Gov. Arnold Schwarzenegger is right: California is out of time. The state must cut $24 billion in expenses or find some new money -- or both -- and must do it before the month is out. The cuts will hurt people. In that, there is no choice. But there is choice in which services are cut, how deeply and for how long. Here are some principles that Sacramento, and the people, should follow in making their decisions.
* Avoid default. In recent months, some critics have openly cheered the possibility that California would go bankrupt, allowing some trustee or higher authority to "right-size" the state government or, in the alternative, to save some programs currently on the chopping block. It doesn't work that way. States can't get bankruptcy protection, but they can default on their obligations, and if this state does that, virtually all the cuts now contemplated will take effect, plus more besides. The state's credit, already crippled, will become nonexistent; investors will shun many states besides this one -- and local governments as well. The world's eighth-largest economy will suffer longer, and ramifications for the world will be severe. Default is not an option. Avoiding painful cuts is not an option.
* Don't just say no. Sacramento must take every reasonable suggestion seriously, and when lawmakers preserve programs, they must justify the costs. We must recognize that, in some cases, California must be penny-wise and pound-foolish, because it needs the pennies right now. We must be open to removing a function from government, even one with benefits and supporters.
* Cut health and human services last -- not just for humanitarian reasons but because these cuts more than others simply produce paper savings while multiplying costs, transferring them to counties and worsening outcomes. For example, a person who loses Medi-Cal and can't go to the doctor's office will delay treatment until he or she must go to the emergency room, where costs are higher and chances of recovery lower. A family that loses CalWorks welfare-to-work aid, training and job placement will turn to county general relief, which pays for about two weeks of rent each month; the family becomes homeless, and the costs return in jails, mental healthcare, drug addiction and hospitals. When health and human services funding remains intact, it brings with it federal matching funds. Cutting a dollar in state services eliminates $2 to $10 in funding.
Human services deserve special attention in these negotiations because they are easily neglected when pitted against services that reach the general population. Transportation, for instance, is paid for in part by gas taxes and enjoys broad public support. To those who rely on health and human services, however, even temporary interruptions can result in grievous harm, even death.
* Acknowledge that supposedly temporary measures often become permanent, and as such can be barriers to long-term reform. That's another reason why cutting a program with a powerful constituency, such as schools, is preferable to cutting one with a weak constituency, such as Medi-Cal. Cuts to schools are far less likely to become permanent simply by inertia. Cuts should become permanent only when they reflect the long-term desire of Californians for their state.
* Focus on the service, not the service provider. Saying no to a service cut is not the same as saying no to an organization or program. Don't, for example, simply write off the idea of eliminating CalWorks if the federal government will grant a waiver to keep its funding coming or if the programs could be picked up by another agency to eliminate administrative duplication. Keep in-home supportive services, but remain open to cutting the pay of those workers, temporarily, to minimum-wage levels, while remaining mindful that such pay cuts will certainly increase the burden on counties. Again, not making such cuts means cutting somewhere else.
As for agencies with state contracts, we can value their work and still conclude that we have to cut them loose if there is a less costly way, in the short term, to keep some of the service. Yes, cutting contracts has a ripple effect on the economy, as people lose their jobs and the tax base shrinks. There are negative consequences, but that is the lot we face right now.
* Say no to a wholesale federal bailout -- but say yes to federal matching funds and to federal payment for federal obligations. Expecting the U.S. government to bail out California programs that Californians won't pay for is fantasy. If it ever verges close to reality, though, the idea must be stiffly rejected. Such federal aid becomes an overwhelming disincentive for the state's people to make tough decisions to cut services or increase taxes, and, in turn, it relinquishes the people's control over their state to Washington. It would also dissuade taxpayers in any other state from ever again agreeing to fund their own services.
