Schwarzenegger proposes budget for 'tough times'

January 8, 2010 5:36:10 PM PST
Governor Schwarzenegger unveiled an $83 billion budget. It calls for no tax hikes and a pay cut for state workers. He is proposing a three-part plan to close the deficit that includes $8.5 billion in spending cuts, $4.5 in revenue shifts and $7 billion in additional funds from the federal government.

Some people are calling it 'fuzzy math' and that happens every year. But the state's economy hasn't improved, so the pain has to be widespread to help close a $20 billion deficit.

Schwarzenegger's final spending proposal envisions deep reductions in services to California's neediest, pay cuts for state workers and the federal government coming to the rescue.

"It's painful, but California is resilient. We know we will once again get through the tough challenges," he said.

The biggest surprise is in school funding. After vowing to protect it, education leaders say he's playing with funding formulas, notably the gas sales tax and Proposition 98, that could cost schools up to $3 billion.

"He doesn't seem to have a great aversion to being accused of his own hypocrisy," Public School lobbyist Kevin Gordon said.

In his proposal, Schwarzenegger also calls for the three-day a month furloughs to end in June. But in its place, a 5 percent pay cut to all state workers and bigger contributions from them for their pensions.

And instead of raising taxes, Schwarzenegger is counting on nearly $7 billion from the federal government to pay for programs mandated by Washington.

If the feds fail to pony up the money, which they haven't in the past, the Governor proposes to totally eliminate the safety net:

  • CalWorks for welfare moms
  • Healthy Families Insurance Coverage for Poor Kids
  • In-Home Support Services for the disabled and elderly
  • Rehabilitation for Inmates
Lauren Steinberg is disabled and is afraid of what will happen if her in-home care disappears.

"I pretty much would have to either move back home with my family or enter an institution," she said.

Schwarzenegger's budget is already getting thumbs downs, and Democrats are stunned that more cuts are in store, despite cutting $60 billion last year.

"With regard to the bulk of the budget proposal, I have one reaction, 'you've got to be kidding,'" Senate President Darrell Steinberg, D-Sacramento.

"I refuse to raise taxes because there are so many other areas that Sacramento can be smarter and more efficient and save precious taxpayer dollars," Gov. Schwarzenegger said

While they are technically not taxes, Schwarzenegger's proposed to add a surcharge to all property insurance premiums to help boost the fire protection budget, and to install hundreds of speed tracking devices throughout the state, so that people will get their tickets on the mail and the fines will help fund the court systems.

To put the state's budget situation in perspective, California's population has grown steadily since 1990 -- about 2 million more people, every five years.

The state spending ballooned after 1995 -- rising from $45billion to $78 billion in just five years and topping $100 billion dollars by 2007.

Clearly, as revenue took off during the tech boom, so did state spending and reversing course now is proving to be painful.