CSUN University News Clippings

Schwarzenegger signs budget bills, cuts $489 million more

(July 29, 2009)

By Steve Wiegand

Gov. Arnold Schwarzenegger signed a 27-bill budget-balancing package Tuesday, but only after making another $489 million in spending cuts and likening the experience to “the good, the bad and the ugly.”

“This has been a very tough budget, probably the toughest since I have been in office here in Sacramento,” the governor said as he signed the bills before a horde of reporters and aides packed into a Capitol conference room.

Schwarzenegger’s signings essentially rebalanced the budget he and legislators approved last February for the fiscal year that started July 1.

The state’s general fund spending will amount to $85 billion, including the reserve. That’s a 7.2 percent drop from spending in the last fiscal year, and a whopping 17 percent less than two years ago.

The governor characterized the rebalancing efforts as “kind of like the good, the bad and the ugly”:

• “Good” because it contains no tax increases, makes government “live within our means” and includes reforms of some programs.

• “Bad” because it includes $16 billion in draconian cuts in almost all state programs, particularly those serving California’s neediest residents.

• “Ugly” because the package legislators sent Schwarzenegger last Friday lacked a reserve and was $156 million short of being balanced, causing the governor to make even deeper cuts that those agreed to earlier by legislative leaders.

“That’s ugly, when already we’ve cut so much and then we had to make additional cuts,” he said.

To eliminate the $156 million deficit and create the $500 million reserve, the governor made $489 million in extra cuts, borrowed $50 million from one of the state’s special funds and found about $117 million in savings from money not spent in the last fiscal year.

The biggest single cut was $80 million in funds allocated to counties to pay for programs that investigate and remediate cases of child abuse and neglect. Officials said the program had been spared in earlier rounds of budget cuts.

“The situation has just gotten to the point we can’t exempt them anymore,” said Mike Genest, Schwarzenegger’s finance director.

Other new cuts include:

• $60.6 million from funds used to pay for Medi-Cal eligibility workers at the county level. Aid to recipients was not cut, but they will likely have to wait longer for service.

• $50 million from Healthy Families, a 12-year-old program providing low-cost medical insurance to low-income families that don’t qualify for Medi-Cal.

Health care advocates said that coupled with earlier cuts totaling $128.6 million, the reductions could affect more than 900,000 children statewide.

The number ultimately losing coverage will depend on decisions by the state Managed Risk Medical Insurance Board, which runs the program.

The board is scheduled to meet Thursday to consider options. The board’s staff has recommended that the program begin actively disenrolling tens of thousands of children a month starting in the fall.

• $52.1 million from the Office of AIDS Prevention and Treatment. Officials said the cut means the elimination of all services except providing drug assistance and monitoring the number of cases.

• $27.8 million from the Williamson Act program, which provides money to counties that give tax breaks to landowners who keep their land as open space. Because the governor couldn’t unilaterally abolish the program, he cut the budget to a token $1,000.

• $6.2 million from state parks. Parks director Ruth Coleman said that coupled with earlier reductions, the cuts could mean the closure of about 100 of the state’s 279 parks after Labor Day.

Which parks will close, she said, will be determined by several factors, including what kind of revenue they produce and whether sponsors and/or partners can be found among local governments and private organizations and individuals to keep them open.

“Before we just roll out a list and start the closures, we’re going to try and find as many partners as possible,” Coleman said. “We’re not going to give up on these parks. We’re hoping Californians will step up and help us.”

Democratic legislators concurred with the governor’s characterization of the new cuts as “ugly” but disagreed that Schwarzenegger has the legal authority to make them without legislative approval.

“We will fight to restore every dollar of additional cuts to health and human services,” Senate President Pro Tem Darrell Steinberg, D-Sacramento, said in a prepared statement. “We question whether the majority of these vetoes are legal.”

Steinberg contended that while governors have the right to “blue-pencil” spending when a budget is sent to them, the package signed Tuesday was only a revision of an existing budget and thus not subject to line-item vetoes.

“This is not the last word,” he warned.

Assembly Speaker Karen Bass, D-Los Angeles, blasted the cuts as not only illegal but life-threatening.

“The governor’s actions today have not just caused harm,” Bass said in a prepared statement, “his actions today put lives in jeopardy. … He and his staff may be lighting cigars to celebrate these cuts, but they should also be concerned about the devastating harm they are causing.”

But administration officials contend the governor has all the legal standing he needs.

“The budget bills that the Legislature sent to the governor contained items of appropriation,” said Finance Department spokesman H.D. Palmer. “and therefore is subject to the governor’s constitutional authority.”

Moreover, finance director Genest said the cuts made Tuesday represent almost all the choices left to Schwarzenegger without having to seek legislative approval to abolish programs.

“There was very little left he could cut without a law change,” Genest said.

The state’s financial gurus are banking on Tuesday’s budget-balancing being enough to persuade Wall Street lenders to provide California with $8 billion to $10 billion in loans to help with its cash-flow needs.

That would allow state Controller John Chiang to stop paying many of the state’s bills with IOUs.

Genest said administration officials would be huddling with Chiang and state Treasurer Bill Lockyer to figure out exactly how much in loans the state should seek, and when Chiang can turn off the IOUs.

“It’s not going to be as easy as it has in the past,” he said.

Genest also acknowledged that even if all of the budget’s machinations work, and the state has no unforeseen emergencies and no one successfully sues the state to thwart some budget-balancing effort, California’s books might still be $7 billion to $8 billion out of whack by the end of this fiscal year.

Publication: Sacramento Bee