If the president were to look at California as a business, he'd see that it has 37 million shareholders, employs 18.5 million people, is responsible for producing more than $1.5 trillion annually and pays some $50 billion more in federal taxes than it gets back in services. That's a record AIG, JP Morgan, Citigroup or any of the other financial institutions already receiving federal assistance couldn't hope to match.
California is not seeking the $700 billion that banks and financial services companies are poised to get. Or the $90 billion the three companies above have received. But with California as vital as it is to the U.S. economy, the state requires the same kind of assistance given to other valuable institutions. What California deserves is a federal stimulus package now that includes real economic assistance to states.
California has cut $15 billion from recent budgets. Still, without prompt action, our budget deficit could reach $28 billion by next June following a collapse in revenue that is directly attributable to the national economic crisis and the failures in the under-regulated financial sector. The governor has proposed $4.7 billion in new revenues for the current fiscal year. To address our budget problem in a way that does not harm the state's ability to contribute to national economic recovery, California needs to have any new state revenue at least matched by discretionary funds from the federal government.
Real economic assistance could also come from an increase in the Federal Medical Assistance Percentage, or FMAP, the federal matching payment for California's Medi-Cal program. At 50 percent, the federal match for California is the lowest in the nation.
The country can afford the investments in a discretionary grant and increasing FMAP far more than it can afford to have its top economic player limping on the sidelines when the stakes are so high.
Though state after state is seeing holes blown in its budget, states aren't alone in this crisis. Cities and counties are facing the one-two punch of decreased funds and increased demand for safety-net services. President Bush stepping in now to support financial aid to California and other hard-hit states could mean fewer severe cuts that harm cities and counties – and likely fewer tax increases as well.
Though it's good to see President-elect Obama on record supporting aid to states, this aid needs to be delivered now, before the new administration begins. Federal assistance now will help prevent California's economic output from slowing even further and contributing to a continuing downward cycle. The sooner the state's budget deficit is resolved, the smaller the problem becomes down the road, and the faster we can get the state's economic engines up to full power for the nation's benefit.
My colleagues, Senate President Pro Tem Don Perata and incoming President Pro Tem Darrell Steinberg and I recently sent a letter to House Speaker Nancy Pelosi and Sens. Barbara Boxer and Dianne Feinstein urging them to ensure that aid to states be included in any federal economic stimulus. But it is in President Bush's hands to actually make sure this aid comes when states need it most – now. It is in the president's hands – and interests – to leave office with one of his final acts having been that he provided responsible support for California and other key dominoes getting hit hard by this economic crisis.
Karen Bass is the Speaker of the California State Assembly. She holds the distinction of being the first black woman elected to the position.
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