CA Budget Update - July 28, 2009

Unfortunately, it appears that we are not yet finished with the 2009-2010 Budget. It is projected that we will again be facing an emergency deficit that will require a second round of amendments to the original budget passed in February. The estimations show that the state will again be in trouble as early as September, although it is projected that negotiations will not begin until November or later. However, given that the majority of the funding is federal – we do have an advantage over other programs in the state budget. Additionally, the research supporting the OTP/Proposition 36 programs shows a cost benefit ratio of 2.5 to 1 (or 2 to 1, depending on the source), which should deter the OTP from continuing to be a target in the budget negotiations because it is proven that those short-term savings will ultimately be twice as costly to the state. That said, the budget negotiations have increasingly become desperate and there is no guarantee that the fact that cuts will be twice as costly later will deter the Legislature and Governor from making those cuts. Repeated education of the benefit (and cost benefit) of the OTP will be necessary as the state’s finances continue to deteriorate.

We will continue to monitor this issue and keep you apprised of any budget developments.