Details of agreement to close Calif. deficit

July 21, 2009 9:57:59 AM PDT
Gov. Arnold Schwarzenegger and legislative leaders from both parties announced a tentative deal Monday night to address California's $26.3 billion budget deficit. The plan still must get a two-thirds vote in the Assembly and Senate.

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It includes about $15 billion in cuts, as well as borrowing from local governments and some gimmicks to generate revenue in the 2009-10 fiscal year that started July 1.

Some details emerged as the leaders prepared to brief their fellow lawmakers:

SPENDING CUTS

-- $6 billion from K-12 schools and community colleges over a two-year span.

-- Nearly $3 billion from the University of California and California State University systems.

-- $1.3 billion from Medi-Cal, the state's health care program for the poor. Also includes a proposal to bill the federal government for more money.

-- Saves $1.3 billion by retaining three unpaid furlough days per month for state workers.

-- Includes $1.2 billion in unallocated cuts to the state Department of Corrections. Does not include Schwarzenegger's proposal to release some inmates early.

-- Cuts $528 million from CalWORKS, the state's welfare-to-work program, partly by increasing sanctions for families that fail to meet work requirements. Schwarzenegger had proposed eliminating the program entirely.

-- Cuts $124 million from Healthy Families, a program that provides health insurance for 930,000 low-income children. Lawmakers hope nonprofits, foundations and other groups can fill in some of the losses.

-- Cuts $226 million from the state's in-home supportive services program for the frail and disabled. Also includes Schwarzenegger's plans to require fingerprinting of caregivers and recipients, and would require caregivers to undergo background checks.

-- Cuts about $8 million from state parks, allowing the majority of state parks, beaches and attractions to stay open. Some parks are likely to close, however, based on popularity and use.

OTHER MEASURES

-- Borrows about $2 billion from local governments' property tax revenue, money that would have to be repaid with interest in three years. As a concession to angry local officials, the deal would prioritize repayment of the so-called Proposition 1A money after schools and bond holders are paid.

-- Takes $1 billion in redevelopment money from local governments.

-- Takes $1 billion in transportation funding from local governments.

-- Speeds up collection of 2010 personal income and corporate taxes to bring in revenue earlier than anticipated.

-- Sells off part of the State Compensation Insurance Fund, which the administration values at $1 billion. The fund is a quasi-governmental agency that is the state's largest writer of workers' compensation insurance.

-- Allows limited expansion of oil drilling off the Santa Barbara coast, bringing in $100 million in the current fiscal year.

-- Eliminates the Integrated Waste Management Board and the Board of Geologists and Geophysicists, which Schwarzenegger had targeted as wasteful and unnecessary.

-- Gives school districts the option of cutting the school year by five days.

-- Defers state employee paychecks by one day for a paper savings of $1.2 billion, which has been criticized by some as a gimmick. Instead of being issued on June 30, 2010, the paychecks would be issued on July 1, the start of the 2010-11 fiscal year.

-- Gives the governor authority to pursue the sale of about 10 state-owned buildings as a potential revenue source in future years, including the Orange County Fairgrounds, the Public Utilities Commission Building in San Francisco and the Ronald Reagan State Office Building in Los Angeles.

-- Rejects Schwarzenegger's proposal for a surcharge on homeowner insurance policies to boost funding for emergency services. The surcharge would have averaged about $48 a year per homeowner.

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