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California Compromises Restores Some AIDS Budget Cuts
  Where the governor proposed eliminating some state AIDS programs, saving $80.1 million, committee Democrats, who outnumber their GOP counterparts by a 6-4 margin, voted to reduce the cuts to $33.5 million.

Lawmakers' plan eases governor's proposed cuts

Budget panel wants to keep parks open and keep healthcare for low-income children. GOP leaders scoff at proposed tax hikes and criticize Democratic leaders for addressing only part of the deficit.

LA Times
By Shane Goldmacher
11:02 PM PDT, June 15, 2009

Reporting from Sacramento -- A state budget panel Monday rejected some of Gov. Arnold Schwarzenegger's most extreme proposals to close the state's deficit through cuts to government programs as the leaders of the Assembly and Senate announced their own plans for billions of dollars in additional taxes.

The joint legislative committee nixed Schwarzenegger's plans to borrow $1.9 billion from local governments, close adult day-care centers and eliminate a health insurance program for low-income children. The panel voted to shave $70 million from the Healthy Families program that serves those children, but that cut, like most others the members agreed on, was significantly smaller than the governor's.

Committee members also said no to cutting off state funds for roughly 220 parks, proposing to keep them open with a new annual $15-per-vehicle fee on California drivers.

At the same time, Assembly Speaker Karen Bass (D-Los Angeles) announced that she wants $1 billion in new taxes on the tobacco and oil industries. And Senate President Pro Tem Darrell Steinberg (D-Sacramento) said Democrats in his house will push next week to suspend $2 billion in corporate tax breaks that were passed in February but have not yet taken effect.

Both leaders said the revenue from such moves would soften the blow for the state's neediest, who rely on services that will certainly be reduced as the Legislature looks for ways to plug a projected $24.3-billion shortfall.

"Would you rather take 900,000 kids off the healthcare rolls or delay a corporate tax break?" Steinberg said in an Internet question-and-answer session with Californians on Monday evening.

Bass said she expects the Legislature to take "a balanced approach" combining new revenue and service cuts.

"The cuts will be deep and painful," she said, "but we will not eliminate basic safety net programs."

Bass said a 9.9% tax on oil pumped from California land is "absolutely on the table."

Democrats are also eyeing possible tax hikes on tobacco products and liquor, though they did not provide details.

Schwarzenegger and GOP lawmakers, some of whose votes would be needed, have said they would not support new levies to balance the budget.

Schwarzenegger's spokesman, Aaron McLear, said Monday that the governor was not prepared to go along with the proposals to raise taxes or roll back corporate tax breaks, and he said the legislators' efforts at cutting state programs so far have been insufficient.

"They are nowhere near solving the $24-billion deficit that the state faces," McLear said.

The jockeying comes as California faces the prospect of being unable to pay all its bills as of July 28, according to Controller John Chiang. Members of the panel, which includes both Assembly and Senate members, said they hope to complete their work and send a budget plan to the full Legislature for approval within the week.

Though lawmakers have raised the possibility of resolving only part of the deficit immediately and addressing the rest later, Schwarzenegger has insisted that they send him a plan to close the entire shortfall.

Republicans on the committee criticized the dominant Democrats for not tackling the full deficit.

"We're falling well short," said Assemblyman Roger Niello (R-Fair Oaks).

Schwarzenegger had said that eliminating the Healthy Families program would save roughly $368 million. The panel's proposal for a $70-million reduction in the program says panel members hope charitable donations will make up the difference.

The governor proposed shuttering any state parks that could not generate enough in visitor fees to operate without government money. Niello said Republican votes for the higher car fees the committee wants instead are about as likely as the "survival of a scoop of ice cream on the pavement in the middle of July."

"This is our best effort to save the parks," countered Assemblywoman Noreen Evans, the Santa Rosa Democrat who chairs the joint budget committee. "If the Republicans want to close the parks, then the Republicans want to close the parks."

Schwarzenegger would eliminate Adult Day Health Care programs, a $170.5-million savings. But the panel restored much of that money, lowering the savings to $26.8 million. Cutbacks to a handful of AIDS/HIV education, prevention and treatment programs were lowered by roughly $50 million, to $33.5 million.

The lawmakers agreed with the governor's proposal to shift $336 million away from transit programs to the state's general fund. And they supported his one-year suspension of state payments for an open-space program that gives property-tax exemptions to certain landowners. Under the program, the state reimburses counties, mostly in rural areas, for the exemptions. But counties would be on the hook for the $34.7-million tab in the fiscal year that begins July 1.

The panel also agreed to reduce a state requirement that local governments keep shelter animals alive for six days before euthanizing them, shortening the mandate to three days for a projected savings of $25 million.

The lawmakers rejected Schwarzenegger's proposals to save $28 million by indefinitely suspending a state law requiring local governments to give absentee ballots to any voter who requests one and to maintain lists of permanent absentee voters. And they dismissed his plan to save $14 million by putting on hold another law requiring local officials to intervene in child custody disputes, including the recovery of abducted children.

Meanwhile, on Monday evening Steinberg announced that he would voluntarily cut his salary by 5%. He urged all other legislators to follow his lead.

"We have to demonstrate we will share the sacrifice, share the pain as well," he said. Steinberg's salary is $133,639 a year.

Schism widens in California budget review

Jun. 16, 2009 - 12:00 am

The partisan schism over how to close a $24.3 billion state budget hole widened Monday, as Republican and Democratic lawmakers found almost nothing to agree on except to reject a plan by Gov. Arnold Schwarzenegger to borrow $2 billion from cash-strapped cities and counties.

While a two-house conference committee began its final expedition through the governor's budget-balancing plan, Assembly Democrats were putting together a revenue-raising package that includes a tax on oil production, a plan to collect taxes from Internet sales and rescinding tax breaks given to businesses last February.

The 10-member committee agreed on a party-line vote (with majority Democrats prevailing) to a proposal by Schwarzenegger to slice general fund support of the state's park system, which could result in 80 percent of the parks closing.

But unlike the governor's plan, the Democrats proposed replacing the money with a $15-per-vehicle license fee. Under the Democrats' plan, vehicles with California licenses would gain free admission to the state's parks.

Schwarzenegger spokesman Aaron McLear said that if individual parks proposed increasing fees to stay open, "I think we'd be for that. But involuntarily charging Californians for parks would be a tax."

The governor has said he will not support any tax increases as part of a budget-balancing plan.

The committee's partisan divide bodes ill for a speedy resolution to the budget mess, since at least parts of the package would require a two-thirds vote of both houses.

State Controller John Chiang has warned that every day past Monday that the state goes without a balanced budget will make it harder for California to borrow money from private investors, which it needs to resolve a cash flow problem it faces in the first month of the new fiscal year, which begins July 1.

"The Legislature has had the governor's proposal for over a month," said Schwarzenegger spokesman McLear, "but is nowhere near solving our $24.3 billion deficit."

The committee did show unanimity by rejecting the governor's proposal to forcibly borrow $2 billion from local governments. The loan, which is allowable under a 2004 ballot measure, would have to be repaid in three years.

Schwarzenegger indicated last week that he would be willing to give up the idea if legislators could find the money elsewhere, possibly by cutting foster care programs or increasing the portion of health insurance paid by state workers.

It also voted 10-0 to grab $336.3 million earmarked for mass transit and an additional $315.5 million in money for school bus programs to use in the general fund.

But almost none of the day's other actions showed strains of bipartisan harmony.

"If we're not prepared to make the tough decisions that are out there, we are going to be left with a lot of tough decisions down the road," warned committee member Sen. Bob Dutton, R-Rancho Cucamonga. Dutton's reference was to committee Democrats' approach to Schwarzenegger's proposal to balance the budget by making $16 billion in cuts and $8 billion in loans from local governments, speeding up collection of estimated income taxes, and other maneuvers.

If some of the governor's proposed cuts could be likened to using a meat cleaver, GOP lawmakers complained, the Democrats' approach was akin to cutting with a butter knife.

Where the governor proposed eliminating some state AIDS programs, saving $80.1 million, committee Democrats, who outnumber their GOP counterparts by a 6-4 margin, voted to reduce the cuts to $33.5 million.

The governor proposed eliminating health care for 900,000 low-income children; Democrats voted to keep the program, while cutting its $386.8 million funding by $70 million.

"To leave these amounts of money on the table, without an adequate substitution is just something I cannot support," said Assemblyman Roger Niello, R-Fair Oaks.

But Democrats countered that wholesale elimination of some programs was asking too high a price.

"I think it is our responsibility to prioritize," said Sen. Alan Lowenthal, D-Long Beach. "If we do not provide some resources, people will die."

Further complicating the budget dance was a package of revenue-raisers outlined Monday by the committee's chairwoman, Assemblywoman Noreen Evans, D-Santa Rosa.

It includes a 9.9 percent severance tax on oil produced in California, the only oil-producing state without such a tax.

Republicans oppose the idea, contending the state already imposes several other taxes on oil production.

"I don't think raising taxes is going to help us get out of this problem," said Assembly GOP leader Sam Blakeslee of San Luis Obispo.

Other elements in the revenue package include reversing tax breaks that were extended as part of another budget-balancing effort engineered in February. In addition, there are proposals that would seek to extend taxes to sales made via the Internet by companies outside California.

An earlier pitch to raise state taxes on tobacco has apparently been dropped.

"I can say that the budget that we will be voting for on the floor will be a balanced approach, it will be a combination of cuts and revenues," said Assembly Speaker Karen Bass, D-Los Angeles.

As if that weren't enough, a split has developed over the size of the reserve in the almost-certain event that the economy continues to stumble or emergencies such as wildfires arise.

Schwarzenegger has proposed to set aside $4.5 billion. Democratic legislative leaders would like to see that reduced to $1 billion or $2 billion.

That would decrease the deficit that needed to be erased to perhaps $21 billion.

"Any solution that does not add up to $24 billion," said McLear, "is not solving the problem."

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