Schwarzenegger's last budget: more pain

Arnold Schwarzenegger today unveiled his last state budget proposal as Governor of California. Like six of his previous seven spending plan, this one relies heavily on cuts to close the deficit — and Democrats don't like it. KPCC’s Julie Small and Frank Stoltze covered the busy budget day in Sacramento.

Schwarzenegger's final state budget offered plans to delay corporate tax breaks; to allow oil drilling off the coast of Santa Barbara; and to demand more money from the federal government.

But the bulk of the governor's solutions for the state government’s $19 billion shortfall are — once again — spending cuts. At a Capitol news conference to unveil the budget plan, Schwarzenegger conceded the cuts will be painful.

"Believe me, these are the hardest decisions a governor must make," said the governor. "But there’s simply no conceivable way to avoid more cuts and more pain."

Nearly a third of the proposed cuts — about $3 billion worth — would gut health and human services program for the poorest Californians. Those programs took heavy hits last year when the deficit soared to $60 billion.

The governor also wants to reduce benefits for Cal-Works “welfare-to-work” recipients. And he wants to tighten eligibility requirements for Healthy Families; that move would kick 200,000 kids out of the program.

Schwarzenegger also wants to reduce eligibility for MediCal health coverage for the poor to the minimum allowed under federal law. The Western Center on Law and Poverty says that could push “several million” people off MediCal.

Democratic Senator Darrell Steinberg of California reacts to the the Governor's proposed state budget.
Democrats don’t like any of it.

Senate President Pro-Tem Darrell Steinberg was blunt during his news conference: "With regard to the bulk of the budget proposal, I have one reaction: you’ve got to be kidding!"

Steinberg and his Democratic colleagues said the cuts would undermine working Californians just as they recover from an economic downturn that’s led to record foreclosures in the state.

Democratic lawmakers are especially steamed over the governor’s plan to cut the pay of 200,000 state workers. But Schwarzenegger said he reasoned the recession had already hit the private sector hard in California.

"People got unemployed, " said the governor. "We have a 12.5 percent unemployment rate. People had to take reductions in their salaries and all those things, and so the public sector also has to take a haircut."

But Senator Steinberg said the governor needs to think before he chops. The Sacramento Democrat said the state worker furloughs the governor ordered last summer have cost California more than they saved.

"The Franchise Tax Board has told us that between February 2009 and June 2010, they will not collect $652 million worth of taxes while they save $60 million worth of salaries, " said Steinberg.

Republicans praised the pay cuts and the cuts to social services. Assemblyman Jim Neilsen (R-Biggs), who co-chairs the Assembly budget committee, said welfare cuts are overdue.

"There is no question that historically California has been on the high end of its generosity in terms of welfare," said Nielsen. "It’s been a lifelong task of mine to try to reform and change that to a degree to make it reasonable and responsible and to get people in jobs and not on welfare."

The Governor threatened even deeper cuts if the federal government doesn’t pony up. He’s asking the feds for aid and special waivers that would restore $7 billion to state coffers. Schwarzenegger said if California doesn’t get that money, he’ll resort to a list of cuts.

The governor said he'll eliminate Cal-Works; that would affect more than half-a-million families. He'd cut the Healthy Families program, which provide healthcare coverage to nearly a million California children.

He'd also wipe out in-home support services for the elderly and disabled. And then he'd said he would eliminate funding for enrollment growth at the University of California and the California State University.

Senator Denise Ducheny (D-San Diego) said those threatened cuts traverse tired terrain.

"This is a recycled budget, OK?" said the Senate budget committee chair. "These are exactly the same proposals he made last year. We talked about them. We rejected them. And he’s come back to the ones that he had before."

Democrats said they’ll find a better way to close the deficit, but offered no specifics.

Schwarzenegger has challenged them and their Republican colleagues to get that "better way" done in an emergency legislative session over the next 45 days.