[Updated] Schwarzenegger unveils grim budget revision

Protesters gathered outside of Gov. Arnold Schwarzenegger's May revise speech outlining his proposed budget.
Protesters gathered outside of Gov. Arnold Schwarzenegger's May revise speech outlining his proposed budget. Frank Stoltze/KPCC
Governor Arnold Schwarzenegger proposed to eliminate the CalWORKs program, most state funded child care and slash funding for local mental health services. The California state budget deficit was pegged at $19 billion. Officials will be able to maintain funding for kindergarten through 12th grade and will increase funding for higher education and community colleges. On the cost-cutting side, there will be increased co-pays for low-income families in the Healthy Families program. The governor's also proposed to halve general funds for In Home Support Services.

Updated at 7:38 p.m. | Permalink SEIU leader calls cuts 'absolutely outrageous'

Caregivers protest Schwarzenegger's proposed budget cuts from 89.3 KPCC on Vimeo.

During a protest outside the governor's news conference, Service Employees International Union leader Dave Regan said the governor's proposed cuts would eliminate life supporting services for 175,000 elderly and disabled individuals. Regan represents the workers who provide care to the disabled and seniors who are in the In-Home Supportive Services program. "This is absolutey outrageous. It cannot stand on moral grounds and it should not stand on political grounds," Regan said. SEIU represents about 240,000 of the In-Home Supportive Services caregivers who stand to lose their jobs, Regan said. -Frank Stoltze
Updated at 6:48 p.m. | Permalink Schwarzenegger: 'We now have to use the axe' Download
Calling the budget proposal his most challenging to date, Schwarzenegger also laid some of the blame on a tax system that is over-dependent on personal income, a federal government that has refused to help fund health care and prison costs and the rulings of federal judges. The governor said court decisions that have blocked many of the changes his administration had made to health and human services have increased the deficit. "So because these judges have prevented us from using a scalpel to trim some of those programs, we now have to use the axe." Schwarzenegger also said eliminating tax breaks for corporations would not stimulate the economy and create jobs. Senate President Pro Tem Darrell Steinberg said he was disappointed in the governor's proposed budget and called it a "non-starter." -Julie Small

Updated at 6:08 p.m. | Permalink Elimination of program removes funding mandates altogether Matt David, communications director for Governor Arnold Schwarzenegger, told KPCC's Patt Morrison today that eliminating CalWORKS is the only way the state can get around federal funding requirements for that program. He said attempts in the past have resulted in lawsuits and federal court findings that prohibited the Schwarzenegger administration from trimming the program. David said a number of states have joined California in asking the federal government to lower funding requirements for such programs. He says lower funding mandates would still allow the states to receive matching funds from the government. "But in most of those categories [the federal government] haven't been receptive," David said. Proposed cuts to Healthy families and In Home Support Srevices could be restored if the federal government were willing to negotiate funding mandates, David said. Although the state stands to lose billions in matching funds with the elimination of CalWORKS, David said there is no other alternative. "If we have no money to put up to get matched, we can't make those promises anymore." KPCC staff

Updated at 5:08 p.m. | Permalink Governor calls for elimination of CalWORKS Gov. Arnold Schwarzenegger is calling for the elimination of California's welfare-to-work program, one of the deep cuts he proposes to close a $19 billion budget deficit in the coming fiscal year. Slashing the welfare program would affect 1.4 million people, two-thirds of them children. In releasing his revised budget plan, the Republican governor laid out the most severe cuts to health and welfare programs since the state tumbled into recession nearly three years ago. He said cuts to government services over the past few years have done away with the "low-hanging fruit." The state's general fund spending will be $83.4 billion for the new fiscal year, the lowest level in six years. The deficit accounts for more than 20 percent of all projected spending. Associated Press

Earlier | Permalink May revise to offer grim proposals In May, the governor revises the state government’s budget to factor in tax revenue collected in April. The news came at the so-called “May revise” that Governor Schwarzenegger unveiled at 1 today. Back in January, Governor Schwarzenegger proposed a plan to close the $20 billion deficit. It included a threat to slash health care and social service spending if Uncle Sam didn’t come up with $7 billion. The Governor said the feds owed California because they required the state to pay for federally-guaranteed health care programs and to keep undocumented felons in prison. So far, Washington’s pledged about half the money California says it’s owed. HD Palmer with the Department of Finance says state tax revenue also came up short. “Through the month of March, the state’s receipts were running about $2.7 billion above projections. Unfortunately, in April our tax receipts came in more than $3 billion below. So those gains we had earlier in the year have essentially been negated” Palmer said. The legislature enacted mid-year cuts to save a little over $1 billion. But in all likelihood, the budget deficit is roughly the same as it was in January - only now Governor Schwarzenegger has new restrictions on how he can close it. For example: he proposed cutting back the Healthy Families insurance program for low-income Californians. But the newly-adopted federal healthcare legislation won’t allow it. HD Palmer says that means “we’re going to have to put more solutions on the table. And in many cases, they’re going to have to be much more difficult than the ones we put forth in January.” The governor might propose eliminating Healthy Families altogether — but it’s not clear if that would violate federal law. He might also try to eliminate California’s In-Home Support Services for the elderly and the disabled. Courts have blocked the state’s efforts to reduce those services before – and eliminating the program could run afoul of the federal Americans with Disabilities Act. Mike Herald with the Western Center on Law and Poverty says he expects the governor to go after CalWorks. The state’s welfare-to-work program provides basic grant assistance to the families of over a million children. “The reality is that without those funds, many of those families are going to fall into abject poverty.” Herald warned. Herald says the unintended consequence of federal health care reform may be that state lawmakers make deeper cuts to programs besides health care — including all levels of education. “I think it’s going to make it very difficult for the governor not to make substantial cuts in the K-12 systems,” Herald said. “And even though he’s proposing to increase funds for higher education, I haven’t heard anyone in the building who thinks that’s real. I think the far more likely scenario is that higher education’s going to take another cut this year.” The Legislative Analyst, the non-partisan agency that advises the legislature on spending, has combed through the state budget in search of savings. Deputy Analyst Michael Cohen says “virtually every action the state’s going to take in this budget is going to have some harm, whether it’s on school kids, or in health care or a grant to a poor individual. And we may not know the implications of all that harm for a number of years.” Cohen said he’s warned lawmakers since January that they must make difficult choices — as difficult as some of the ones the governor’s has proposed. State Senator Denise Ducheny (D-40th District) told KPCC's Patt Morrison Thursday that legislators had considered tax credits and cuts that they could option in order to close the $20 billion deficit, including the vehicle license fee. Ducheny said the state had originally intended the 1998 cut to be a one-time rebate and that it was a mistake to lower the fee. The state Finance Department estimated the cut amounted to a $6 billion a year loss in revenue, Doheny said. "I'm not quite sure we would recoup that much revenue now if we restored the fee. But it would be worth about $2-$3 billion and well worth our time." Jean Ross, executive director of the California Budget Project, said the budget deficit is a problem that "can't be addressed nipping and tucking a few programs here and there." The cuts will undoubtedly affect the core of the state's fundamental services, Ross said, and lawmakers will have to choose what their priorities are. Coming after last year's massive service cuts, there isn't much left for them to pare back, Ross said, while suggesting that closing the corporate tax loopholes that have survived over the years could generate revenue. Whether legislators have the political appetite to make those decisions remains a question. Sacramanto Bee political columnist Dan Walters also told Patt Morrison that the governor and the legislator are still in the early stages of what will most likely be a drawn-out process. Legislators will eventually arrive at a "get-out-of town" deal several months from now that will be "phonier than a $3 bill," Walters said. "It'll go on until someone cuts up the credit cards," Walters said. "The problem is, in a state of 38 million people nobody agrees on what those priorities are."

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