TOPICS > Economy

California Grapples with Cuts to Safety Net Programs

August 17, 2009 at 12:00 AM EDT
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Local governments across the Golden State are beginning to feel the impact of the $4 billion in budget cuts made by lawmakers in the state's general assembly earlier this year. Spencer Michels explores the impact on California cities and counties.

SPENCER MICHELS, NewsHour correspondent: Cities and counties throughout California and the people they serve are feeling the impact of the state budget and the compromises made to pass it.

The waits for services are getting longer at the Contra Costa County Medical Center and emergency room across the bay from San Francisco. Welfare recipients are getting less money and fewer services, some of which are designed to get them to work. And redevelopment projects aimed at revitalizing decrepit neighborhoods are being delayed.

The principal problem for local government is the decision by legislators and the governor to take more than $4 billion from cities and counties to balance the state budget, along with major cuts in many programs.

GOV. ARNOLD SCHWARZENEGGER, R-Calif.: This budget is kind of like “The Good, the Bad and the Ugly.”

SPENCER MICHELS: Governor Arnold Schwarzenegger signed the cuts and the transfer of local money to the state, outraging some county officials.

DR. WILLIAM WALKER, county health director: I’ve been a county physician providing family practice care for over 35 years. This is the worst I’ve ever seen it.

SPENCER MICHELS: Dr. William Walker, a family practitioner and director of Contra Costa County Health Services, thinks the health of the community is in danger.

DR. WILLIAM WALKER: I’ve been health director here for 14 years. This is the biggest tsunami that we’ve ever had to deal with in terms of wave after wave of local budget cuts, state budget cuts, and in many cases federal budget cuts.

SPENCER MICHELS: Statewide, 500,000 poor children are predicted to lose health coverage under the new budget. Other cuts will affect immunizations, mental health, and HIV programs, plus major cutbacks in Medicaid. These are all programs that the state mandates local governments to run.

Walker thinks the decision to borrow and take money from local budgets was just wrong.

DR. WILLIAM WALKER: We are the state’s arm to be the safety net. And if they’re taking money away from the safety net, the state no longer has a safety net for essential benefits.

SPENCER MICHELS: Legislators said they had no choice. State Assemblyman Tom Torlakson, who used to be a supervisor in Contra Costa County, wrote the law allowing the state to get local money.

TOM TORLAKSON (D), California assemblyman: In an emergency, the state can borrow money from cities and counties, so that’s $2 billion borrowing that I’d rather not have done, but in this emergency it helps us avoid further devastating cuts to schools.

Counties struggle

Arnold Schwarzenegger
California governor
This budget is kind of like "The Good, the Bad and the Ugly."

SPENCER MICHELS: But the counties argue the cuts to them are devastating, as well. Contra Costa County already was suffering because of a decline in revenues from both property and sales taxes.

It is a county with some of the wealthiest enclaves in the state, like Orinda, whose residents may feel the loss of library or park money, and some of the poorest, like Richmond, a largely minority community with a 17 percent unemployment rate, where the medical and social service cuts will hit hardest.

Already, the welfare office where they dispense financial aid and food stamps has seen an upsurge in clientele and a reduction in personnel.

John Gioia is a county supervisor who thinks the state took the easy way out.

JOHN GIOIA, Contra Costa county supervisor: What happens is, counties are the agent of the state for social services and health services, so it's easier for them to cut us, because people won't show up in Sacramento complaining. They'll show up at our board chambers, because we're the ones delivering the program.

SPENCER MICHELS: Supervisor Gioia met with county welfareworkers, including Wendy Therrian, to figure out how the cuts would be handled.

WENDY THERRIAN, welfare supervisor: What we're going to be looking at having to do is significantly reducing, if not eliminating, a lot of the employment services supports, so we're looking at child care, transportation, ancillary services.

SPENCER MICHELS: Recipients of aid who are enrolled in a program to get them to work were dismayed by cuts already made and to come.

ASHLEY HILLIARD: I get $561 a month, so that's less than minimum wage. So, you know, my rent is almost half that, you know. So if I keep getting cut, we're going to be homeless.

BRIANNI PETERS: I just feel that it's unfair. How do you expect any kids to be nutritioned or anything like that if you're cutting the money?

ANTHONY AVALOS: I think they cut where they cut because they feel like these people are hopeless, like I am hopeless, we are hopeless, that we don't deserve a second chance.

SPENCER MICHELS: While the legislature largely protected law enforcement, this sheriff's unit that patrols North Richmond is supported by redevelopment money, which the state dipped into. This is a deteriorating area with a high crime rate that is in the midst of redevelopment.

JIM KENNEDY, county redevelopment director: We're badly in need of economic stimulus, and redevelopment is the major economic development tool here in the state.

SPENCER MICHELS: As the county's redevelopment developer, Jim Kennedy, explained to Supervisor Gioia, and then to us, $2 billion in redevelopment funds were borrowed by the state, putting a big crimp in Contra Costa's plans.

JIM KENNEDY: This block of properties are being purchased by the redevelopment agency as we speak to do a residential mixed-use program, retail on the ground floor, residential above. Our ability to implement that will be delayed by the diversion of revenues to the state by at least three to five years.

Returning borrowed funds

Dr. William Walker
Contra Costa County Health Services
I've been health director here for 14 years. This is the biggest tsunami that we've ever had to deal with in terms of wave after wave of local budget cuts, state budget cuts, and in many cases federal budget cuts.

SPENCER MICHELS: Kennedy, who heads the state's Redevelopment Association, says redevelopment spurs affordable housing, growth, and tax revenue. His group is threatening to sue the state.

But state officials say the borrowed money will be returned eventually and local jurisdictions can borrow money on their own.

TOM TORLAKSON: We're saying, we're going to take this money on the short term, but we're going to more than compensate out in your future years.

SPENCER MICHELS: In Martinez, the Contra Costa County seat, many local officials are skeptical that they'll be able to borrow or that the state will really make up what it is taking.

For Gioia, it's a no-win situation.

JOHN GIOIA: Sacramento's taking money from counties and cities, but at the same time, their fix is temporary. It's not solving any problem.

SPENCER MICHELS: City and county roads, and the people who work on them, were also put in jeopardy by the state budget. The governor proposed that the state take gasoline taxes that the counties use to repair roads. Many of Contra Costa's workers feared layoffs.

But at the last minute, the legislature, threatened with a lawsuit by cities and counties, buckled under. The money was left in county hands, and the word came down.

SAMUEL ROTHSCHILD, road maintenance worker: Everybody was excited about it, you know. We even have what you call -- they brought in donuts and brought in the...


SAMUEL ROTHSCHILD: ... brought in a little bit of sparkling cider.

ROAD MAINTENANCE WORKER: Yes, we couldn't pop the real stuff, so it was...

SAMUEL ROTHSCHILD: You know, so everybody -- everybody was excited about it, and they've got a right to be, because we're dealing with people's livelihood. And this is what they live -- you know, they live, their homes and everything, and their homes and everything, and their families was in jeopardy. And so when I heard about it, I just begin to thank God.

SPENCER MICHELS: But that was the exception. County and some state officials, fearing hard times ahead, are pushing for a more long-lasting and structural fix to problems that are affecting more and more Californians.