twelve Catholic Charities agencies. Contact him at spehanich@cacatholic.org.