California meltdown

Two weeks ago we ended this biweekly catalogue of horrors with a bit of good news—namely an item from the San Jose Mercury News suggesting that, because of gains in the stock market and “other signs the recession is on its way out, the state’s fragile revenue and spending projects ought to hold up until at least mid-January—and maybe even beyond.” Well, it didn’t take long to burst that bubble. Read on.

Sept. 28: The California Redevelopment Association announces that the state of California has dropped its appeal of a Sacramento Superior Court ruling that the 2008 state budget revision taking $350 million in redevelopment funds from counties was illegal. That means two things: One, the state has to pay back the money. Two, the state’s $2.05 billion raid on RDA as part of its July budget revision could be on thin legal ice. The CRA says it plans to sue. The city of Chico could save as much as $11 million if the suit prevails.

Sept. 30: Reuters reports that drug store groups have sued the states of New York, California and Washington, charging their Medicaid programs had failed to pay enough for providing prescription drugs. A lawyer for the National Association of Chain Drug Stores says its members stand to lose $200 million a year because of unfair payment schedules.

Oct. 1: Disability and seniors-rights groups filed suit in San Francisco federal court to block cutbacks in the state’s In-Home Supportive Services program. The state earlier had announced it would cut the hours of or eliminate altogether some 136,000 in-home care givers. The suit alleges violations of federal disability-rights laws.

Oct. 3: The Sacramento Bee reports that the state Supreme Court has declined to hear a Schwarzenegger administration appeal of a lower-court ruling that the state had illegally siphoned transit funds to balance the state budget. The ruling “opens the possibility that the state may have to begin refunding bus and rail agencies nearly $3.5 billion diverted in the past three years,” writes reporter Tony Bizjak.

Oct. 8: Lawyers representing state prisoners ask a panel of federal judges to hold Gov. Schwarzenegger in contempt of court and impose a fine for failing to comply with their order to submit a plan to reduce the prison population by 40,000 over two years. The state has appealed the judges’ ruling to the U.S. Supreme Court.

Oct. 9: State Controller John Chiang announces that, because of the recession, general-fund revenues are already $1.1 billion below estimates made in July. That and recent adverse court decisions “are dealing a major blow to a budget that is barely 10 weeks old,” he stated.

Oct. 9: The Obama administration gives the state 15 days to convince the feds that furloughs for state workers are not affecting the state’s ability to meet the escalating demand for unemployment-insurance benefits and services. If the state fails to convince, it could lose federal grants.

Oct. 12: The University of California announces that it may institute a tradition-breaking plan to charge undergraduate engineering and business students more tuition because students majoring in those subjects tend to land well-paid jobs after graduation. Regents may vote as early as next month on the proposal.