The Budget and what’s fair

It is officially Mid-January 2010, and California is still nearly $20 billion short in budgetary funds. $19.9 billion is a lot of money, and so it makes sense that Governor Schwarzenegger is looking to balance the books. On January 8, the governor announced an 18-month plan to address the massive shortfall, which included $6.9 billion in expected funds from the federal government. The press release from the Governor’s Office informed readers that this part of the plan will help in “reforming the state’s relationship with the federal government,” by obtaining “monies owed to California for faulty reimbursement formulas and federal mandates.” Specifically, flawed financial reimbursement formulas, the use of federal funding before December 31, 2010, and unpaid, unfair federal mandates are described as the “fair” ways by which California will obtain nearly $7 billion to close the gap. 

The first category includes the Federal Medical Assistance Program, for which the state is seeking a “more equitable” refund rate of 57 percent versus 50 percent. If the federal assistance level was to rise by 7 percent, the state would expect an additional $1.8 billion in funding. The second category includes federal funding (through the federal American Recovery and Reinvestment Act) of such programs as CalWORKS and Child Support Services, to the tune of $2.1 billion. The last category includes $1 billion for assistance toward the state’s support of prescription drug costs and “[s]ervices paid for by Medi-Cal instead of Medicare.” The state is also requesting $86.9 million for foster care payments and nearly $1.9 billion for federal funding of California’s special education programs and “full reimbursement” to California to go toward costs incurred under the State Criminal Alien Assistance program.

What’s fair is fair, right?

It seems unwise for a state as (normally) prosperous and powerful as California to count on debts and reimbursements for a fiscal year. As the federal government itself is relying on excessive debt spending, it seems unwise for California officials to suddenly demand their federal counterparts start ponying up. Even more cringe-worthy is the second demand, that ARRA payments be extended. If the state cannot support a program, it is a good sign that the state must either give up that program, or cut from programs of lesser importance to the voters. 

It is commendable that the governor is looking for ways to save money and balance the budget, but perhaps unwise to begin demanding that the federal government pay every nickel and dime it may owe, while simultaneously demanding that the very same federal government continue to pay for programs unique to California.