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January 21, 2004

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Palo Alto Online

Publication Date: Wednesday, January 21, 2004

Passing the buck Passing the buck (January 21, 2004)

Actor-turned-governor's budget is balanced "on the backs" of Palo Alto's neediest families and its local government

by Bill D'Agostino

California Gov. Arnold Schwarzenegger said raising taxes wouldn't "punish working families" when he announced a $92.7 billion budget Jan. 9. But many of Palo Alto's neediest families say the governor's plan directly penalizes them.

"I wish the governor could come and spend a day in my shoes," said kindergarten teacher Laura Bence, whose 14-year-old autistic son Tristan relies on a variety of services in the area.

Due to the governor's budget proposal, the Bence family could be facing the prospect of a new enrollment fee for services that make their lives manageable -- such as after-school care at Community Association for Rehabilitation in Palo Alto.

The fee, scheduled to be submitted to the Legislature in April, would be assessed to parents whose minor children (ages 3 to 17) live at home but receive services through the regional care centers, according to the "2004-2005 Governor's Budget Highlights."

"To pay for that will be hard," Bence said of possible fee raises. "We'll have to make some choices."

If the governor's budget is approved, many other Palo Alto families -- and the nonprofits and agencies that serve them -- will face similar tough choices about how to spend their already stretched dollars.

The governor "is balancing his budget on the backs of the poor and the disabled and the elderly who have no more options," said Patricia Gardner, the executive director of the Silicon Valley Council of Nonprofits. The city of Palo Alto also faces a sizable cut that could lead to further slices in local services.

Plus, the current plan will have to be radically overhauled, possibly with even more cuts, if the core of the proposal -- a $15 billion debt bond -- does not receive voter-approval in March.

"This budget will make reductions," Schwarzenegger said during his Jan. 9 presentation. "And these are very difficult decisions that I do not take lightly."

Shailini Azariah is another Palo Altan who faces belt tightening due the proposals. She takes care of her 87-year-old mother, Ida Sheppard, a former aircraft quality control inspector who suffers from Alzheimer's Disease. @text During the day, Sheppard goes to the Avenidas Senior Day Health Care Center, where she socializes with other seniors, takes part in exercise classes and receives the constant care her illness requires.

Thanks to her mother's six hours of daily respite care, Azariah is able to work -- she runs Bay Area 2nd Mom, a nanny placement agency.

The governor's proposed budget would decrease state reimbursements for Avenidas' Medi-Cal patients, forcing the agency to make cuts to the respite program, possibly even eliminating subsidies the program provides.

What could that mean for people like Azariah, who are struggling to take care of their parents?

"It means I can't retire myself," Azariah said. "I'll just have to work longer in order to take care of her.

"Then I'm concerned because I'm the next one in line here. I'll be in the same situation that my mom is."

Still, the mother-and-daughter team is one of the luckier ones. More than half of those served by the health clinic live below the poverty line, and wouldn't have the means to pay more than the subsidized rates.

Many are seniors themselves, including those caring for their ailing spouses.

"We will probably have to turn people away who can't pay the full fee," said Lisa Hendrickson, Avenidas' CEO. Those retirees could then be forced into retirement homes or out of the area, she said.

Approximately 40 percent of the senior health center's patients come from Palo Alto.

Overall, decreasing the reimbursement rates for Medi-Cal will save the state $462.2 million in 2004-2005, according to the "Governor's Budget Highlights."

"If we do not control the spending today," the governor argued on Jan. 9, "we will put every program at risk tomorrow, and California will be bankrupt. And a bankrupt California will not be able to provide services for anyone."

The MayView Community Health Center, which offers free medical care to the uninsured, is anticipating major cuts due to the decreased reimbursements, as well as other proposals.

"It affects us in so many ways, it's mind-boggling," Executive Director JoAnn Cabrera said.

Although the full extent of the budget's impact is still unknown, MayView is projecting as much as a $200,000 loss in revenue. That's no small amount for an agency with only a $2 million budget.

The state's direct cuts to the local safety net will be compounded by the fact that Santa Clara County is facing a $175 million slice in 2004-2005.

Many vital Palo Alto nonprofits get county funding, including MayView, the homeless-services provider Urban Ministry, and the popular La Comida Lunch Program for seniors.

A Palo Alto drug and alcohol center -- which offers Alcoholics Anonymous meetings and counseling for recovering substance abusers -- that barely missed the ax last year will likely again be on the chopping block this year, according to County Supervisor Liz Kniss, a former Palo Alto mayor.

Santa Clara County, as well as the city of Palo Alto, are also being hit by the governor's proposal to shift property tax payments from local governments to school districts.

Overall, that would save the state $1.3 billion, although it contributes nearly $60 million to the county's overall deficit for 2004-2005.

"The state giveth and the state taketh away," Kniss said.

Palo Alto would face a nearly $1 million take-away due to the grab, in addition to smaller loses of funds due to less transportation grants and other minor cuts.

During the last two years, Palo Alto has eliminated more than $20 million in spending to offset declining tax revenues. A library was closed. Special events were eliminated. Maintenance to fields and other city facilities were delayed.

Unlike many California cities, Palo Alto has thus far avoided layoffs, but has eliminated positions as they've become vacant, restructuring around those vacancies -- a strategy that has continued this year to reduce expenditures.

But tax revenues continue to drop this year. City financial prognosticators predict that continued restructuring might be enough to prevent any additional service cuts -- if, that is, the state does not take away any more funds.

"The people who have lived up to their fiscal responsibilities are being punished by those who have not lived up to their fiscal responsibility," City Manager Frank Benest said. "So how does it feel? Pretty lousy."

Traditionally, property tax has gone to help improve the local area, repairing roads and sidewalks, Benest said, and using those funds to fulfill the state's obligation to schools is "appalling."

It's not the first time the state has targeted cities' and counties' property tax revenues, Benest noted. In the midst of the early 1990s recession, the state began siphoning city funds to maintain full funding for schools, establishing the Education Revenue Augmentation Fund (ERAF).

The move was pitched as temporary, but even in the midst of the dot-com boom, the state kept relocating the funds. Overall, the state has already taken approximately $30 million from Palo Alto, Benest said. With that money, the city could have revamped its ailing libraries or faulty storm drains.

"In the last recession, they ripped off our property tax. In this recession, they're ripping off our property tax. So much for new ideas," Benest said.

That reflection -- that despite Schwarzenegger's promises to "blow up" conventional wisdom in the capital, he is instead relying on the same tactics as past administrations -- was repeated over and over again by the affected agencies' leaders.

State support for Community Association for Rehabilitation -- where Tristan Bence gets his after school care -- has slowly dwindled from being 76 percent of the agency's budget in 1983 to 56 percent in 2003. Schwarzenegger's proposal might chip away even more, although CAR was still analyzing the proposal last week.

"I don't see any radical reform being suggested," Executive Director Lynda Steele said. "It's just what previous governors have done to the service system."

The linchpin of the governor's proposal is a $15 bond measure scheduled to be voted on in a March 2 election. If the bond, Proposition 57 on the ballot, fails, all bets will once again be off.

"If the bond does not pass in March, we will be forced to make painful cuts to essential programs," the governor said at his Jan. 9 press conference. "We cannot let that happen."

Bill D'Agostino can be e-mailed at

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