SACRAMENTO - The $144.3 billion state budget released Wednesday by Gov. Arnold Schwarzenegger would eliminate a massive, $15.2 billion deficit in tax revenue by selling lottery bonds.
But the plan also would cut billions from state programs, hurting Monterey County schools, social services and transportation along the way. "As everyone knows, we are facing an extremely tough budget year," Schwarzenegger said during a news conference at the Capitol. "Our crisis is real, and it is very serious."
Schwarzenegger's budget proposal backs away from a politically unpopular plan to suspend the state's minimum school funding guarantee. Instead, he will boost education funding by about $1.8 billion in the 2008-09 fiscal year when compared with current year spending. Schools still would lose about $4 billion in anticipated revenue, because Schwarzenegger's plan would not include program cost-of-living increases.
The centerpiece of Schwarzenegger's budget relies on a plan to make the state lottery more lucrative and thus more attractive to potential investors.
The governor hopes to raise $15 billion over the next three years by selling bonds based on anticipated lottery revenue. He will use about $5.1 billion of that in the 2008-09 fiscal years to help erase the state's deficit.
The other $10 billion would remain in a rainy day fund the governor wants to create to help the state get through future rough financial times.
Assemblywoman Anna Caballero, D-Salinas, said she's glad the governor "has acknowledged that we need new revenue. “But he doesn't develop new revenue, he just borrows (with the Lottery), which got us into this situation," she added.
School losses high
Dozens of Salinas-area students, teachers, school employees and education officials spent two hours rallying at Central Park in Salinas on Wednesday, voicing concerns over those losses. Monterey County Office of Education Superintendent Nancy Kotowski, who spoke at the rally, said her office is pleased the governor changed his mind about suspending Proposition 98, the 1988 law requiring 40 percent of the state budget be spent on education.
Instead, Proposition 98 funding will increase by $193 million, raising per-pupil student funding by more than $100 to $8,610 for the 2008-09 school year.
But Kotowski said categorical programs such as special education, migrant and Head Start programs could still face a 6.5 percent cut. That's huge, she said, since as much as 90 percent of the county office of education's $90 million budget goes to such operations.
"Things can change, but this May revise by the governor is what's utilized by school districts in setting their budget for the next school year," Kotowski said. "It's important to know that we base our budgets on this information."
The governor's updated budget plan also reverses some other politically unpopular proposals he made in the spending plan he released in January. For instance, he's dropping plans to release 22,000 low-risk prison inmates early.
"I'm glad to see he backed off the early release," Sen. Jeff Denham, R-Merced, said. "I think that really would have hurt our gang situation in Salinas, as well as elsewhere." Sen. Abel Maldonado, R-Santa Maria, said that he's "ecstatic" that the governor also dropped his proposal to close 48 state parks - instead proposing a usage fee hike of $1 to $2 - and that he's relieved Schwarzenegger boosted education funding.
"I was having heartburn about having to cut education funding," Maldonado said.
'A devastating proposal'
But Assemblyman John Laird, D-Santa Cruz, said the governor's revised education proposal still would leave education $4 billion short of what it is getting this year. "I think this is a budget in general that's bad for the economy. It lays off teachers. It's based on risky assumptions. It's not a real fix," said Laird, who chairs the Assembly Budget Committee. "We are ready in the spirit of reality to move to a real fix in the next six weeks."
Monterey County social services would also take a big hit under the revised budget, with cuts for foster parents, low-income families receiving financial and work assistance, and immigrant health care.
"This is a devastating proposal," said Elliott Robinson, the county's social services director. Robinson blames the governor for cutting most severely from services for the state's poorest people. He said 25 percent of county residents use Social Service Department programs and will be hurt if the governor gets his way.
As food and gas prices rise drastically, Robinson said the number of county residents receiving food stamps has increased by 34 percent over the past year.
"Just at the very time when families are most in need, the budget comes out and targets low-income families," he said.
The governor has also proposed cutting wages for in-home care providers from $10.50 to the minimum wage of $8, affecting the county's 3,100 in-home care workers, he said.
If the Legislature approves deep cuts to social services, the county may not be able to provide much financial assistance. Rosie Pando, assistant county administrator, said supervisors have a policy of not covering funding shortfalls for state programs normally carried out by county agencies, because the county doesn't have enough general fund money to do so. All departments, she said, have been warned not to expect funding increases next year and to plan their budgets with no additional positions.
Local transit may also suffer from reduced spending, as more than $828 million in gas taxes meant for public transportation projects would instead be diverted to help bail out the state.
"Everyone is looking to transit to help provide alternatives to expensive gas prices and to help reduce greenhouse gas emissions," said Debbie Hale, executive director of the Transportation Agency for Monterey County. "This is the wrong cut at the wrong time." The MST Rides program, which provides transportation to disabled persons, may get $2 million less of the $4.9 million it had expected for helping replace an aging fleet of 15 buses and pay for the program.
Caballero didn't reject the Lottery proposal, but she said that using future revenue now is "dangerous," and she wants more information about the temporary sales tax option. The Salinas lawmaker said the proposal for a bipartisan tax commission to make recommendations on how to bring the state's more than 70-year-old tax system into the 21st Century was good idea.
"It's a place to start the negotiating process," Caballero said of the governor's revised budget proposal.