Slashing Programs For The Poor Is Not The Answer To The Deficit

January 08, 2008
Contact: Rodney Foo @  (408) 282-8920
Beall urges the Legislature and governor to evaluate tax giveaways that cost California billions annually

Forcing California's poor to bear another round of budget cuts is not the way to cure the state's deficit. The remedy is in the hands of the governor and Legislature: Cut the real fat and legitimately boost revenue by eliminating billions in antiquated tax loopholes.

Many essential Safety Net programs – such as welfare and foster care – have long suffered from cuts or stagnant budgets despite increases in the general fund and boosts in spending for other state agencies. Now the governor asks that these diminished budgets for social programs take another hit. His proposal to enact 10 percent, across-the-board cuts spell disaster for our poorest citizens.

"This indiscriminate, slash-and-burn approach proposed by the governor will shred the Safety Net for California's children, the poor, and disabled," said Assemblyman Jim Beall, Jr., D-San Jose, chairman of the Human Services Committee. "We can reach a better solution by working together to target the true spending problems."

Since fiscal year 2003-2004, the Department of Social Services budget has grown 8.94 percent. At the same time, the prison budget jumped 74 percent; Health rose 45 percent; Higher Education rose 25 percent; and K-12 increased 41 percent. In fact, the current Social Services budget was slashed to $8.9 billion, a cut of $300 million from the previous year. General fund spending for CalWorks, which provides temporary income support, employment services, and child care for more than 450,000 people, has declined by a third since since 1998-99.

Social Service programs have endured a disproportionate share of cuts over the years that jeopardize our most vulnerable citizens. For example, inadequate funding has resulted in payments for Foster Care and Calworks to lag far behind the actual costs of raising a family and the pace of inflation.

The average monthly cost to raise a child, ages 9-11, is $709. But foster children in the same age range only receive $494 per month – a difference of 43 percent, based on 2005 statistics. The inadequate funding has far-reaching repercussions since research indicates that foster youth who are emancipated without proper levels of support are more likely to become involved in the justice system than their non-foster care peers, according to the County Welfare Directors Association of California.

In 1989-90, a CalWorks welfare payment to a family of three totaled $694. Today that grant has only risen by $29 to just $723 – a 39 percent loss in purchasing power since 1989.

Meanwhile, the state continues to lose an estimated $17 billion in revenue annually to tax giveaways, according to a California Tax Reform Association study. For example, the state loses $4 billion every year because commercial property is not subjected to reassessment as frequently as residential property. Unlike other oil-producing states, California loses $40 million annually because it does not tax the oil that is pumped out of the ground by petroleum companies.

These are simply a few legal loopholes that should be evaluated for elimination before we start cutting essential services to the poorest and neediest Californians.