California Facing Fiscal Abyss
Unfortunately, there’s a road map showing us where fiscal conditions are going in the state of California for both state and local governments. And it’s not a pretty destination. Having worked directly for Governor Schwarzenegger as we entered the great recession in 2007 - 08, I had a ringside seat as we advised the Governor and watched CA’s finances melt down and were forced to make extremely difficult decisions on how to cut state expenditures. We had the unenviable task of having to advise the Governor onhow to rollback state programs including education, health and welfare, publicsafety, transportation and all thethings that people come to depend on in their lives here in the state.
The Governor’s Department of Finance are actively preparing cut lists of critical state functions and these are being vetted internally in the Governor’s office at this very time. The “rainy day fund” and related reserves total about $20 billion dollars. That is the “good news”. However, Sacramento will blow through that reserve in less than one budget cycle. That is right, in LESS THAN one budget cycle. It is just a matter of time before all the red ink hits the floor and s##t hits the fan.
I don’t envy Governor Gavin Newsom, his Department of Finance or his cabinet which I served in last time we experienced this. But I definitely know what they’re going through, what type of fiscal drills they’re doing and what programs are being put on the chopping block in order to keep the state solvent. Everybody living
in this state that has a stake in its future needs to tighten their belts and get ready for a pretty rough ride. Let’s
hope that the governor catches a break and it’s not as bad as it’s looking it’s going to be. The next major shot across the bow comes in two weeks when the Governor will deliver his May revise which will simply be a placeholder on what the final budget looks like, but will give major signals as to how quickly
we’re going into the red.
Stay tuned.
Tom Sheehy is a CA government affairs consultant with
the Sheehy Strategy Group based in Sacramento. You can learn more about Tom at
https://www.sheehystrategygroup.com/