State budget: Democrats' plan would ease cuts, tap 'rainy day' funds

Senate President Pro Tem Darrell Steinberg (D-Sacramento) outlined a Democratic budget plan today that would protect California programs for lower-income residents that provide health insurance for kids, college aid for students, welfare for those out of work and in-home nursing care for the elderly and disabled.

Gov. Arnold Schwarzenegger’s budget, unveiled last month, put all those programs on the chopping block, including slating several for elimination entirely, as the GOP governor sought to tackle a projected $24-billion budget deficit.

Steinberg said Democrats would protect programs for the poor largely by tapping into a $4.5-billion reserve included in Schwarzenegger’s budget. The administration has argued the money should be tucked away in case the state’s economy continue to suffer or program costs exceed those budgeted. Democrats would lower the reserve to as little as $500 million, Steinberg said.

“The purpose of a rainy-day fund is to provide a reserve for a rainy day,” Steinberg said. “It is thunder and lightning in California right now.”

Steinberg also said Democrats would reject a Schwarzenegger administration proposal to raid “our friends in local government” for $1.9 billion to balance the state’s books. The state would have to repay local governments -- with interest -- within three years.

Democrats, he said, are prepared to cut $13 billion in state spending, including largely accepting the size of cuts Schwarzenegger proposed to the state’s schools and prison system. He said the Legislature would be “probably looking at the Proposition 98 minimum” guaranteed for K-12 schools.

An additional $6 billion to $7 billion would come about through “solutions,” Steinberg said, such as selling off state assets, accelerating tax payments and imposing fees and other accounting maneuvers similar to what Schwarzenegger has proposed.

Every area of government would still face cuts in the Democrats’ plan, Steinberg said.

The governor's proposal to save $70 million through the closure of most of California’s state parks is “on the bubble,” Steinberg said.

Also “on the bubble” is the governor’s plan to cut state workers’ pay by 5%, in addition to the two unpaid furlough days per month workers already are required to take.

Steinberg said Democrats would begin cutting within days. “It would be a mistake to lead with taxes,” he said.

But if the Republican governor and GOP lawmakers want a larger budget reserve, Democrats will push to “end corporate tax loopholes” instead of deeper cuts to services for the poor, he said. An oil severance tax, which Schwarzenegger proposed last year but was rebuffed by Republican lawmakers, “might be in the mix at the very end,” Steinberg added.

New taxes in California require a two-thirds vote of the Legislature, giving minority Republicans veto power.

-- Shane Goldmacher in Sacramento

Comments

[HernandeUSA]

make sure ALL support for illegal aliens is ended.

Ending all State, County, and City social programs will SAVE over 6 billion the 1st year alone.

Enacting E-Verify for ALL employers and employees will push the illegals out of the job market and get Unemployed Americans, LEGAL Residents, and Welfare takers back to work and paying taxes again. -- Thereby bringing in billions into the STATE coffers.

[Steve Dunmore]

Still don't get it, I am for stopping 100% of the aid to low income people, time they share the pain of reality we can't keep paying for people that can't carry there weight, let them move. Inflation is going to eat us alive better now then later for them to face reality the gravy train has run out!

I am sure all democrats will band together and donate to them so they will continue to survive, just not at every ones expense only those with bleeding hearts.

[aaron]

It is true that illegals are a drain on our economy, we were able to absorb it for many generations, but lately it has grown significantly and it truely inpacts every californian today. Illegal are not the whole cause of our financial troubles but they do play a major role.
what should we do, let them stay here and work for wages only with no public benefits, let them continue to do the work that we and our children dont want to do for minium wages, like washing dishes, janitorial work, cleaning hotels, washing cars, harvesting crops, etc. Are you aware and prepared for the SIGNIFICANT changes if all illegals were deported? There are no easy answers.

[B]

As far as I know programs for low income people DO NOT equate programs for undocumented individuals. I am not sure what programs the people above are referring to, but in general low income is not synonymous to "illegal" Californians. Poverty exists in the state of California AMONG U.S Citizens.

[A]

"There are no easy answers." - Aaron

Well said Aaron.

[JoeK]

The in-home nursing care for the elderly and disabled program is a HUGE source of fraud and mismanagement. I met a 20-year old female recently who for 4 years was paid by the state of the California to simply visit her grandmother once or twice a day. 30 years ago that type of a visit would be expected of family, and not something that the state should be involved with. Why are the folks in Sacramento so out of touch?!?!?! It is absolutely frustrating, and will ultimately drive me from this state.

[paulw]

This is crazy. California has a population of 37 million people. In order to support that large a population it needs a LARGE government. And that's just to provide essential services, not to mention constant repair to the infrastructure. The small government people paint a rosy picture of how to cut expenses to save money. We have now reduced our schools from being at very top in the nation to 3rd world levels in some areas. What's next, asking the poor and sick to leave the state because it cost to much money to let them live at the poverty level?

[allanst3]

real work to cut expenses seems to be going on. Frankly I'm suprised and pleased. I'd be suprised if California couldn't trim 10% of its work force and more get the same job done just due to the productivity improvements in administrative functions over these last two decades. I'd like to see california work functions compared to best in class in the private sector and then see steps taken to bring us in line.

In my opinion we need to move away from guaranteed retirement for state workers. those paying taxes other than other union members don't have this luxury. why should a state worker have a better deal than the tax payers footing the bill?

it seems to me this is the right year to use the rainy day fund and a safety net for those in need is the right place to continue to spend the money.

I am supportive of additional gasoline taxes. we lived at $4.00 per gallon last year. the highways were less crowded, mass transit ridership went up. I believe i saw more small cars, scooters and motorcycles on the road. all good things. In europe gasoline is closer to $10/gallon, they seem to have adapted.

[L.A. Max]

If you cut the assistance to low income people, our homeless population will swell up. They are not going to move. They go the shelters or to the prisons or to the streets. Perhaps a combination of all three.

Where else will they go? They will not go to Mexico. Mexico has a crime wave going on. They will not go to Michigan where the car factories are all shutting down. What you immigrant and poverty bashers do not seem to understand, is that the employers will NEVER pay a decent wage unless we as consumers demand it or it is forced upon them by law suits, unions, or legislation.

Sure. Cut this. Cut that. What happens. Some smart lawyer runs to the Federal Courthouse, files a law suit; papers the State with a motion here and a pleading there. The State loses because of the dumb lawyers left over from the last bit of budget cuts are the only ones they can get to defend a losing case. Then pay even MORE for the prisons, the police, and probation officers needed to service the human consequences created by the previously passed foolhardy budget or the last proposition put on the ballot by some special interest group.

The solution to the problem is the need for better leadership that has the ability to think pass the next photo op or election cycle.

[John T]

Really pretty simple answer for medical problems. Show up at Emergency room, be treated for what ails you, if you can't pay a DHS agent is there and you prove you're legally here. If you're not here legally you're deported. Humanely your medical problem is taken care of, but you won't be back to tax our resources again.

[pauld]

If cali could legalize and tax weed with the fed gov's help, cali would have alot less people incarcerated and a huge rainy day fund. Also the snack co.s sales would skyrocket. As an ex-toker I cannot partake since my wife would kill me.

[Figgins]

The problem with using the "rainy day" money is that the Democrats will not put any of the money back into the fund. They will spend every cent this year, and have nothing left when the hole in our budget rips open again in 2010 because they refused to face reality.

The budget must be met with revenues the State takes in today. Don't rely on the "rainy day" fund to keep a program alive. Use it to cover cost overruns and emergencies/disasters. Using the fund to pay heathcare premiums for children is not being fiscally responsible.

But when have the Democrats in Sacramento ever acted in a fiscally responsible manner?

[Bruno]

Steinberg wants to leave intact programs that largely benefit those who pay no taxes (welfare, healthcare ) and cut programs that benefit both taxpayers and the indigent (education, parks). When people begin to understand what's actually going on, there will be widespread, but quiet outrage.

Look for several middle class districts hosting Democrats to switch to Republican in the next election. Maybe even enough turnover to start working on some real "change" in CA. The Democrats have no idea how pissed off people are.

[Ray Childers]

The comment about guaranteed retirement for State Employees stating "those paying taxes other than other union members don't have this luxury. why should a state worker have a better deal than the tax payers footing the bill? "

The answer is simple. They have a better "retirement system". While I am not a state employee, I am a government employee who will receive a retirement benefit. Not everyone who works in government belongs to a union. I am not a union member and niether are a lot of state employees. We do not participate in the Social Security System as the government I work for chose to opt out a long time ago. As a bit of reference, Social Security withholds up to 6.2% on earnings up to $106,800 and is matched by the employer. Our retirement works much the same way, except their is no cap on the earnings. I also know that some people have more than 6.2% withheld and the government contributes less than 6.2%. The money is sent to a separate agency that invests the money and then pays the employees as they retire. I would also agree that the government would also have to make up any shortfall that would be required should the invested funds run short. This has been proposed for the Social Security System but is deemed the third rail as never to be touched. I also think that since we are all living longer, that retirement be set out to longer ages including government employees.

So why do "state employees" get a better deal? Their retirement system is better since it invests money for profit. The problem lies in the system that pays out the retirement not the employees. Also, keep in mind, government employees pay State, Federal and Medicare taxes as well. The only thing we don't pay into is Social Security.

Now before you assume that I am a person who could not get a job elsewhere etc. I have a Bachelor's degree with a double major in Information Sciences and Finance, a Masters of Science in Information Systems, and a Master of Public Administration with an emphasis in government finance.

[mike]

Sorry paulw, we don't need a LARGE gov't to run the state. The pols in Sacramento went nuts the last few years starting with the tech bubble and all the capital gains tax money that poured in. They had the means to fund every pet project imaginable. How big would the budget be if the tech run up had never happened? I bet a lot smaller than it is now and closer to what the final budget for this year will end up looking like.

[Silverlake Mike]

The Unions better come out swinging against the 5% pay cut. If the Democrats are not there for the workers during this fight, they should be cut off from all Union support in future elections. Any Democrat who votes for the cut should be targeted in the primaries and candidates that are pro-worker should be run against them. It's time to get tough, cut off a horse's head and put it in Steinberg's bed if necessary. The Governor got his furloughs and the workers have taken a 10% hit, it's time for someone else to bear the burden of the Governor's mismanagement of the economy, the workers have done their part.