Political Notebook

Dan Walters: California has big money, hot politics in poverty

Gov. Jerry Brown was still explaining his new budget to reporters on Jan. 7 when advocates for the poor, who didn’t like what he was saying, began firing email blasts.

Although billions of unanticipated dollars were pouring into the state treasury, Brown was still preaching caution about spending them, preferring to divert an extra $2 billion into the rainy-day fund he had persuaded voters to create.

The state would need reserves, he warned, to cushion an inevitable downturn in the economy.

“Everything that goes up comes down,” he said, adding, “There’s a tendency to do everything, and I’ll have to straighten it out at the end.”

To advocates for early childhood education, health care for the undocumented poor, homeless housing and welfare payments, Brown’s remarks smacked of indifference.

“While heavily emphasizing growing the reserves, the governor’s proposal misses several opportunities to strengthen vital public services and systems,” the left-leaning California Budget and Policy Center declared in a typical response. “It includes only modest increases for higher education – a key to the state’s economic future – no significant reinvestment in child care, and no additional investment in a welfare-to-work system that was deeply cut in recent years.”

It would be fair to say that the vast majority of Brown’s fellow Democrats in the Legislature agree with his critics, setting up what is likely to be the major conflict over the budget this year. For instance, the incoming speaker of the Assembly, Anthony Rendon, is a passionate advocate of expanding early childhood education. Brown’s new budget consolidates, but freezes, spending on that program.

It’s not a new conflict. From the onset of Brown’s second governorship in 2011, he’s been reluctant to expand “safety net” services to the poor, openly fearing that new entitlements would lead to deep budget deficits during the next recession and privately fearing that a major legacy goal – stabilizing the state’s boom-and-bust finances – could crumble.

Brown slashed social and health services deeply in his first budget, and left little doubt that he intended the “retrenchment” to be permanent. Ever since – even when revenues jumped from an improving economy and his temporary tax increase – he has insisted that K-12 schools and reserves have the highest priorities.

Brown also has been more than a little defensive on the issue. “California has an extensive safety net for the state’s neediest residents who live in poverty and the state has maintained those core benefits despite the recession,” his new budget declares.

The politics of poverty have become more contentious because California’s recovery from the Great Recession has revealed the state’s increasingly stark economic disparities.

Although unemployment has dropped to less than half of what it was during the depths of the recession, California still has millions of impoverished residents – far more, proportionately, than any other state, according to the alternative measure of poverty the Census Bureau devised a few years ago that has become widely accepted as being more accurate.

California’s “official” poverty rate, 16 percent, is only slightly higher than the nation’s, but by the alternative measure, which includes the cost of living, it’s nearly 24 percent of the state’s residents, or about 9 million people.

In reality, it could be even much higher.

Brown’s budget projects that during the 2016-17 fiscal year, Medi-Cal, the state’s version of the Medicaid health care system for the poor, will swell to 13.5 million enrollees, more than a third of the state’s population. That would be twice as many Medicaid enrollees as the next largest state, New York, and approaching 20 percent of the nationwide total.

The Public Policy Institute of California devised its own measure of poverty similar to the Census Bureau’s alternative and came up with a slightly lower overall percentage. However, when it included those living in “near-poverty,” the ranks of the impoverished doubled to about 40 percent, or 15 million-plus people – more than the populations of all but four states.

Poverty is markedly higher, PPIC’s study found, in Latino and black households, particularly those with low educational levels.

Most poor adults are either working or looking for work, rather than depending on welfare. However, they’re usually limited to low-paying, often temporary, jobs, such as farm labor, because middle-class jobs for those without strong educational or technical training credentials – factory jobs, especially – have diminished.

Scarcely a million Californians – about 3 percent of the state’s residents, most of them children – are drawing welfare benefits. Nevertheless, welfare benefits are one of the flashpoints in the larger debate over what, if anything, California should do about poverty.

California’s benefits for what it calls CalWORKs are higher than those of any other state, topping out at $704 a month for a single-parent family of three, but California’s cost of living, particularly for housing, more than offsets that number.

“What upsets me is that we are still living in a state where the grant for a CalWORKs family is impossibly tiny,” state Sen. Holly Mitchell, D-Los Angeles, fumed after Brown’s budget was unveiled.

“The grant does not pay for a family’s basic needs, and so the family may go without housing, without paying utility bills and without transportation to a doctor. On top of that, we continue to deny aid to children simply because they are born into welfare.”

Mitchell has become a fierce warrior on the latter point, called the “maximum family grant,” that blocks benefits for children conceived while the mother is on welfare. She has authored legislation to repeal the two-decade-old rule, but so far has been frustrated.

Welfare is a component of what has become, in effect, a major economic sector in California – the care, feeding, housing and education of the state’s poorest residents.

Brown’s budget declares that it will spend $136 billion on “health and social services to California’s vulnerable and at-risk residents,” 75 percent of which will come from the federal government.

Billions more will be spent by local governments, primarily counties and primarily for “general relief” and medical care for the indigent. Low-income housing subsidies are another major spending category. Much state education spending, particularly in grades K-12, is concentrated “on poor students to raise their subpar achievement levels.”

Brown’s Local Control Funding Formula provides several billion dollars a year in extra funds to school districts with large numbers of poor and “English-learner” students, in hopes of closing what officials call the “achievement gap.”

The poor kids whose enrollments drive the formula – as defined by their eligibility for reduced- or no-cost lunches – aren’t hard to find since 60 percent of the state’s 6 million-plus K-12 students qualify.

Federal, state and local spending on the poor approaches, and may even top, $200 billion a year, or roughly 10 percent of the state’s economy. It flows into grocery stores, gas stations and other retail outlets, into the rental housing market, and into the state’s medical care system. It supports extensive public and private agencies that employ thousands.

But to advocates for the poor, it’s too little.

They want Brown to loosen the purse strings. They want the minimum wage to be boosted to at least $15 an hour. They want more low-income housing. They want a ballot measure that would hike taxes on properties worth $3 million or more to support anti-poverty programs.

Given the huge number of poor Californians, the politics of poverty are likely to become even more contentious. But so far, at least, politicians have focused on its effects, rather than causes, and have been reluctant to address its deeper issues, such as easing the housing shortage, or making California more competitive for investment that would bring more well-paying, blue-collar jobs.