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Governor Releases Budget Plan

In Sacramento this morning, Governor Arnold Schwarzenegger released a $99.1 billion budget plan that includes cuts, borrowing and no new taxes.

The former action movie star is looking to impose higher fees on users of state parks and on college students.

The biggest hits are aimed at the state´s Medi-Cal program, which would lose nearly $900 million next year. Schwarzenegger´s budget is built on a rosy economic picture next year, projecting $2.9 billion in additional tax revenue to be available in 2004-2005.

Schwarzenegger and the Legislature have put a $15 billion bond issue on the March ballot that would pay off the existing deficit. But a $14 billion projected deficit for next year remains.

If voters reject the bonds, most observers believe the resulting budget hole will force Schwarzenegger to reconsider his no-tax pledge.

— Education: Educators agreed to accept $2 billion less next year than they are owed. Community college students are being asked to pay an eight-dollar-per-unit increase.

— Public Health: The hit to public health includes caps on enrollments for the state´s health insurance program for the poor and elderly. The governor also called for the elimination of some medical benefits for the poor and disabled.

— Local Governments: The loss of property tax money to local governments is a shift from Schwarzenegger´s previous pledge to protect those governments that rely on that money. While proposing the $1.3 billion shift, the governor also proposes to maintain a $4 billion replacement for the car tax money.