State Finance Department Hard at Work on State Budget

Most people will spend today shopping, but the people who handle the state's budget are at work. KPCC's Julie Small reports California's finance department already has begun its annual end-of-the-year sprint to balance the state's debit and credit columns.

HD Palmer: We've got slightly more than 400 people, and they are probably the hardest working group of career civil servants I've ever had the pleasure of working with in my life.

Julie Small: That's HD Palmer, the chief spokesman for the California Department of Finance. They're the people keeping tabs on the largest economy in the nation. Busy people.

Palmer: We're updating our economic forecast. We'll be updating our revenue forecast after that. We'll be updating our projections for what we call caseload programs: How many people are going to be on Medi-Cal next year, on welfare, in our public schools, in our prison system. All of those things go into the mix. And we've got a lot of people who are online and catalogue Christmas shoppers at the Department of Finance because this is the time of the year when we work late into the evenings.

Small: They burn that midnight oil now so that by January, they can to give California's lawmakers a picture of the state government's balance sheet. But the picture keeps changing. This year, the housing market cooled. That's the main reason why the Finance Department's revenue projections fell short for next year by, oh, somewhere about $8 billion dollars. So, they're adjusting all the budget numbers from black to red. Next, they'll propose ways to turn the red numbers black again.

Palmer: And then we will go to the Governor in early December and tell him kind of where the goal posts are, if you will: What our economic forecast is, what our revenue projections are, what the expenditure projections are, what the gap is and (again) that menu of how to go about closing the gap.

Small: It'll be up to Governor Schwarzenegger to close that gap. He'll decide what spending to postpone, where to trim, what to axe and what state assets to sell.

Palmer: Then we adjust the budget based on those decisions. We begin writing up the write-ups that help explain, that we release when the budget comes out in January. So it's a pretty labor-intensive job, not only before we go to the governor for decisions, but afterwards as well. So between Thanksgiving and New Year's is pretty much non-stop for the folks at the Department of Finance.

Small: If you stand outside the plain wooden door to the Finance Department's Capitol offices, you'd never guess how busy it is inside. Nor could you tell the enormous influence these civil servants have on California's economy. That may be by design. The budget process is high stakes, highly political... more than a little secretive. Here's director HD Palmer when I ask if I can record him in a staff meeting:

Palmer (laughing): No, no, no, no. It's the internal development process that will continue to be that internal. Clearly, once the budget decisions are made and the budget's out, we display them for everyone to see. We have them in excruciating detail on our Web site. And we hope and encourage that if people are interested in what's going on in the budget and where we're spending our money and why we're spending it or why we're proposing the changes in the budget that we do, we lay it all out on our Web site.

Small: So if you are curious to know what's going on with California's economy, jot this down: www.dof.ca.gov. Now wait... till January. That's when you, and the lawmakers in Sacramento, and the rest of the state government will finally get to see the results of late nights the Finance Department's putting in now.