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5/26: Schwarzenegger to reveal deeper budget cuts
Released 27 May 2009  By SAMANTHA YOUNG - Associated Press

Schwarzenegger to reveal deeper budget cuts

SAMANTHA YOUNG - Associated Press
Tuesday, May 26, 2009

Sacramento, CA (AP) -- Gov. Arnold Schwarzenegger's takeaway message from last week's defeat of the special election ballot measures was "cuts, cuts, cuts."

This week, he's following through. The Republican governor on Tuesday will release a revised budget proposal for the coming fiscal year that details nearly $5.5 billion in cuts on top of those he previously announced.

California's budget deficit has ballooned to $21.3 billion, although the nonpartisan legislative analyst says it actually be will $3 billion higher when the fiscal year begins July 1.

The extra cuts Schwarzenegger is set to announce are in place of his earlier plan to borrow $6 billion.

He said voters indicated in last week's special election they did not want state lawmakers to raise taxes, borrow money or employ shell game-style funding shifts to balance the budget.

Schwarzenegger spokesman Aaron McLear said the revised budget will include making $18 billion in cuts and taking $2 billion from local governments that will have to be repaid. The governor also wants to raise money by selling some state assets, such as San Quentin State Prison, and charging an emergency response fee to homeowners in wildland areas.

The governor acknowledged his cuts will be painful. They include cuts to in-home care for Alzheimer's patients and layoffs for thousands of teachers.

"Behind every one of those dollars we cut, there are real faces," Schwarzenegger told a gathering of small-business owners Tuesday in Sacramento. "If we don't make those cuts, I think we will face catastrophic consequences because the state would simply run out of money and get insolvent, which we cannot afford to do."

Schwarzenegger already had proposed deep cuts, including laying off 5,000 state government employees and reducing general fund payroll by 10 percent. Billions of dollars would be cut from K-12 schools, potentially shortening the school year by a week, while financial aid for college students would be reduced.

The CalWORKS welfare-to-work program and Healthy Families, which provides low-cost health insurance for children, may be eliminated. Funding for state parks would be greatly reduced, and some boards and commissions consolidated or eliminated.

Schwarzenegger also wants to transfer 19,000 inmates who are illegal immigrants to federal custody, saving $182 million.

The governor said he will not support further tax hikes after agreeing to $12.8 billion in higher sales, personal income and vehicle taxes earlier this year. Legislative Republicans also have said they are not willing to raise taxes.

That will present a problem for majority Democrats, because some GOP votes are needed in the Assembly and Senate to reach the two-thirds threshold for approving budgets.

Noreen Evans, chairwoman of the Assembly Budget Committee said she wants lawmakers to consider raising revenue rather than cutting so deeply into state programs. The Santa Rosa Democrat said lawmakers could impose taxes on soda or oil and gas production.

"I will look under every rock and every leaf so that we can make sure women and children are fed and their medical needs are taken care of," Evans said.

A steep drop in tax revenue has accelerated the decline of California's financial condition. This year saw the first drop in personal income statewide since 1938.

"The depth and the scope of this international recession and the effect it has had on California's economy and its budget requires us to be putting additional measures on the table that would have been unthinkable just three months ago," said H.D. Palmer, spokesman for the governor's finance department.

Finance officials will deliver the administration's latest budget proposal to a hearing of a joint legislative budget committee Tuesday afternoon.

The Legislature's constitutional deadline to approve a budget and send it to the governor's desk is June 15, but Evans said lawmakers are unlikely to meet it. Democrats had hoped to reach a deal by July 16, but Evans questioned whether even that goal could be met because the governor keeps revising his budget proposals.

Among the propositions defeated by voters last week was one that would have raised $5 billion by borrowing against future lottery revenue. Two others would have transferred about $900 million next year from early childhood and mental health funds.

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