10% state budget cut may hit young, poor the hardest

Schools might lose usual level of funding

By JUDY LIN
BEE CAPITOL BUREAU

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It sounds simple enough: Gov. Schwarzenegger is proposing an across-the-board cut of 10 percent as part of an effort to absorb a $14 billion budget blow. But though such efforts have been talked about in the past, budget experts say straight reductions are impossible in a world filled with legal, financial and political obstacles.

"Can he get across-the-board cuts comprehensively? No," said Jean Ross, executive director of the California Budget Project, a nonpartisan group that advocates for poor and middle-class families. Not only must the state comply with various laws and court orders, it has debts to pay, paychecks to deliver, and everything from schools to prisons to maintain.

The Schwarzenegger administration has pledged to spread cuts in a way that "no department shoulders a disproportionate share," finance spokesman H.D. Palmer said.

Yet the governor's aversion to taxes has left him little choice but to make cuts that are certain to attract political resistance on multiple fronts, from Democrats who control the Legislature to powerful interest groups such as the teacher and prison guard unions.

Schwarzenegger has spent the past month trying to build cooperation by holding private meetings with legislative leaders and interest groups. Because the Republican governor cannot make unilateral spending reductions, he will need the support of lawmakers to make changes. He is expected to declare a fiscal emergency and call a special legislative session when he releases his annual budget Jan. 10.

Advocates predict many of his proposed cuts will affect young and needy people. Education, health and welfare programs command nearly two-thirds of the state's $102 billion general fund.

"I think some people think that 10 percent may sound fair and it's not that much, until you recognize what that means on a human level," said Anthony Wright, executive director of Health Access, a statewide health care consumer advocacy coalition.

Wright said a 10 percent cut in the state's health insurance program for the poor means 680,000 of 6.8 million recipients could be left without coverage. If people aren't denied coverage, Wright said, the governor could slash benefits dramatically.

Meanwhile, education advocates said the governor could seek two-thirds support of the Legislature to suspend Proposition 98, the constitutional mandate that guarantees a minimum of 40 percent of the general fund goes to public schools.

Such a move would allow Schwarzenegger and the Legislature flexibility to cut 10 percent from the public school system. It surely would be opposed by the education community.

Kevin Gordon, a consultant on education budget issues, said across-the-board cuts mean fewer textbooks, canceled field trips and no school bus service.

"Given that a majority of our expenditures are on people, which are set in contracts, the only place you can go is to all those nonstaff things that di- rectly relate to kids," Gordon said. "Every school bus in the state grinds to a halt."

Gordon said the administration has floated a less drastic option to make midyear spending reductions. Currently, he said, slower-than-anticipated revenue growth allows the state to reduce school funding by $1.4 billion without suspending the constitution.

The danger of that, however, is that school districts have established their budgets and are counting on that money.

"School districts would definitely be harmed trying to cut back right in the middle of the year," said Scott Plotkin, executive director of the California School Boards Association.

Slash in welfare-to-work?

As for seniors, blind and disabled receiving supplemental income, they may not get a cost-of-living increase from the state as promised in the budget, said Mike Herald, an attorney with the Western Center on Law and Poverty, which advocates for low-income Californians. The state could shut off grants for counties to run welfare-to-work programs, Herald said.

In recent years, voters have passed several Schwarzenegger-backed measures clamping down on what the administration characterized as "budget-balancing ploys," such as borrowing cash and raiding local coffers to fill the budget gap on paper.

But there remains an imbalance between how much the state takes in and how much it spends. Growth in spending is projected to outpace growth in revenues by 50 percent in the next fiscal year, which will begin in July.

The housing slump coupled with lower-than-expected property taxes, Southern California wildfires and a delay in the expansion of slot machines have eroded revenues so much that the state is projected to be $3.3 billion in the red by the end of the budget year in June, according to the governor's office.

Schwarzenegger had signed a budget bill in August that projected a $4.1 billion reserve.