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2003-12-12 -- Schwartzenegger, Legislature agree on March 04 budget initiative


The budget deal passed by the Assembly would ask voters to approve:

-- A bond to finance $15 billion in debt to be paid over 9 years,
including $10.7 billion in bonds now under legal challenge.

-- A constitutional amendment requiring a balanced budget, that would
force lawmakers to adjust spending each year to match revenues, but
would allow them to increase spending in years when the state's
revenues were high.


-- The $15-billion bond issue and the spending-limit measure are
joined, so if voters reject either one, both will fail to become law.

-- A ban on long-term borrowing to cover operating expenses.

-- A reserve fund eventually containing 5 percent of general fund
reserves or $8 billion, whichever is greater.

-- New powers letting the governor make mid-year budget adjustments.
The changes could be overturned by a simple majority of the
Legislature within 45 days.

--  Budget caps in earlier proposal, capping expenditures at current
low levels, discarded.  (See LA Times story below on huge
demonstration in Sacramento against proposed cuts, particularly to
disabled people.)



California Healthline, 12/12/2003

Assembly Passes Spending Limit, Bond


The Assembly on Thursday "overwhelmingly endorsed" placing measures to
limit state spending and restructure the state's debt through a $15
billion bond on the March 2004 statewide ballot, the Los Angeles Times
reports. The Assembly voted 80-0 to approve the spending limit and
65-13 to approve the bond (Vogel et al., Los Angeles Times, 12/12).
Gov. Arnold Schwarzenegger (R) and Assembly leaders did not reach an
agreement until 1:30 a.m. Friday, the San Francisco Chronicle reports
(Berthelesen/Gledhill, San Francisco Chronicle, 12/12). According to
the Los Angeles Times, the plan is "less restrictive" than earlier
proposals and would limit health care program growth when state
revenues fall but allow the state to reinvest in health care programs
during good economic times (Los Angeles Times, 12/12). The plan
includes:


A constitutional amendment that requires the Legislature to pass and
the governor to sign a balanced budget;


A future prohibition against authorizing bonds to close budget
deficits (Simerman/Hannah, Contra Costa Times, 12/12);


The establishment of a "rainy day" fund that would be funded with 1%
of general fund revenues in fiscal year 2006-2007, 2% of general fund
revenues in FY 2007-2008 and 3% each year afterward until the reserve
reaches the greater of 5% of the general fund or $8 billion, with the
understanding that future legislatures could increase the amount.
However, half of the reserve fund money, up to $5 billion, would go to
paying off the $15 billion bond (Hill, Sacramento Bee, 12/12);


A $15 billion bond to be paid off over eight to 13 years that would
replace a $10.7 billion bond approved last summer to balance this
year's budget (Vogel et al., Los Angeles Times, 12/12); and


Provisions that allow the governor to propose mid-year budget
adjustments that would have to be approved by the Legislature.
Spending cuts would require a simple majority and tax increases a
two-thirds vote to pass. Should the Legislature not approve the
governor's plan or pass an alternative plan in 45 days, it could not
recess or act on other legislation until the fiscal emergency is
resolved (Mendel, San Diego Union-Tribune, 12/12).


Proposed Cuts
In related news, Schwarzenegger's proposal for $2 billion in mid-year
budget cuts to health and other programs has "stalled" in the
Legislature, the Union-Tribune reports (San Diego Union-Tribune,
12/12). Citing an increase in the number of beneficiaries and in
health program costs, the administration has proposed suspending the
Lanterman Act, which requires the state to provide "treatment and
habituation" services to all residents with disabilities. The
suspension would result in a spending reduction of as much as $300
million for the Department of Developmental Services over the next 18
months and would eliminate some services for people with disabilities.
Those cuts are part of a larger budget plan that includes about $3.8
billion in spending cuts over the next 18 months, most of which would
affect health and other social programs (California Healthline,
12/11). However the cuts have encountered "heavy public opposition,"
according to the Union-Tribune (San Diego Union-Tribune, 12/12).

Legal Challenge
Even if the Legislature passes the new ballot initiative, voters might
not be able to vote on the plan because of legal challenges, the
Oakland Tribune reports (Geissinger, Oakland Tribune, 12/12). The
Legislature just before the Friday deadline to place the bond and
spending cap proposals on the ballot defeated the measures. However,
Secretary of State Kevin Shelley extended the deadline after 19
lawmakers requested that he do so but said that the delay would
shorten the number of days the public has to review the ballot
initiatives, which had already been reduced to eight days from 20 days
(California Healthline, 12/9). According to the Tribune, postponements
in the deadline for public review leave the plan "vulnerable to legal
challenges" before and after the election. Education advocates and
anti-tax activists, who both oppose the proposal, say they may file a
lawsuit over the "compression of the process for lawmakers to place
measures on a statewide ballot," the Tribune reports (Oakland Tribune,
12/12).

Editorials, Opinion Pieces
Recent editorials and opinion pieces address the budget proposals.
Summaries are provided below.


Editorials
Orange County Register: Although Schwarzenegger said he would "clean
house in the state government," he had "his clock cleaned on the
budget deal" in negotiations with Democratic senators, a Register
editorial states, adding that the proposed deal is a way "to get the
$15 billion bond on the ballot" rather than a "spending limitation or
even much of a balanced-budget requirement" (Orange County Register,
12/12).


San Francisco Chronicle: The budget compromise is "not going to
balance the budget or provide anything close to the level of
structural reforms that are required," a Chronicle editorial states.
According to the editorial, voters who believed that Schwarzenegger
could "shatter political gridlock," account for his "pain-free
promises not to raise taxes or cut bedrock services" and lead the
state out of its financial problems should take the proposed package
as "a civics lesson," adding that Schwarzenegger's time in office
looks like a "zig-zag as he made and broke promises" and "alarmed
powerful interests" (San Francisco Chronicle, 12/12).


San Jose Mercury News: "[C]ontradictory promises" to reduce taxes and
"continue funding essential services" are "easy to make in a campaign"
but "so hard to keep in office," a Mercury News editorial states (San
Jose Mercury News, 12/11).


Santa Rosa Press Democrat: Lawmakers in California have to realize
that they are "at the point that doing nothing is the worst
alternative" and that the state cannot "afford any more of their
failures," a Press Democrat editorial states, adding that there is
"much to like about the new proposal" (Santa Rosa Press Democrat,
12/12).


Opinion Pieces

Dan Walters, Sacramento Bee: Although Schwarzenegger might have
considered the Legislature a "foe he could overcome by sheer force of
will," he actually found himself in "a jungle full of often invisible
political forces that were largely immune" to his weapons, columnist
Dan Walters writes in the Bee. According to Walters, Schwarzenegger
"was compelled to give ground" and created a "much weaker" spending
cap when he was negotiating the state budget policy's constitutional
provision (Walters, Sacramento Bee, 12/12).


Joan Ryan, San Francisco Chronicle: One of Schwarzenegger's first
proposals to the state budget "slash[es] crucial services to disabled
people and their families" and suspends "a landmark law" guaranteeing
those services, columnist Joan Ryan writes in the Chronicle. According
to Ryan, Schwarzenegger proposed plans to "limit access to health care
for the state's sickest kids," completing his "Ebenezer Scrooge hat
trick" by indicating that he also might propose education spending
cuts. While Schwarzenegger seems to think that not accepting his
salary was "enough to show that everyone" will have to make a
sacrifice, "you have to wonder what political genius" is making
suggestions to Schwarzenegger on "how to sell the cuts to the public,"
Ryan writes (Ryan, San Francisco Chronicle, 12/12).


 = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = =


Los Angeles Times, December 11, 2003


Thousands Swarm Capitol to Protest Cuts

SACRAMENTO - In what security officers described as one of the largest
Capitol demonstrations in years, thousands of disabled Californians,
college students and police representatives converged Wednesday to
protest midyear budget cuts sought by Gov. Arnold Schwarzenegger.

"Governor, welcome to Sacramento," shouted one speaker at a rally
where Schwarzenegger's proposed elimination of millions of dollars in
services for the developmentally disabled was denounced as
devastating.

By noon, more than 4,500 people - many of whom said they traveled all
night in buses from Southern California, and including at least one
mother who rented a plane - had poured into the building.

"We got stormed," said Debbie Manning, chief deputy sergeant at arms
of the state Senate. "Even our overflow rooms were filled."

As disabled people, many in wheelchairs or clutching the elbows of
supporters, demonstrated on the north steps of the Capitol, several
dozen police officers and sheriff's deputies in full uniform gathered
in the Capitol rotunda for a lobbying effort aimed at keeping state
funds flowing to cities and counties despite Schwarzenegger's repeal
of an increase in the vehicle license fee. The increase provided about
$4 billion a year that local governments used to support public safety
and other services.

On a sidewalk outside, meanwhile, college students protested the
threatened reduction of money for college outreach programs aimed at
recruiting minority students.

At one point, about 2,000 demonstrators massed outside
Schwarzenegger's office window in a scene reminiscent of the turbulent
days of former Gov. Jerry Brown, when protesters ranged from
farmworkers to the wives of doctors angry about malpractice insurance.

A spokesman said the governor, who was the target of the first major
Capitol demonstrations since he took office 3 1/2 weeks ago, was "well
aware" of the demonstrators and their concerns. But he kept to his
corner office, where he and legislators negotiated in a restarted
attempt to agree on a fiscal recovery program for California.

"The governor recognizes that the state must get its fiscal house in
order if it is to continue to provide services to all participants in
state programs" spokesman Vince Sollitto said.

A senior spokesman, Rob Stutzman, said such protests were to be
expected when difficult decisions such as clamping a lid on program
enrollments were made. "Obviously, the stakeholders are going to
scream and scream loudly," he said.

But budget reductions aimed at the disabled are among the most
controversial of the governor's fledgling administration.

The governor has proposed cutting nonmedical services for children and
adults with cerebral palsy, autism, mental retardation and other
disabilities. And he wants to freeze future enrollment in the state's
growing disability care programs to the current caseload of about
185,000 people. Newcomers would be placed on a waiting list.

A platoon of speakers, including state Treasurer Phil Angelides, a
potential Democratic contender for governor in 2006, promised an
all-out fight against the cuts in the Legislature. Some addressed the
governor as if he were present.

"This is your first taste of us," shouted Francis Gracechild,
executive director of the Sacramento office of the support
organization Resources for Independent Living. "We are not going away.
We'll be back. And, guess what? We've got friends."

A few minutes later as protesters wearing "Don't cut my services"
T-shirts filled Capitol hallways, members of the Senate Budget
Committee opened a hearing into the reductions to the disabled and
other health and human services programs.

In an unusual move, Chairman Wes Chesbro (D-Arcata) offered a virtual
open microphone to disabled witnesses and their advocates.

Dan Kaiser of the California Council of the Blind warned at the Budget
Committee hearing that the governor's action "is the beginning of the
dismantling of the safety net" that has protected disabled people.

Several speakers warned that if state-financed services were lost,
they would have no choice but to send their children away to more
costly state hospitals.