SACRAMENTO — Gov. Schwarzenegger has warned Californians that they face more economic pain in the year ahead, and Friday he delivered on that promise by proposing an austere budget that takes the state back to its spending level of six years ago.
To make up for a drastic drop in tax revenue and plug a $20 billion deficit, Schwarzenegger proposed making cuts to health and human services, welfare, prisons, transportation and environmental programs.
He seeks to raise money by rolling back recent corporate tax breaks, expanding oil drilling off the Santa Barbara coast to provide $140 million for state parks and demanding more money from the federal government.
The Republican governor vowed to protect spending for public schools and colleges after cutting their funding by billions of dollars in recent years, actions that have sparked student protests throughout the state. Unlike last year, Schwarzenegger said he would not agree to any tax increases.
The continued austerity measures are a fallout from the national recession, which has pummeled California's economy and boosted the state's unemployment rate to 12.3 percent, third highest in the nation. The resulting fiscal crisis has forced California to shave $60 billion from state government spending over the past two years.
Schwarzenegger said the state is beginning to emerge from the downturn but that it would be three to four years before tax revenue recovers. "Tough times still lie ahead," he said.
Schwarzenegger's budget proposal for the fiscal year that begins in July contains $82.9 billion in spending from the general fund, the state's main account to pay for its daily operations. The amount is $3.1 billion lower than last year and the lowest amount California has had to spend on government operations since the 2004-05 fiscal year.
It is $20 billion less than the high point of general-fund spending three years ago.
"These are the hardest decisions, the hardest decisions a governor must make. Yet there's simply no conceivable way to avoid more cuts and more pain," Schwarzenegger said.
Political divisions over the governor's plan have emerged, and debate over which programs will get money from a shrinking pie will dominate state government this year. Lawmakers will start the back and forth in the coming weeks in an emergency legislative session called by the governor.
Democrats, the majority party in both houses of the Legislature, want to explore more ways to raise money and protect health and human service programs. Republicans, whose votes are needed to reach the two-thirds majority required to pass a state budget, refuse to raise taxes and want to focus on helping the private sector create jobs.
Job creation part of plan
Schwarzenegger's plan includes stimulus measures, including a $500 million plan to train 140,000 workers and create 100,000 jobs.
The governor vowed to continue targeting the state payroll after ordering government workers last year to take three furlough days a month, which cut their pay by 14 percent. His proposal for the coming year would replace them with a straight 5 percent pay cut. He is asking that state employees contribute 5 percent more to their pension plans.
Departments across state government would be required to reduce their payrolls by 5 percent by mid-July. Taken together, the employee compensation measures would save $1.6 billion, the governor said.
Increased federal help, especially for the costs of Medicaid, imprisoning illegal immigrants and implementing federal education mandates, plays a key role in Schwarzenegger's budget proposal.
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