State Budget: Good, Bad and Ugly

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Wednesday, Jul 29, 2009  |  Updated 9:28 AM PDT
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Gov. Arnold Schwarzenegger signs the $85 billion revised state budget as Finance Director Mike Genest, seated left, and Legislative Secretary Michael Prosio, seated right, look on during ceremonies at the Capitol in Sacramento, Calif., Tuesday, July 28, 2009.

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The Good, The Bad and The Ugly

Gov. Arnold Schwarzenegger signed a revised $85 billion budget Tuesday that he said contained "the good, the bad and the ugly," including additional cuts to child welfare programs, health care for the poor and AIDS prevention efforts.
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Gov. Arnold Schwarzenegger has signed an $85 billion compromise budget plan for California.

Schwarzenegger used a phrase connected to his friend Clint Eastwood saying it contained "the good, the bad and the ugly."

The budget has no new tax increases, but does make deep cuts in education and health care.

Schwarzenegger said lawmakers forced him to make additional cuts to parks and child welfare services when they handed over a deal that was $156 million in the red.

Schwarzenegger's vetoes include $80 million from child welfare programs; $61 million in county funding to administer Medi-Cal, California's version of Medicare; $52 million from AIDS prevention; $50 million to Healthy Families, the low-cost health insurance program for poor children; and $6.2 million more from state parks.

"We are not out of the troubled waters yet," he said."We are ready if our revenues drop further to make the necessary cuts to again live within our means."

He said the plan forces California to live within its means but makes severe cuts to government programs from schools to prisons.

The governor and lawmakers hope the revised spending plan will end California's cash crisis and stop the state from issuing more IOUs.

The governor wanted a cash cushion after the Assembly rejected about $1.1 billion in revenues from local transportation funding and new oil drilling.

Finance Director Mike Genest said he agrees the additional cuts are ugly.

He said the governor wanted a $917 million reserve and even with the line item vetoes he only has a $500 million reserve.

"500 million is skimpy, no doubt about it. It's a reserve we have to live with," Genest said.

Another possible way to help raise that needed extra billion bucks is to take an additional 10 percent out of all workers' paychecks.

You could call it an interest-free loan from workers to the state.  Of course, this loan does not need our approval.  The plan, if it goes ahead, would give us our money back after April 15, 2010.

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