Bottom-line politics kick Yuba-Sutter

Harmony Health CEO Rachel Farrell decided to shut the doors to the Linda health clinic Friday because without a state budget she no longer had funds to operate.

That decision would've been carried through if her staff of 22 hadn't decided to work for free until a budget passes.

"I've borrowed to the max," Farrell said. "The next thing to do was close and have layoffs, but (the staff) is so dedicated to this community."

Many public service agencies statewide have been without money since the fiscal year began on July 1 because the state Legislature has been unsuccessful in passing a budget.

Early Tuesday morning, legislators compromised on a plan that would have closed the state's $15 billion deficit without raising taxes or borrowing money. Gov. Schwarzenegger, though, said Tuesday afternoon he intends to veto it. Farrell said in the 11 years the private clinic has been operating, she's never been through a budget cycle like this one.

"This is a record," Farrell said. "It's stressful."

Harmony Health physicians have roughly 10,000 patients and the clinic operates on a $1.3 million budget. Seventy-five percent of that budget is from Medi-Cal reimbursement.

Farrell said budget problems are not going to be solved if legislatures continue to cut programs the way they do.

"They are always looking to cut health and education. They cut the vulnerable population first and the rich just get richer," she said.

Even with her staff's sacrifice, Harmony Health has cut hours, laid off four employees and is quickly running out of supplies for its everyday operation, including many immunizations and inner uterine devices for prenatal care.

"We made our last payment (to vendors) in June," Farrell said. "We're stretched."

Regardless of funds, Harmony Health physicians said the patients' needs are greater than the paycheck.

"I come here to provide medical coverage not because I'm getting paid," Dr. Harpeet Johl said. "We don't want to cut our patients loose. Our first priority is patient care."

Sutter County Human Services Director Joan Hoss said she hasn't made any cuts, but has had to freeze vacant positions until she knows what kind of budget will be passed.

"We're well into the fiscal year and we still don't know the cuts we'll need to make," she said.

Though most of the county's health and mental health services are funded through grants and federal money, Hoss said potential cuts to Medi-Cal could have dramatic impacts on all county residents.

"It could affect a community provider's willingness and ability to provide care," Hoss said.

Some agencies, though, are doing better than others.

Sutter County spokesman Chuck Smith said the county is poised to weather this storm.

"We expect we can handle what the state throws our way," Smith said. "(So far), we've dodged a direct hit."

Smith said Sutter County has $18.7 million in the general fund to handle cuts made by the state.

In response to Schwarzenegger's veto, Sutter County put its own budget on ice.

Less than five hours after the governor's announcement, the Board of Supervisors deferred a vote on approving its 2008-09 financial plan until its Sept. 30 meeting. Supervisors said they need to hold off on approval until they know whether the county will get its share of fuel and sales taxes under Propositions 42 and 1A which direct some of that revenue to county road projects.

Financial problems confronting state government mean less money for local schools, said Baldev Johal, deputy superintendent for business in the Yuba City Unified School District.

But the final budget should be an improvement from state spending plans earlier in the year, he added.

Johal said even if Schwarzenegger signs the budget, the delays in Sacramento mean local officials are only nine months from the next budget for the state.

"They've really just kicked the can down the road," Johal said of delays.

The financial fate of schools in California is closely tied to the health of the state budget, he noted.

"When the state is flush with money," Johal said, "schools do well."

Higher education in California, like the state's water systems and highways, were well funded in the 1960s and 1970s, Johal said.

"We're really living off past investments," the deputy superintendent said.

Mark Allgire, assistant superintendent for business services in the Marysville Joint Unified School District, said a consulting firm will hold a Sept. 29 workshop for school officials on state financial issues.

"Until we get the details we can't determine any actual impacts to the school district," Allgire said.

Sen. Sam Aanestad, R-Grass Valley, who represents Yuba, Sutter and Colusa counties, did not support this budget proposal because he said excessive spending in the Legislature needs to be reduced.

"There is no real reform in this budget," Aanestad said in a prepared statement. "However, if the governor's solution is a tax hike, I will not support it because it will threaten the economic recovery of this troubled state."