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California’s Financial Fix

Sacramento, CA – The Schwarzenegger administration has released additional information about the proposed new budget.

According to the Associated Press, the following cuts are proposed.


$2.9 billion reduction, including:

_ $950 million in cuts to the state’s in-home supportive services program for the disabled, achieved through reductions in wages and services.

_ $130 million reduction in payments through CalWORKS, the state’s primary welfare-to-work program, by reducing individual grants.


$1.6 billion in savings:

_ Achieved partly through a 5 percent across-the-board pay cut and a 5 percent increase in employees’ contribution to their pension funds.


$1.2 billion in cuts:

_ $811 million reduction in prison health care expenses by making the system more efficient and reducing funding to a level he said would be comparable to New York state.

_ About $360 million in savings by shifting nonviolent offenders out of state prisons and into county jails and by reducing the juvenile prison population and closing the facilities that house them.


_ Proposes to hold spending at $48 billion for K-12 schools, community colleges and the four-year university systems. The budget could reduce some education funding, however, through a complicated swap in which the current gasoline tax would be replaced with an excise tax.

_$225 million increase for the University of California and California State University systems that the governor said he hopes would avoid further student fee increases.


_ The budget proposes to eliminate the sales tax on fuel (about 16 cents per gallon) and increase the excise tax on gasoline by 10.8 cents. The administration said this approach would maintain funding for transportation programs while reducing net taxes paid by consumers by $976 million.


Three-day-a-month furloughs would end on June 30 under the governor’s proposal. Instead, he:

_ Seeks payroll reductions of 5 percent across all state departments, except for constitutional offices, which already achieved 5 percent reductions. The administration says much of the payroll reduction can be achieved by departments not filling current vacancies.

_ Seeks 5 percent pay cut for all state workers and a 5 percent increase in their pension contributions.

_ Includes an additional 5 percent pay cut for state employees if California does not receive the additional federal money it is seeking.


_ Proposes to fund state parks by allowing more oil drilling off the Santa Barbara coast, which the governor’s office estimates would generate $100 million in the current fiscal year and $119 million in 2010-11. In total, the administration said the drilling would generate $1.8 billion in royalties for the state over the next 14 years.

If the state Lands Commission approves the drilling plan, the Department of Parks and Recreation would receive $140 million in the fiscal year that begins July 1, restoring last year’s cuts.

If it does not, the state parks budget would be funded through the general fund.


_ Would install radar-equipped cameras on state-operated freeways to catch speeders. The administration says the tickets generated by the technology would raise about $300 million a year for government operations, a portion of which would go to pay for courthouse security.


Schwarzenegger’s budget also relies on getting an additional $6.9 billion in federal money he says the state is owed:

_ $2.1 billion in an extension of federal stimulus money for Medi-Cal, CalWORKS, child welfare, foster care, special education and child support.

_ $1.8 billion in Medi-Cal reimbursements. Schwarzenegger said the federal formula to calculate state reimbursements unfairly penalizes California, giving it the lowest possible reimbursement rate of 50 percent.

_ More than $1 billion for special education programs.

_ $1 billion for Medi-Cal prescription drugs.

_ $880 million for full reimbursement of the state and local government cost of providing guards to oversee illegal immigrants who are in state prisons or county jails.

_ $87 million for foster care.


If the state does not receive the additional federal money, Schwarzenegger proposes even more spending cuts, including:

_ $1 billion by eliminating CalWORKS, the state’s primary welfare-to-work program.

_ $847 million in funding for mental health services.

_ $532 million in Medi-Cal cuts by reducing eligibility to the minimum allowed under federal law and reducing most remaining optional benefits.

_ $508 million through another 5 percent pay cut for state employees.

_ $495 million by eliminating the state’s In-Home Supportive Services program for the disabled.

_ $325 million in funding for counties to administer programs.

_ $280 million by eliminating inmate services, including rehabilitation programs and increasing the number of parolees each agent would supervise.

_ $126 million by eliminating the Healthy Families program.

_ $115 million by eliminating health programs funded by Proposition 99.

_ $112 million for the University of California and the California State University to compensate for annual enrollment growth.

_ $100 million to trial courts.

_ $79 million by freezing the awards and income eligibility for Cal Grants.

Written by bjhansen@mlode.com.