Democrats take on governor over cuts
Panel calls for 25% less in program reductions, $1.9 billion in taxes
Published: Tuesday, June 16, 2009 at 3:00 a.m.
Last Modified: Tuesday, June 16, 2009 at 10:01 p.m.
SACRAMENTO — Democrats started firing back in concerted fashion Tuesday against Gov. Arnold Schwarzenegger’s proposed budget cuts, setting the stage for yet another round of acrimonious debate as the state falls further into the red.
A state budget panel dominated by Democrats on Tuesday called for significantly fewer cuts in state programs — about 25 percent less — than what Schwarzenegger is seeking to bridge a projected $24 billion budget deficit.
In addition, Democratic leaders are proposing at least $1.9 billion in taxes to help create a reserve fund that state officials say is necessary to secure loans and cover future shortfalls. The governor’s plan would achieve this fund through deeper budget reductions.
The budget panel wrapped up a month’s work Tuesday with a plan that rejects the governor’s proposals to eliminate some programs entirely, including the welfare-to-work program and health coverage for about 1 million children, and also would negate his proposals to close state parks and borrow at least $2 billion in property taxes from local agencies.
Instead, the panel of six Democrats and four Republicans in the Assembly and Senate — voting primarily along party lines — opted for lesser across-the-board cuts, as well as some that seemingly have little to do with budget fixes, such as a proposal to eliminate California’s high school exit exam.
Assemblywoman Noreen Evans, D-Santa Rosa, chairwoman of the Legislature’s budget committee, insisted that such tests represent a cost savings if discontinued, although she could not provide a dollar figure.
“It sounds kind of cute, but it works,” she said of the proposal.
A spokesman for Schwarzenegger reiterated Tuesday that the governor will not sign a budget that includes “gimmicks” or raises taxes.
“We believe we need to live within our means and do the best with what we’ve got,” said spokesman Aaron McLear.
The governor also criticized the committee’s 6-4 vote to reject his proposal for a 5 percent salary reduction for 235,000 state employees. The pay cut would have come on top of two-day-a-month furloughs the governor imposed in February, which have reduced state employees’ pay by nearly 10 percent.
Instead, the committee voted to pay state workers on July 1 instead of June 30, a device that would create a one-time savings of about $1.2 billion, according to Evans’ staff.
“It’s outrageous that the Legislature would ask Californians to pay higher taxes but refuse to cut the pay of state workers by 5 percent,” Schwarzenegger said in a statement. “This is exactly why so many Californians have lost faith in Sacramento’s ability to solve problems.”
Schwarzenegger is proposing a mix of $16 billion in spending cuts, borrowing from local governments and fees on property owners to close the deficit for the fiscal year that begins July 1.
Among the proposals is the closure of up to 220 state parks.
The panel’s final recommendations came on the same day that Standard & Poor’s put California on credit watch out of concern the state will not be able to fix the budget mess.
State Controller John Chiang has said the state will run out of cash by July 28 without a balanced budget, which he said is necessary to secure loans to keep the state afloat.
But how to achieve that balance is sure to be a fight in upcoming budget negotiations. The work done by Evans’ committee will be translated into budget bills that will go before the full Legislature, possibly as early as next week.
Evans estimated that once the committee’s work is added up, it will amount to between $12 billion and $13 billion in cuts. She said transfers and other revenues, such as a proposed $15 surcharge on car registrations to fund state parks, will make up another $6 billion or so to get to $19.5 billion, which is the estimated amount of the budget deficit without creation of a reserve fund.
Her committee recommends that new taxes be used to fund a reserve.
Tax proposals endorsed by the committee include a 9.9 percent severance tax on oil, a tobacco tax and closing corporate tax loopholes that were agreed upon in February to end a budget stalemate then.
Democratic leaders said they will provide a formal summary of their budget plan today.
The legislative committee proposed the following on Tuesday:
Reducing the budget for K-12 schools by $5.5 billion, an amount lawmakers hope can be backfilled with federal stimulus funds.
Reducing the general fund payments to the University of California and California State University systems by almost $2 billion.
Cal Grant scholarships would be maintained at the current level for the coming school year but the following year would not be offered to as many students.
Scholarship amounts for students at private colleges would be reduced by 5 percent. The panel also voted to increase student fees at community colleges by $6 per unit, increasing the cost per unit to $26.
Adopted a proposal from the Judicial Branch for a 10 percent cut, which would include closing courts for one day a month and increasing fees for security and other services.
Reduced funding to the California Department of Corrections and Rehabilitation by $1.18 billion, which includes a proposal to release thousands of nonviolent inmates early. The governor originally estimated that 38,000 inmates could be released under the plan, but questions have since surfaced about how many actually are eligible.
You can reach Staff Writer Derek J. Moore at 521-5336 or Derek.moore@pressdemocrat.com.
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