Friday, June 5, 2009

Day of reckoning is here, Schwarzenegger says

Day of reckoning is here, governor says

By Steven Harmon

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Challenging the Legislature to "spend only what we have," Gov. Arnold Schwarzenegger on Tuesday outlined a path of devastating cuts that he said was unavoidable but could lead to lasting reforms and a revived economy.

He urged the Legislature to resolve a $24 billion deficit within the next two weeks before the state starts to run out of cash, and he stuck to his revised cuts-only budget that includes eliminating the state's welfare-to-work program and its health insurance program for poor children, along with deep cuts to schools, parks and higher education.

"California's day of reckoning is here," Schwarzenegger said at in an 11-minute address to lawmakers on the floor of the Assembly. "Our wallet is empty. Our bank is closed. Our credit is dried up. ... We must make these cuts and live within our means because what is the alternative?"

The governor's remarks raised the curtain on what could be another round of contentious budget negotiations as lawmakers grapple with revenues that have plummeted 27 percent — from $101 billion last year to $77 billion. Democrats, who hold the majority in both legislative chambers but are short of a two-thirds majority that would enable them to approve tax increases, said the governor's proposed cuts went too far.

"Should we be the only state without a safety net? Should we eliminate efficient programs that bring in federal money?" Assembly Speaker Karen Bass, D-Los Angeles, asked. "The wholesale elimination (of welfare and health insurance programs) would completely reshape the state of California and I don't believe that reflects the quality of life Californians would like to have."

Democrats are holding hearings this week on the governor's proposed cuts and are preparing their own alternatives, which could include increases in the alcohol and tobacco taxes, as well as a severance fee on oil extractions.

"Voters across the board support a number of these taxes, and they're taxes that won't affect every day people in their ordinary lives," said Assemblywoman Noreen Evans, D-Santa Rosa, the Assembly budget chairwoman. "The governor and Republicans say live within our means, which, in my opinion, is code for throw women and children off the lifeboat first."

Democrats realize they will have to agree to "painful" cuts and have vowed to comb through programs to find waste and inefficiencies, said Senate President Pro Tem Darrell Steinberg, D-Sacramento.

"But we must continue to find a way to invest in health care for children, invest in college opportunities and scholarships for young people, to continue to invest in helping people from assistance to work," Steinberg said. "So, we need to be surgical in the way we go about in cutting, and cut we will."

Republican leaders said they saw the crisis as an opportunity to remake government in their own image.

"To ensure maximum delivery of services to the most vulnerable populations and that the dollars we do spend end up with the greatest benefit to those in need," said Assembly Minority Leader Sam Blakeslee, R-San Luis Obispo, "we need to streamline government, cut overhead and essentially overhaul how we do what we've done for over a generation."

Republicans cheered Schwarzenegger's proposals to privatize prisons, loosen contracting restrictions on school districts and eliminate or consolidate more than a dozen state departments, boards or commissions.

"Governor Schwarzenegger is absolutely right when he says the state should reduce the mandates and restrictions on school districts and local government," said Ron Nehring, the state GOP chairman, "especially when the state is no longer providing the funding to meet those mandates, if it ever did."

Liberal groups decried Schwarzenegger's cuts, calling them "reckless" and "destructive."

"The people of California did not vote to take away dialysis from patients suffering kidney failure," said Rick Jacobs of the Courage Campaign, an online organizing group.

"Voters did not ask for the elimination of the Cal Grant program. It is time for California's legislators to (take) a stand against firing teachers and denying children health benefits to support tax breaks for the rich."

The governor's proposal would cut In Home Supportive Services, which serves those older than 65, the disabled or blind, by hundreds of millions of dollars, reducing it to serving only the neediest clients — those with the lowest ability to function.

Eliminating CalWORKS would mean 500,000 families would lose average monthly welfare checks of $526 and the state would forego hundreds of millions of dollars in federal matching funds. Nearly 1 million children would lose their health insurance if Healthy Families is eliminated.

Schwarzenegger has also called for reducing the SSI grants to the federal minimum levels, saving close to $750 million over two years; releasing 58,000 low level offenders from prison, reducing funding for AIDs and HIV programs, borrowing nearly $2 billion in tax revenues from local government and closing 80 percent of the state's 279 parks.

The governor is also making deep cuts in education, including $2.75 billion from higher education and another $173 million from Cal Grants, which could mean that hundreds of thousands of people will be unable to attend college.

He has proposed nearly $8.4 billion in cuts to K-12 schools, a 16 percent drop from last year.

"Perhaps some of the ideological Republicans see this as an opportunity," said Jack Pitney, a government professor at Claremont McKenna College, "but the more pragmatic Republicans understand there's considerable danger in these cuts, especially when your cuts start to hit neighborhood schools in their districts."

Schwarzenegger said he understands the pain people are going to face.

"People come to me all the time, pleading, 'Governor, please don't cut my program.' They tell me how the cuts will affect them and their loved ones," he said.

"I see the pain in their eyes and hear the fear in their voice.

"It's an awful feeling.

"But we have no choice."

Reach Steven Harmon at 916-441-2101 or sharmon@bayareanewsgroup.com.

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