Gov. Arnold Schwarzenegger announced a revised budget proposal on Friday which he said would see the state “live within its means” by adding no new taxes but making “terrible” cuts to reduce $19.1 million in costs — including elimination of the state’s welfare to work program, most childcare for the poor, and 60 percent of mental health funding.
The $83.4 billion proposal would also further cut state workers’ pay by 10 percent, drastically scale back In-Home Supportive Services, and send some state inmates to county jails. Funding for K-12 education would remain constant, while state parks would be spared from cuts and higher education would see a slight uptick, hopefully avoiding fee increases for students.
While the cuts may seem painful, Schwarzenegger said there aren’t many options left.
"California no longer has low-hanging fruit,” Schwarzenegger said. “As a matter of fact, we don't have any medium-hanging fruit. We also don't have high-hanging fruit.
"We literally have to take the ladder from the tree and shake the whole tree."
The complete elimination of the CalWORKS program, which accounts for 2.7 percent of the entire state budget, would have the largest effect on Californians. Nearly 1.4 million people rely on the state welfare program, which helps unemployed Californians pay bills and return to work.
The change would leave California as the only state in the union without a welfare to work program.
Schwarzenegger’s proposal to eliminate all childcare programs, save for after-school and preschool, is the second largest cut. The shift would affect about 142,000 low-income children.
The budget proposal, in part, looks to cut the state budget by shifting costs to already cash-strapped county governments.
A proposed 60 percent cut to mental health programs would send a $435 million bill to counties. About 160,000 Medi-Cal patients could find narcotics treatment programs slashed, saving the state $53.4 million. A two-thirds cut to the In-Home Supportive Services budget would also likely have to be absorbed by counties.
Even the CalWorks cut could come on the shoulders of some county governments, who suddenly may find themselves required to provide financial help through county General Assistance programs.
Counties would also be tasked with caring for as many as 15,000 low-level felons, who would be shifted to county jails. The state would save more than $240 million by paying counties $11,000 to $15,000 per offender to cover costs related to the shift, including probation, drug court, and rehabilitation.
Counties would also be asked to supervise state juvenile parolees.
Schwarzenegger said the solution was preferable to a 10 percent cut to corrections he proposed in January, which would have seen the early release of nonviolent and low-risk inmates.
In addition to the cuts, Schwarzenegger’s proposal calls for borrowing $1.2 billion in transportation funds.
The budget proposal is also reliant on a November ballot initiative which would modernize the lottery — possibly doubling income — and direct lottery revenues to a rainy day fund. Schwarzenegger said the move could generate $15 billion over the next three years, which could be pulled from the rainy day fund to help stabilize revenues and balance the budget in down economic years.
If lottery revenues fall short, or if the measure isn’t approved by voters, Schwarzenegger said the state sales tax would temporarily be increased by 1 percent.
As part of stabilizing the budget for future years, Schwarzenegger said he would not sign a budget which does not include a reduction in pension benefits for new state workers and changes to the state budget process, including that rainy day fund.
Schwarzenegger said that the changes he proposed were in line with Californians’ desires, which he heard repeated throughout the state “time and time again, loud and clear.
“The people of California want us to live within our means, just as they must in their businesses and their families. They don't want us to spend more money than we take in and they don't want us to raise taxes, especially now when times are tough.
“But what they do want us to do is to fix our dysfunctional budget system once and for all, so that we don't have to go through this pain every time the economy cools off.”
State democratic leaders decried the plan Friday, arguing California would be better served by delaying corporate tax breaks and seeking tax revenues from companies extracting oil in California.
“I am disappointed that the Governor has chosen to surrender,” said State Senate President pro Tempore Darrell Steinberg (D-Sacramento). “That he sees California as unfixable and that he proposes a budget that kills the economy and harms so many.
“It is a non-starter.”
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