Schwarzenegger Vows Drastic Budget Cuts

In the wake of voters overwhelmingly turning down tax hikes to balance the budget, governor Schwarzenegger's Latest proposal eliminates CalWORKs, lets out inmates early.

In California's latest doom-and-gloom announcement, Gov. Arnold Schwarzenegger's Department of Finance on Tuesday proposed closing the state's main welfare program, releasing nonviolent prisoners one year early and shuttering up to 80 percent of state parks to shrink the state's $24.3 billion budget deficit.

Schwarzenegger wants $5.6 billion in new cuts to replace a like amount of borrowing he proposed in his budget plan earlier this month. The Republican governor previously asked for more than $15 billion in other savings by slashing schools and Medi-Cal, laying off 5,000 state workers and borrowing money from local governments.

Several of the latest cuts were eye-openers, but the largest was the wholesale elimination of the California Work Opportunity and Responsibility to Kids Program, which provides grants to parents that people commonly refer to as "welfare."

Nearly 1.3 million Californians received CalWORKs payments in February, almost 1 million of whom were children. The state would save $1.3 billion next year by eliminating CalWORKs but lose three times as much in federal funds.

"It boggles the mind that California would be the only state in the Union without a CalWORKs-type program," said Frank Mecca, executive director of the County Welfare Directors Association. "In fact, we'd be, to our knowledge, the only state in a country in the entire First World not to have subsistence benefits for children."

Schwarzenegger envisions phasing out Cal Grants for low-income college students. He would save $10 million by giving only $7,000 to the University of California's Hastings College of the Law, the bare minimum so as not to upset the state's 19th-century compact with the Hastings family. And he wants to defund state parks, forcing them to rely on user fees.

"It could be upwards of 80 percent of parks not having sufficient fee revenues to continue to operate," Matosantos said.

A Schwarzenegger proposal to close parks last year didn't go anywhere, but the state's fiscal condition has worsened considerably since then.

The governor's plan would release a year early about 19,000 nonviolent, non-serious prisoners not convicted of sex offenses, saving $120 million. He also would seek $790 million in savings by reducing inmate services such as substance abuse counseling and vocational education.

The governor proposes saving $150 million by retaining a two-day furlough for state workers.

Schwarzenegger would cut Medi-Cal services such as dialysis, breast cancer treatment for women over 65 and non-emergency care for undocumented immigrants.

Assemblywoman Noreen Evans, D-Santa Rosa, chairwoman of the Assembly Budget Committee, said it would be more responsible to seek additional taxes. "With this proposal, the governor's made it very clear he'd rather throw women and children out of the lifeboat before he raises taxes," she said.

Voters Chose Wisely

Schwarzenegger did not make these decisions, voters did. Raising taxes is not the answer, spending money wisely is. Evans clearly does not know the difference.

Voters made a wise decision. People like Evans will spend every cent and come back for more. Hopefully voters will show Evans the door.

New 5 percent cut for state workers on the table

Gov. Schwarzenegger, speaking with reporters vowed to make "drastic cuts" to the state budget. As part of his proposal, Schwarzenegger says new 5 percent cut for state workers on the table.

Left: Gov. Schwarzenegger, speaking with reporters last week near the U.S. Capitol in Washington, vowed to make "drastic cuts" to the state budget. Mark Wilson/Getty Images

Gov. Arnold Schwarzenegger plans to propose a 5 percent across-the-board pay cut for state workers to save nearly $500 million in next year's budget and preserve cash, a spokesman said Thursday.

The pay cuts would affect 235,000 state workers under the governor's control, according to Schwarzenegger press secretary Aaron McLear. The state's judicial and legislative branches would be exempt because they are autonomous, but McLear said employees who work for constitutional officers would receive a pay cut.

"Voters gave the leaders of this state a mandate to cut government spending, and that's exactly what we're doing," McLear said.

The move would save $470 million by cutting pay for 100,000 general fund employees, as well as $415 million by reducing salary for special fund workers.

A 5% wage cut hardly seems drastic. 25-30% can be considered drastic. 5% cuts will raise $885 million. The budget hole is $24.3 billion and growing about $2 billion a month for a year.

As noted in California Voters Immediately Rewarded For Voting Down Propositions 1A Thru 1E a state panel slashed the salaries of elected state officials by 18% a day after voters rejected a plan by the governor and Legislature to address the budget crisis.

Before tossing around the word "drastic", let's at least see cuts of 18%.

California cities, counties vow to fight state over budget tactics

Fourth up in a series of budget crisis articles, the Sacramento Bee notes California cities, counties vow to fight state over budget tactics.

Arguing that the state is nickel and diming them to oblivion, leaders of California's financially beleaguered counties and cities say they plan to fight back.

Soon after the May special election, in which voters rejected the state's deficit stopgap measures, the Bay Area Council and several other groups launched a drive for a constitutional overhaul to address the state's governmental dysfunction.

Multiyear labor agreements also are placing a burden on both cities and counties. Local jurisdictions statewide have been negotiating with unions to win labor concessions to reduce cost of personnel, which consumes a major portion of general funds.

But Roger Dickinson, Sacramento County supervisor, cautioned about putting too much emphasis on labor costs.

"Even if we had significant concessions by our employees, we still have a very serious budget gap," Dickinson said. "It's truly an illusion when you consider the reality of the numbers. That is, this is a very deep hole."

Both cities and counties are watching legislation that would require them to get state approval before filing for bankruptcy.

The measure carried by Assemblyman Tony Mendoza, D-Artesia, is backed by state firefighters unions and the nonprofit AARP whose members' benefits could be jeopardized in bankruptcy.

Cities' and counties' associations are strongly opposed.

"It's absurd to me that the state of California believes it's appropriate to provide financial advice to local agencies," said CSAC's Hurst. "The state doesn't have a great track record with managing its own finances."

If you want higher taxes and more waste, by all means vote for Tony Mendoza and any other clowns who want to raise your taxes to support union graft and ridiculous pensions.

Bankruptcy is one of the few means available capable of bringing about much needed pension reform. Tony Mendoza wants to deprive cities and counties of that means.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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