Guv Offers New Cuts, More To Come

May 26, 2009
Guv Offers New Cuts, More To Come

Governor Schwarzenegger proposed a new list of deep reductions in state spending today, including more prisoners to be released early, a scrapping of a stalled state worker labor agreement, and new cuts in medical care for the poor.

And that won't be all; aides to the governor say he'll propose an additional $3 billion in spending reductions later this week.

The $5.6 billion in spending cancellations over the next 13 months are going to raise an awful lot of eyebrows. For state workers, the governor is effectively walking away from a new contract that his staff negotiated earlier this spring, thus saving the state $210 million over the next 15 months. That contract has never been approved by the Legislature; the scrapping of the deal would keep those state employees represented by SEIU Local 1000 at a two-day-a-month furlough.

The governor is also proposing to allow nonviolent, non-serious, non-sex offender inmates out of prison a year early, saving $120.5 million.

And he's suggesting multiple cuts in the Medi-Cal program... about $284 million that include services like dialysis treatment, and much of which would require a waiver of federal stimulus law to prevent California from losing big stimulus bucks.

Some of today's proposed cuts -- like shutting down the welfare-to-work program CalWORKS and the Healthy Families Program... as well as all general fund dollars for state parks, college student loans, and more -- were first revealed last week. And there are many, many more that you can read for yourself.( http://www.dof.ca.gov/budget/historical/2009-10/may_revision/documents/2009-10_May_Revision_Updates.pdf )

They will be joined, we're told, by an additional $3 billion in spending reductions to be proposed later this week, the amount being the additional red ink that the Legislative Analyst's Office believes that could arise by the summer of 2010.

Today's proposed cuts sparked some emotional comments from the chair of the Legislature's joint budget committee, Assemblymember Noreen Evans (D-Santa Rosa). "The governor has made it very clear," Evans said at today's conference committee hearing. "He'd rather throw women and children out of the lifeboat before he raises taxes."

All that being said, the most perplexing part of today's dump of budget documents was the actual numbers. And a word of caution, some of the below may change... as I've been seeking some clarity on the original documents.

For starters, the Schwarzenegger administration is now calling the state's budget gap a $24.3 billion problem between now and June 30, 2010. That's basically their $21.3 billion gap of last week, grafted on to the new LAO projections.

But that also assumes a $2 billion reserve fund; therefore, the actual deficit projection would appear to be $22.3 billion (note: if accurate, we will only use that number -- not the guv's larger number -- in future blog postings on the deficit).

It appears that the governor is calling for about $21 billion in solutions to be made in the budget year that begins on July 1, which if enacted would actually leaving the state with a $3.2 billion surplus as of June 30, 2010.

Some context: remember that the February budget deal made $19 billion in cuts and tax increases in the 2009-10 fiscal year... the same fiscal year from which Schwarzenegger is now hoping to squeeze another $21 billion.

The governor's budget team also released some early projections for the budget year that begins next July (2010-2011 fiscal year). There, they project -- without action -- a $17.2 billion gap.

That would bring the total deficit between now and June 30, 2011 to $41.7 billion.

http://blogs.kqed.org/capitalnotes/2009/05/26/guv-offers-new-cuts-more-to-come/