State Budget Hammer to Fall Today

Tuesday, May 26, 2009  |  Updated 1:00 PM PDT
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State Budget Hammer to Fall Today

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California's budget deficit has ballooned to $21.3 billion.

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Gov. Arnold Schwarzenegger's takeaway message from last week's defeat of the special election ballot measures was "cuts, cuts, cuts."

This week, he's following through. The Republican governor on Tuesday will release a revised budget proposal for the coming fiscal year that details nearly $5.5 billion in cuts on top of those he previously announced.

California's budget deficit has ballooned to $21.3 billion, although the nonpartisan legislative analyst says it actually be will $3 billion higher when the fiscal year begins July 1.

The extra cuts Schwarzenegger is set to announce are in place of his earlier plan to borrow $6 billion.

He said voters indicated in last week's special election they did not want state lawmakers to raise taxes, borrow money or employ shell game-style funding shifts to balance the budget.

Schwarzenegger spokesman Aaron McLear said the revised budget will include making $18 billion in cuts and taking $2 billion from local governments that will have to be repaid. The governor also wants to raise money by selling some state assets, such as San Quentin State Prison, and charging an emergency response fee to homeowners in wildland areas.

The governor acknowledged his cuts will be painful. They include cuts to in-home care for Alzheimer's patients and layoffs for thousands of teachers.

"Behind every one of those dollars we cut, there are real faces," Schwarzenegger told a gathering of small-business owners Tuesday in Sacramento. "If we don't make those cuts, I think we will face catastrophic consequences because the state would simply run out of money and get insolvent, which we cannot afford to do."

Schwarzenegger already had proposed deep cuts, including laying off 5,000 state government employees and reducing general fund payroll by 10 percent. Billions of dollars would be cut from K-12 schools, potentially shortening the school year by a week, while financial aid for college students would be reduced.

The CalWORKS welfare-to-work program and Healthy Families, which provides low-cost health insurance for children, may be eliminated. Funding for state parks would be greatly reduced, and some boards and commissions consolidated or eliminated.

Schwarzenegger also wants to transfer 19,000 inmates who are illegal immigrants to federal custody, saving $182 million.

A steep drop in tax revenue has accelerated the decline of California's financial condition. This year saw the first drop in personal income statewide since 1938.

"The depth and the scope of this international recession and the effect it has had on California's economy and its budget requires us to be putting additional measures on the table that would have been unthinkable just three months ago," said H.D. Palmer, spokesman for the governor's finance department.

Finance officials will deliver the administration's latest budget proposal to a hearing of a joint legislative budget committee Tuesday afternoon.

Among the propositions defeated by voters last week was one that would have raised $5 billion by borrowing against future lottery revenue. Two others would have transferred about $900 million next year from early childhood and mental health funds.
     
 

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