Policy Spotlight: The California Budget

Governor Schwarzenegger addressed a joint session of the Legislature on Tuesday to discuss California’s worsening budget situation. He noted that state revenues are down 27 percent from their peak in 2006—taking the total general fund dollars available back to 2001 levels. Adjusted for inflation, the state’s buying power has diminished where it was in 1998. He expressed that voters on May 19th stated clearly that they do not want tax increases, and that the Legislature must cut; he continued to catalogue a list of cuts to public safety, healthcare, and education. The governor also advocated for revisiting public employee contracts and eliminating wasteful state spending, citing the California Integrated Waste Management Board as an example.

Democrats praised the governor for the “can do” tone of his speech, but expressed reservations about the cuts proposed. Speaker Karen Bass acknowledged that difficult decisions lay ahead and that the Legislature must preserve, “some semblance of a safety net.” President pro Tem Darrell Steinberg echoed the speaker’s concerns saying it is the job of the Legislature to, “minimize the ‘harsh’ in ‘harsh realities,’” when it comes to slashing state services.

Former State Senator Sheila Kuehl chimed in to the debate in an essay that argues the governor is misguided about the political message voters were trying to send in voting down the special election propositions. She concludes that Californians favor a balanced approach to rectifying the state’s budget woes and are not behind the Republican intransigence to raise taxes. (Interesting sidenote: Kuehl was appointed to the California Integrated Waste Management Board after terming out in December—and that Board is at the top of the governor’s hit list for budget cuts).

CHI has been monitoring the budget situation, and has provided our membership with a series of updates on the cuts proposed by the governor in his May revise and subsequent proposals. The life sciences industry is in a unique position as the budget negotiations unfold: cuts to public health programs, such as Healthy Families, Medi-Cal, and the AIDS Drug Assistance Program have the potential to seriously affect our bottom line—but so do reductions to various tax credits designed to stimulate research and development and economic growth in the state, and increases to corporate taxation. Cuts to the University of California and California State University systems, as well as the CalGrant Program, have the potential to leave our industry without qualified workers to research, develop, and manufacture new treatments. We will continue to keep our membership informed of the developments in the budget negotiations, and how the taxes and cuts will affect our industry and the environment for biomedical research in the state. In the mean time, if you’d like to share your thoughts on the California budget crisis, email me: engelhardt@chi.org or comment below.

CHI-Advancing California biomedical research and innovation