In a move some said was timed to influence California’s May 19 special election, Republican Governor Arnold Schwarzenegger May 14 unveiled two proposed budgets to cope with the state’s ballooning deficit.

The first would close a $15.4 billion general fund gap that will still remain even if ballot measures pass boosting revenues for the coming year. The other reflects the $21.3 billion gap if they fail. Recent polls show the measures trailing.

Under the governor’s proposals, funding for K-12 education and community colleges would drop by $3 billion to $5.4 billion, and public college and university funds would be cut $1 billion to $1.2 billion. Health and human services programs would lose at least $2 billion through cuts in programs such as children’s health care, health services to documented immigrants, and support services to help elderly and disabled people remain in their homes. Funding would also be slashed for welfare and for centers serving the developmentally disabled.

The state would also tap local governments, themselves suffering revenue shortfalls, for millions in loans, forcing cities to cut local programs still further.

The governor ruled out tax hikes; California is one of three states requiring a two-thirds legislative majority to pass taxes, and Democratic majorities in the two houses fall short of that level. Nearly all Republican legislators have signed a no-new-taxes pledge.

Schwarzenegger also called for laying off 5,000 state workers by July 1, when the new fiscal year begins.

Responses were prompt.

State Superintendent of Education Jack O’Connell called the education proposals “exactly the wrong conversation we should be having at this time,” saying equipping youth to compete in the global economy is more urgent than ever.

Dennis Smith of the California Federation of Teachers criticized Schwarzenegger’s call for “billions and billions more” in cuts while ignoring potential revenue sources such as taxing oil companies.

Others including the Health Access coalition’s Anthony Wright warned that besides the dire health consequences for hundreds of thousands of Californians, the governor’s proposals could also cause huge losses in federal matching funds. Wright said “an ugly budget with awful choices” continues the “long-term mismatch between the revenues the state brings in and the education, health and other vital services Californians expect and deserve.”

The California Budget Project said the state’s predicament reflects the continuing decline in revenues while the need for human services is rising under the impact of the state’s over-11 percent unemployment. Numbers of people receiving welfare, food stamps and public health care for children have increased sharply in recent months.

CPB said tax cuts enacted in the last 15 years, and the declining role corporate income taxes play in general fund revenues, are among major factors in the crisis. It also warned that corporate tax cuts included in budget agreements the legislature and governor reached earlier in the year will create additional problems.

Though Gov. Schwarzenegger is campaigning vigorously for all six measures on the May 19 ballot, only three directly affect the next budget. They are Prop. 1C, to sell bonds backed by state lottery proceeds, and Props. 1D and 1E, to temporarily shift to the general fund, moneys previously earmarked for specific programs. The most far-reaching and controversial measure, Prop. 1A to build up the state’s reserve fund, sharply limit future spending even in good revenue years and let future governors make unilateral midyear budget cuts, would not have an immediate impact.

Many labor unions, health and retiree organizations adamantly oppose Prop. 1A because it severely restricts future human needs spending even in good budget years, while other unions and organizations see the measure as necessary because of the devastating revenue shortfall.

mbechtel @ pww.org

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