Safeguarding Budget Equity Amidst State and Local Fiscal Challenges

For the second consecutive year, California continues to grapple with a multi-billion-dollar deficit, and now it seems many local jurisdictions are finding themselves in the same predicament.  

The state was already staring down a $37.9 billion deficit because of a severe revenue decline. Now, the latest projections from the California Legislative Analyst’s Office have reached $73 billion, nearly doubling what the Governor anticipated back in January. This bleak state deficit picture is compounded by flattening local revenues and, in some prominent cases, rising deficits. All of this has put advocates on the defensive, requiring them to intensify their work to resist any cuts to gains made during the pandemic health crises.  

Advocates closely monitoring the fiscal conditions are unfortunately accustomed to the usual course of action during a budget deficit – cuts to innovative social, welfare, and infrastructure programs that benefit the most vulnerable Black, Indigenous, and people of color (BIPOC) and low-income communities.  

The Governor is following this playbook, with cuts or delays to affordable housing investments, cuts to CalWORKs and child services, and massive cuts and delays to climate programs. At the same time, no significant effort has been made to address these shortfalls with much needed tax reform that would raise revenues, like eliminating tax breaks on the wealthiest corporations and individuals.[1] For many equity budget advocates who won significant gains during the pandemic years of massive budget surpluses, these actions by state leaders represent a significant setback after years of hard-fought victories.  

Essential public services such as children and youth programming or health assistance programs are often the first to face cuts during recessions or deficit years.[2] While local budgeting may be different from state budget dynamics, the path for advocates to restore these cuts during boom years will be arduous as they compete against other priorities or pet projects. 

The intensity of local budget impacts may vary depending on the size of the state deficit. 

We won’t know what the exact figures for state budget reductions will be until May or later, but county and community leaders are already concerned about the potential impact on local budgets and low-income BIPOC communities. Many counties depend on state funds to cover social service programs, with state revenues typically constituting 15 percent to 30 percent of their local General Fund. In some jurisdictions, county leaders may get creative by backfilling state funds with locally generated revenues, but that will not be the case across the board and is not a dependable solution. What is clear is that some of our most vulnerable community members will bear the brunt of the state deficit reductions. 

A January motion by the L.A. County Board of Supervisors[3] projected $18.8 million in cuts to the Housing Supplement for Foster Youth in Supervised Independent Living Placements (SILP) program, affecting 1,129 young people who rely on this program for housing support. The Supervisors emphasized the severity of these cuts, stating that, "losing any ongoing supplemental funding for SILP and not creating new opportunities for housing for emancipated foster youth would be dire for the County and would only worsen the pipeline to homelessness and the unhoused population.” It’s crucial that leaders consider better and more just options, such as tax reform, to prevent this from happening. 

State Deficits Layered on Top of Local Deficits  

While local jurisdictions brace for state funding reductions, many cities are also forecasting deficits driven by anemic increases or lower-than-expected locally generated revenues. These projections, coupled with planned personnel and benefit increases often driven by costly police contract negotiations, surpass incoming revenues. Additionally, underlying systemic issues persist, such as Proposition 13 which continues to depress tax revenues that would otherwise be available for needed investments. Policy decisions that prioritize overspending in law enforcement and rely heavily on an active economy leave little cushion for even minimal economic downturns and jeopardize health-based essential services. 

Many local mayors plan on addressing their deficits by: 

• Clawing back unspent funds. 
• Reducing funds to departments engaged in innovative programs such as community-violence prevention or guaranteed basic income. 
• Eliminating vacant positions using a prioritization system that protects law enforcement and emergency responders. 
• Shifting spending away from local revenues to state/federal funded grants. 
• Eliminating already filled personnel positions. 

Taken together, these local deficit reduction strategies pose a real threat of erasing the gains won by local advocates in recent years during a time when many are still facing the costs of inflation. 

Fighting Back Against Cuts - Advocate and Policymaker Strategies to Protect Equity-Based Programs 

Both state and local deficits are ringing alarm bells for equity-minded advocates and policymakers who are adamant about preserving the gains won during the pandemic years for health-based and community-centered programs. We have seen the emergence of guaranteed basic income pilots, community-led public safety alternatives, and increased investments in climate programming, all of which require ongoing funding to make a larger impact. The looming threat of budget cuts demands immediate attention. Relying on short-term fixes via budget cuts to vital programs while avoiding systemic reforms only serves to set back low-income BIPOC communities from recovering from a global public health crisis. As state and local governments grapple with the challenge of balancing budgets, leaders must prioritize resilience and the well-being of all residents, particularly the most vulnerable among us. 

Below are a several approaches advocates and policymakers can implement to safeguard our gains: 

• Prioritize the most impacted BIPOC and low-income community residents from cuts. 
• Policymakers and community advocates should engage with low-income BIPOC communities to determine the essential services they rely upon, including food, rent, utility assistance, and more. 
• Support efforts that call for systemic tax reform efforts and enable local jurisdictions to raise revenues for important projects and programs.  
• Engage in efforts aimed at ensuring corporations and major real estate entities pay their fair share of property and business taxes represents an essential step toward equity and fairness. We must also push back against initiatives like the misnamed "Taxpayer Protection and Government Accountability Act," which seeks to curtail voter rights to raise revenues for schools and other social programs. 
• Share community stories that vividly illustrate the harm caused by budget cuts. 
• Participate in active community dialogue, promoting storytelling to vividly depict the adverse impacts of budget cuts. Budget changes aren't merely figures on a page -- they profoundly affect the residents our leaders swore to serve.