Gov. Arnold Schwarzenegger's finance officials, faced with a growing budget gap, Thursday unveiled more ways to cut spending by doing away with a popular health care program for children, welfare payments to poor families and grants to university students.
The cuts were proposed as additional ways to save money after the governor said he is reconsidering his plan to borrow $5.5 billion in short-term loans from Wall Street to close what he estimates will be a $21.3 billion deficit through June 2010.
But the massive shortfall, which comes three months after Schwarzenegger and the Legislature closed a $42 billion gap, may be even worse, nonpartisan Legislative Analyst Mac Taylor said Thursday.
Taylor, who released a 28-page report on last week's budget proposal by the governor, said California's revenues for the fiscal year that begins July 1 will be $3 billion less than Schwarzenegger's estimate - bringing the deficit to a staggering $24.3 billion.
The analyst also blasted the governor's idea of taking out short-term loans to help bridge the gap, saying it is a one-time solution that pushes the state's fiscal problems to the following year. Taylor said there are legal questions about whether the idea would violate Proposition 58, which prohibits the state from borrowing to balance the budget.
But the issue became moot Thursday when Schwarzenegger said he has instructed his finance officials to find additional spending cuts in the budget rather than taking out short-term loans.
Based on his conversations with federal officials and legislative leaders - and voters' rejection of his budget-related ballot measures in Tuesday's special election - the governor said he is having second thoughts about borrowing.
"It'll mean cuts, cuts and cuts, and living within our means," Schwarzenegger said after attending a prayer breakfast at a downtown Sacramento hotel.
Ana Matosantos, his chief deputy finance director, said in a legislative committee hearing Thursday that administration officials have decided to focus on programs that are not federally mandated.
Details of the new spending cuts had not been worked out Thursday. The Legislature will hold another hearing Tuesday to address the issue.
But Matosantos said Schwarzenegger is considering eliminating the Healthy Families program, the CalWorks program and Cal Grants to college students. Other options include reducing spending on mental health services, child welfare services and cutting another $600 million from the state's public universities, she said.
The state's general fund support of state parks could also end and state prisons may see an additional $750 million in budget cuts.
Anthony Wright, executive director of Health Access, an advocacy group, called Schwarzenegger's additional spending cuts "insanity."
"It's way beyond draconian. There aren't words to describe it," he said.
Wright said eliminating programs such as Healthy Families, which provides health care to nearly 1 million children of poor families, would also result in California turning away billions of dollars in federal matching funds.
But the deep recession has resulted in state revenues falling to the level a decade ago, Schwarzenegger said, adding that he will not support tax increases to close the latest gap even though the budget he signed in February included more than $12 billion in temporary tax increases.
"We have to recognize that we have to dial back to what was happening in 1999, what kind of programs were available and what kind of programs were not available," he said.
Saturday, May 23, 2009
Yup, it's all going down hill from here guys. After CA, Michigan and NY are probably next. This fuax socialism experiment was never meant to succeed. ATS boards are active with thoughts of riots and crime as a response to this.