Huffman: Grim outlook for state finances

<p>North Bay Assemblyman Jared Huffman last week painted a grim picture of a worsening economic scenario that is likely to unfold across California if the state government runs out of cash next month.</p><!-- Nothing to do. The paragraph has already been output --><p>“More people will lose their jobs, more businesses will close, small school districts will close, tax refund checks will be delayed,” he said.</p><p>Huffman, D-San Rafael, made his comments in an interview with the Argus-Courier in which he explained the reasons for the state’s dire financial crisis and what he thinks needs to be done to resolve it.</p><p>“The first and most important thing is to make sure the state doesn’t run out of cash in early February, which is what will happen if we don’t put any solutions on the table that both sides (Democrats and Republicans) can accept,” Huffman said.</p><p>If an agreement isn’t reached, the state will have to issue IOUs, he said. “But the state is now almost at junk-bond status, so we can’t assume IOUs will be an available option.”</p><p>He said Democrats are working with the governor and the Republican caucus to find at least an interim solution for the $41 billion deficit. “We put $18 billion worth of solutions on the governor’s desk a few weeks ago,” Huffman said. “Unfortunately, he vetoed that package. But we’re going to keep at it. We can either do this on a majority vote basis or we can keep working to get three Republican votes in the Assembly and two in the Senate (to get a two-thirds majority, which the governor couldn’t veto). </p><p>“The governor has put a $41 billion solution on the table,” Huffman added, “$10 billion of which will be up to voters in the June election.”</p><p>Who’s responsible for the fiscal crisis? “All of us,” Huffman replied. “We failed to set aside enough reserves and our revenues haven’t kept up with our needs. California is by no means alone. Seventeen states have already gone to a four-day school week, for example.”</p><p>“We’ve made some pretty painful cuts already, but we’ll have to cut more,” he said. Schools, both K-12 and higher education, and human services will be in for funding cuts. “And we have to start looking at programs like our prison system, where we have wrongheaded and very expensive policies that are driving our state further and further into debt. We need to reform our parole system, we need to stop dumb projects like the expansion of Death Row (at San Quentin) and we have to look at our sentencing system, which is putting people in prison for life for petty, nonviolent third strikes.</p><p>“So hopefully, through a combination of those and some revenues that both sides can agree on, we can come up with $41 billion,” he said. “It’s a tall order.”</p><p>Here’s what Huffman had to say about other issues:</p><p>Tax hike: “We don’t want to raise taxes, but if you do, you have to be careful. Republicans have proposed a half-cent sales tax increase, but it will trigger reduced spending. I would implement a higher tax structure for upper-bracket taxpayers on a short-term basis, such as three years.”</p><p>Constitutional convention: Huffman supports a constitutitional convention to restructure state government. “I think it should go forward,” he said. “I support anything outside the system that starts to address these fundamental questions of how to make California governable. It’s hard to argue that the state is governable, especially in this very severe fiscal crisis.” The two-thirds requirement to pass the budget needs to be changed, he said. “California is one of only three states to have that requirement. It’s one of the big reasons for the gridlock we face every year at budget time.”</p><p>Rohnert Park casino: Huffman said he’s doing everything he can to stop the proposed gaming complex proposed by the Graton Rancheria tribe. He is working on a bill that would require local support or intergovernmental agreements for urban casinos on land that was not in trust as of Jan. 1 of 2008.</p><p>Water: “Water is a very big issue that won’t wait for the budget,” Huffman said. “Salmon stocks are plummeting. The Delta is the biggest issue. We need to change it and diversify the state’s water profile.” Sonoma County can do a lot more to reduce its water use, he said.</p><p>Petaluma Valley Hospital: Huffman has introduced “clean-up legislation” to address a provision in a bill passed in October that effectively reduced Medi-Cal reimbursements for Petaluma Valley Hospital and other acute-care hospitals by 10 percent. </p><p>Federal economic stimulus package: “We still don’t know what the (federal stimulus) program will look like, but the emphasis will be on shovel-ready projects,” Huffman said. He says the federal funds should emphasize job creation. </p><p>SMART rail: On a brighter note, Huffman said the federal stimulus package will likely provide money to accelerate the startup of the Sonoma-Marin Area Rail Transit system. “There are parts of the project that could move very quickly,” he said.</p><p>(Contact Chris Samson at chris.samson@arguscourier.com)</p>