PEOPLE ARE STARTING to notice the impacts caused by the state's budget quagmire. Like the ripples from a stone thrown into a pond, Sacramento's inability to pass a budget is affecting all segments of our community.
Checks for various kinds of aid are sometimes delayed, causing late payments for rent and other bills. County case workers are so overwhelmed for aid requests that they can't respond quick enough. Depending on what day you call, county and city offices may be closed.
Foundations that give grants to nonprofit agencies are seeing their pots dwindle, and in turn those agencies that help people cope with these trying times see more and more people knock on their doors. Schools are dropping the small class mandates instituted just a few years ago, stacking 30-40 students per classroom.
After school sports are in danger of disappearing or being forced to charge students fees to play on school teams. Summer school, where students usually make up work or try to get extra tutoring, is not happening in some school districts.
And the list goes on.
The full impact of those cutbacks in services and programs has not slammed down on us yet. Contra Costa County workers scramble to find other sources of money to maintain some of the county's services. Most of the service providers are operating on last year's leftovers or emergency reserves. When those funds dry up, things will really start to get painful.
We
expect the complaints to reach critical proportions when potholes don't get filled, levees are not maintained, creeks overflow, library hours are cut, and health permits issued to new restaurants take months to get issued.
We know we face major funding problems in our county, and for the past several years the Board of Supervisors has been seeking ways to lessen the certain pain. Only now are other counties undergoing the same process we've been going through.
However, a major portion of our financial problem is out of our control. If the state ultimately decides to take our gas tax money, cut back on education or withhold funding for federal- and state-mandated social services, the county and cities like Antioch, Brentwood, Oakley and Pittsburg will be up the creek.
The reserves cities and the county are required to have will only keep us afloat for so long. No one is certain what will happen if this recession lasts more than two or three years.
Some people still cling to the belief that the Obama administration will throw a lifeline to California. Those who believe this think there is no way the United States can afford to let California go under. The seventh-largest economy in the world, California represents a 12th of the U.S. economy.
"A fiscal meltdown by California or any other large state or municipality would surely destabilize the U.S., if not worldwide, financial markets," wrote State Treasurer Bill Lockyer to U.S. Treasury Secretary Tim Geithner, President Obama's point man in guiding the nation out of this recession.
President Obama and his administration have repeatedly said California has some serious fundamental problems that it needs to fix.
If the United States bails out the state from the logjam caused by the political gamesmanship being played out in Sacramento, the Feds could impose conditions — just as they did with the auto and banking industries — that might be so onerous as to dissuade more states from asking for federal aid. However, our state legislators would be in no position to refuse those conditions.
The economy continues to spiral downward. Fitch Rating has lowered California's bond rating from an A minus to a BBB. That is the lowest bond rating for any state (just above junk bonds) and will make further borrowing for infrastructure and services even more expensive.
There is a conclave this weekend where members of the California State Association of Counties (CSAC), in which I represent Contra Costa, will be meeting with our city and school board partners at the Local Government Summit on State Governance and Fiscal Reform in Sacramento.
The Cities Counties Schools (CCS) Partnership combines the efforts of CSAC, the League of California Cities and the California School Boards Association.
The summit, titled "Rebuilding California — From the Ground Up," is an effort to hash out in detail the changes the state needs to make to restore effective governance and a sensible fiscal system.
The possible reform topics will run the gamut — from changing the initiative process to modifying the mandated allocations, restoring the rule of local control, to broadly realigning revenue authority.
Counties have seen firsthand how the state's dysfunctional system dramatically affects services and constituents. It's clear the current state-local relationship is not working and needs to be changed.
Let's hope these organizations will be able to push the state's leadership toward the implementation of serious reform. Reform could take the form of the initiative process, legislation, or a Constitutional Convention. It is a conversation we need to start right away.
Joined: Mar 2008
Current Posts: 166
Obama’s tax policies hurt nonprofits
7:45 pm March 10, 2009, by Bob Barr
While America’s and metro Atlanta’s nonprofits are not facing the dire circumstances staring many of our country’s large manufacturers and major financial institutions in the face — scenarios that include bankruptcy and nationalization — neither do these vital community resources benefit from the “too-big-to-fail” mentality that has prompted the federal government to commit billions of taxpayer dollars to shore up failing institutions such as Citigroup and AIG.
In fact, America’s nonprofits are facing lean times that are likely to be made worse, not better, as a result of policies being championed by the Obama administration.
Those in the nonprofit arena expecting a sympathetic ear in the new administration — after all, these are agencies helping precisely those seemingly in synch with the new president — were sadly disappointed when his spending plan was revealed to Congress. Arguing that tax laws allowing for charitable deductions “unfairly” benefited the wealthy, the president has proposed cutting the percentage of income that can be deducted, and capping the overall size of itemized deductions.
While the administration argues that the full impact of these (and other) tax changes would be softened because they are phased in and would not be felt until 2011, the fact that those in higher income brackets make their tax plans years in advance — including the amount and type of charitable donations — presents real concerns for nonprofits.
Most charitable gifts come from individuals, not corporations. In fact, about 75 percent of the $306 billion donated to charities in 2007 came from individuals. However, the 5 percent of corporate donations impacts nonprofits significantly, largely because they are planned; and corporations already are planning cuts to their 2009 charitable giving.
According to a recent report on corporate philanthropy by The Conference Board, more than 60 percent of corporations surveyed had either already cut their planned donations for 2009 (45 percent) or were now considering doing so (16 percent).
Not only are corporations planning cuts in charitable giving this year, but the administration’s new emphasis on the environment, including “global warming,” apparently is causing at least some corporations to redirect their donations from local focus areas, to nonprofits emphasizing environmental activities rather than social services.
United Way of Metropolitan Atlanta, the most visible player in the region’s corporate giving sector, will announce this month if it reached its ambitious, $82-million goal set last fall. If it does, it will be a tribute to the hard work of the United Way staff and its member agencies, as well as those heading its campaign, led by Deloitte executive Ed Heys.
However, the continuing economic weakness locally and nationally means that corporations, as well as nonprofits that rely for funds on corporate generosity, will face very real, if not debilitating challenges this year. Already, for example, Atlanta’s United Way has cut a dozen staff positions and is leaving other vacancies unfilled.
However, it is perhaps the environment facing the country’s wealthier taxpayers that poses the most serious challenges for nonprofits; and why Obama’s move to reduce incentives for donations by higher-bracket taxpayers is especially troubling.
The danger signs have been there since at least the second half of 2008 when, according to a study by Indiana University, large gifts to nonprofits — that is, $1 million or more — dropped 33 percent. While many taxpayers do not make charitable decisions based solely on tax consequences, they will undoubtedly give less if they face lower tax incentives on top of sharp declines in personal wealth.
In this environment, the Obama administration’s tax increases aimed at higher-income individuals will prove most harmful to those least likely to be able to withstand the brunt of those policies — our nonprofits.