State aid cuts loom as need for help rises

<p>California's faltering economy is increasing the demand for assistance to low-income families while curbing the state's ability to pay for it, a collision that almost certainly portends cuts to food stamps, health care and other welfare programs.</p><p>"Realistically, we've got to cut everything," said Assemblywoman Noreen Evans, D-Santa Rosa, including the $30 billion for health and human services.</p><p>Pointing to the state's 8.4 percent unemployment rate, third highest in the nation and expected to swell over the next two years, Evans said the cuts "come at a time when it's morally indefensible."</p><p>Evans, who chairs the Assembly Budget Committee, is on one side of an ideological divide over the state's yawning budget deficit, now at $42 billion over the next 18 months.</p><p>While Evans and other Democratic leaders join Gov. Arnold Schwarzenegger in backing a mix of cuts and new taxes to cover the budget gap, fiscal conservatives insist that state spending is the culprit and new taxes are not an answer.</p><p>California has become a "welfare magnet," awarding benefits that "could be viewed as excessive," said Jon Coupal, president of the Howard Jarvis Taxpayers Association.</p><p>The state is still a "prodigious tax-producing machine" despite the recession and should "cut expenditures to (match) the level of revenue," Coupal said.</p><p>Republican lawmakers, who steadfastly support the all-cuts, no-tax approach, have been cut out of the budget negotiations among the Big Three: Schwarzenegger, Senate President Pro Tem Darrell Steinberg of Sacramento and Assembly Speaker Karen Bass of Los Angeles.</p><p>Evans, a former Santa Rosa city councilwoman, believes an agreement is likely before New Year's Eve, and the now-recessed Legislature could be hastily summoned to approve it by a majority vote.</p><p>Two weeks ago, Democrats approved an $18 billion deficit-reduction plan that included $7.3 billion in cuts, including reductions of $100 million for CalWORKs (payments to needy families) and $618 million in benefits to the elderly and disabled.</p><p>Democrats noted that the latter step would cost elderly and disabled individuals more than $700 a year and couples more than $1,300.</p><p>But Schwarzenegger threatened to veto the plan, setting the stage for renewed negotiations.</p><p>Cutting back on public assistance, such as CalWORKs, food stamps and Medi-Cal, is bad medicine in the midst of an economic slump, the California Budget Project said last week.</p><p>"It's precisely the opposite of what we need to do to keep spending up," said Jean Ross, executive director of the nonprofit, which advocates for low-income families.</p><p>Programs like food stamps help needy people and also bolster the economy, Ross said, because the money is spent immediately in local stores.</p><p>The Budget Project documented recession-driven increases in state assistance programs, including a 14 percent jump in food stamp recipients and nearly 6 percent enrollment boosts in both CalWORKs and Healthy Families, which provides health insurance for children in low-income families.</p><p>In hammering out a budget solution, lawmakers and the governor should "prioritize basic services to families," Ross said, but she declined to discuss details or spending amounts.</p><p>Coupal, who champions budget cuts, said that almost everyone is "concerned about the truly needy." But waste and excess spending can be trimmed from all parts of the budget, he said.</p><p>Three major expenses -- public schools ($42 billion), health and human services ($30 billion) and corrections ($10 billion) -- account for 80 percent of California's general fund budget.</p><p>There is "substantial evidence," Coupal said, that Californians drop private health care coverage and enroll their children in Healthy Families, freeing up money to spend on "housing and new cars."</p><p>Educational bureaucracy could be shrunk without cutting funds for classrooms, Coupal said, and the corrections budget could be reduced by bringing salaries down to the levels paid in other states.</p><p>If the Democrats and the governor adopt a budget based on a majority vote, circumventing Republican opposition, Coupal said his organization will sue.</p><p>Proposition 13 requires a two-thirds vote for new taxes, and defending the 1978 ballot measure is "our raison d'etre," Coupal said.</p><p>Democrats said their $18 billion plan could be passed by a majority because it is "revenue neutral." And even if it wins approval, Evans said, a $22 billion deficit will be carried over into 2009.</p><p>You can reach Staff Writer Guy Kovner at 521-5457 or guy.kovner@pressdemocrat.com.</p>