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

June 9, 2009 | 12:04 pm

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