LABJ FORUM - Feeling the Sacramento Blues

California began the new fiscal year last week without a budget and with little prospect that the legislature will come up with one in the near future. Meantime, credit rating agencies continued to downgrade general obligation bonds and Gov. Gray Davis is pleading with 180,000 state workers to give up their negotiated raises from last year. But despite a crisis atmosphere in the state capitol, it was pretty much business as usual elsewhere in California. So the Business Journal asks:

How have the state's budget problems affected you?

Fenton Bailey
Managing Director
World of Wonder Productions

For us, the chickens have yet to come home to roost. It's impossible to tell if it will have an industrywide effect. I tend to let politicians do their thing. Politicians terrify me, period, and I normally have my hands over my eyes hoping they don't drive us all over a cliff anyway.

E. Jan Kehoe
Long Beach City College

It prevents us as a college from developing a predictable budget, and it could prevent us from receiving our July and August apportionment, which will create a significant cash flow problem for the district. Coupled with the budget cuts that have been high for community colleges, it makes it very difficult to run our large community college districts. It affects every single aspect of our operation. I'm very worried for our state.

Steven Ruef
NBBJ Architects LP

Is it directly affecting me? No. But it would be more difficult to get permits if there were staff cuts in certain offices. Health care is one of our primary markets and the state regulates our projects, so we have to go through the Office of Statewide Health Planning and Development out of Sacramento. If people lost their jobs there, our projects couldn't get inspected. As it is, there are huge delays in getting our projects through permitting and inspection, and that drives up the costs. The company has several Southern California health care projects in the process that could be impacted by state budget cuts in regulatory agencies.

Andrew Leeka
President and Chief Executive
Good Samaritan Hospital

It's going to affect state reimbursement to hospitals. Through the years a lot of hospitals have had funding cuts, and over half of the hospitals are losing money already. A good portion of our business is Medi-Cal business, about 14 percent. Medi-Cal is not paying most hospitals their costs for doing business as it is. So we're going to be providing medical care and not getting reimbursed.

Christopher Martin
Chief Executive
A.C. Martin Partners Inc.

The state budget does not affect us directly, but indirectly it's a catastrophe in the making. It will cast a pall over the whole California business climate, making investment a very uncertain proposition. Our analysis is that school construction funding is already in place, so the teaching side is affected but not the operations side. It is like a house of cards pull one corner and the whole thing will come down.

Peter Hardash
Vice President for Administrative Services
Pasadena City College

We have adequate reserves through into September. But as long as the impasse goes on, the more cuts it will eventually mean for community colleges. We do have options after we exhaust our funds. We're not going to stop paying our employees.

Dave Schmidt
Chief Executive
Scan Health Plan

It's very worrisome that we have providers who may or may not be paid and therefore may consider not treating patients. Our own company is likely to receive a reduction in payment for a period of time. We're assured to be paid sometime, but it's a concern.

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