Sharing the state’s fiscal pain

State Senate leader Darrell Steinberg is in an awkward position: He’s the leading advocate of a ballot measure that would whack a government program he fought to create.

“I feel a little conflicted about it,” the Sacramento Democrat concedes.

Proposition 1E on the May 19 ballot would transfer roughly $230 million during each of the next two fiscal years from a mental healthcare account to the state general fund to help balance the budget.

The community mental health program -- aimed at getting the mentally ill into treatment and keeping them off the street -- was created in 2004 by Prop. 63, ramrodded by Steinberg. It’s funded by a 1% surcharge on taxable income exceeding $1 million. The annual take has ranged from $900 million to $1.5 billion.

“The last thing I wanted to do is take money from the proposition that I worked my heart and soul to pass,” Steinberg says. “But as a leader, I have to set an example. I’ve talked consistently throughout this budget crisis about shared sacrifice. . . . I protected it as much as I could.

“There’s way too much of ‘My way or the highway’ in the recent history of California government.”

Another program was not as well protected during the budget negotiations in February that culminated in passage of a $42-billion deficit-closing package.

Prop. 1D would transfer $608 million during the next fiscal year -- and $268 million each year for four more -- from the First 5 program serving children under 5. All that money, nearly $1.7 billion, also would be used to help balance the budget.

The First 5 program was created in 1998 by filmmaker Rob Reiner’s Prop. 10. It’s funded by a 50-cents-per-pack tobacco tax taking in about $500 million annually.

Both the mental health and First 5 programs were fat targets in budget negotiations because they were hoarding large surpluses of money they didn’t immediately need.

The mental program had a $2.5-billion reserve, according to Rusty Selix, executive director of the California Council of Community Mental Health Agencies, and a coauthor of Prop. 63. The First 5 program was sitting on $2.1 billion last summer, says Legislative Analyst Mac Taylor.

Both groups deny they really had spare money. Much had been committed to future programs. Some was being salted away for bad times.

“Money’s coming in and we’re doing multiyear planning,” says Sherry Novick, executive director of the First 5 Assn. “This is what state government should be doing. We’re creating a model.”

Sorry, the government way is more like use it or lose it.

While these groups were stashing tax dollars, the governor and Legislature were reducing grants for welfare moms and the elderly poor, blind and disabled, eliminating dental care for the impoverished on Medi-Cal, reducing wages for workers who provide in-home services for the infirm and cutting money for regional centers that serve people with developmental disabilities.

Plus a lot of other stuff, including temporarily raising income, sales and vehicle taxes.

So when opponents of Props. 1D and 1E argue that the measures “take away voter-approved funding for programs for our most vulnerable citizens,” it’s a weak claim. Voter approval doesn’t preclude voters changing their minds. Ask Gray Davis. And millions of vulnerable citizens already have lost government benefits and services and stand to lose more unless all the budget measures pass on May 19.

“This is necessary in order to avoid deeper cuts to other health and human service programs that don’t have any reserves,” Steinberg says.

Actually, this whole tussle over pots of money illustrates the problem with ballot box budgeting. A given interest will bypass Sacramento and head directly to the people with an irresistible idea. If the initiative passes, the hands of the governor and Legislature are tied even tighter in trying to set spending priorities. To change a voter-approved program, it must be sent back to the electorate. That’s why 1D and 1E are on the ballot.

Selix and Steinberg were close allies in fighting for Prop. 63. Now they’re on opposite sides.

“He’s doing what he has to do,” Selix says. “He did as good a job on our behalf as he could. But that doesn’t mean it’s a good thing.

“There’s no money to be saved by denying anyone mental healthcare,” he adds, citing costs of emergency room care and jail time for the homeless. “This is illusionary savings.”

He estimates the Prop. 63 program has served more than 200,000 mentally ill people. And he concedes that even if Prop. 1E passes, there’ll be enough money to get through the next fiscal year without cutting services. But after that, significant cuts would be needed.

Opponents of Prop. 1D say it would especially jeopardize efforts to prevent child abuse. Currently about $200 million in First 5 money goes to that cause, says Sheila Boxley, president of the Child Abuse Prevention Center. She asserts 1D “would be devastating.”

Polls show voter skepticism about the measures.

But if they’re rejected, the electorate had better be prepared for sharper cuts in other social services, as well as schools. There’s already a projected $8-billion deficit for the next fiscal year. If Props. 1D and 1E fail, the hole will get nearly $1 billion deeper.

Most likely to be rejected is Prop. 1C, which would allow the state to borrow $5 billion against future lottery winnings. If the three props go down, the hole grows to $14 billion.

Another tax hike seems improbable.

“If the measures pass,” Steinberg says, “we can triage through the rest” of the deficit.

There are many casualties already on the budget battlefield. Unfortunately, they probably should be joined by mental health and children’s programs. Shared sacrifice.

--

george.skelton@latimes.com