When he announced revised budget proposals on May 13, Gov. Arnold Schwarzenegger was looking at $4 billion in revenue that wasn’t in the original budget last January. But instead of returning $2 billion borrowed last year from education funds and removing cuts to health care and other human needs, much of the additional revenue is earmarked for highway improvement.

The new budget would impose premiums on over half a million Medi-Cal (California Medicaid) recipients with incomes just above the poverty level. Medi-Cal dental benefits would be capped and hundreds of thousands of Medi-Cal recipients would be forced into HMOs, depriving them of access to trusted health care providers. Home health care workers’ pay would be slashed from $10.10 an hour to the $6.75 state minimum wage. Poor working-class communities and people of color would be affected most sharply, both as home health care workers and consumers.

While the Health Access coalition of over 200 member organizations strongly opposes Schwarzenegger’s cuts, Executive Director Anthony Wright warned that the budget fight is only a single battle. “The real war,” he said, “is the special election and the issue of the governor being able to impose unilateral health care cuts” through his proposed “Live within our means” initiative for a spending cap.

Education proposals include modest appropriations to cut class sizes and provide bonuses for teachers in poorly performing schools. Failing schools would be turned over to state-appointed management teams or converted into charter schools.

“The governor’s May Revision appears to acknowledge some of the funding problems facing our most challenged schools,” said the Education Coalition, which represents teachers and school employees’ unions, administrators, school boards and the PTA. At the same time the coalition said it is “deeply disappointed that overall this budget revision cements the governor’s broken promises to California’s students and public schools and fails to provide any long-term solutions.”

The educators pointed out that because it doesn’t deal with the ongoing financial crisis in school districts around the state, Schwarzenegger’s budget paves the way for more school closures, bigger class sizes, layoffs of teachers and other education workers, and a deepening shortage of nurses, counselors and librarians. They said the governor’s refusal to pay back the $2 million, and his initiative for a spending cap, “are in direct contrast to the priorities established by California voters,” and fail to offer “any real solutions or plan to deal with the real problems facing our public schools.”

Democratic legislators, who dominate both Senate and Assembly, are expected to propose their budget this week, possibly including new taxes — a solution the governor has shunned.

Last week, Schwarzenegger’s supporters turned in signatures for the “Live within our means” initiative, and for shifting redistricting to a panel of retired judges, delaying tenure for public school teachers and curbing political action by public workers’ unions. The labor-community Alliance for a Better California (ABC) submitted signatures for re-regulation of the state’s energy market, and for affordable prescription drugs.

No sooner had they done so than PhRMA, the political arm of the big prescription drug companies, leaped into the fray with a lawsuit challenging the prescription drug measure on a technicality. ABC immediately called on Schwarzenegger “to stop his allies in the pharmaceutical drug industry” from seeking to deny Californians “the right to vote on an initiative promising cheaper prescription drugs in the governor’s special-interest election.”

The governor’s supporters “know this is a very popular issue with voters, and they know they can’t win at the ballot box,” ABC spokeswoman Robin Swanson said in a telephone interview. Swanson urged members of the public to write to Schwarzenegger on the issue, as well as sending letters to the editor and calling radio talk shows.

ABC is sponsoring a May 25 Action Day for a Better California, with rallies in Sacramento and Los Angeles (see box below).