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| CA Approaches a Deal on Budget Cuts |
| By nytimes.com |
| Published: 07/16/2009 |
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California Approaches a Deal on Budget Cuts By Jennifer Steinhauer July 15, 2009 LOS ANGELES — California lawmakers neared a deal on Wednesday with Gov. Arnold Schwarzenegger to close the state’s $26 billion budget gap in ways that would profoundly alter the state’s relationship with its cities and millions of residents who receive basic services. Details emerging from the talks suggested that the deal would require extraordinarily deep cuts to school systems and local governments, and, while far smaller than the governor threatened a month ago, substantial cuts to health care and other social services. The final framework of the budget was still being hammered out among legislative leaders and the governor on Wednesday evening, and it appeared as the night went on that negotiations would bleed into Thursday. The state, short on cash, continued to pay vendors with i.o.u.’s, its credit rating continued to topple and the governor and the teachers’ union exchanged nasty advertisements concerning cuts. But lawmakers and the governor agreed that a deal was close. The governor and lawmakers sounded optimistic early Wednesday that they would finish by day’s end. Karen Bass, the speaker of the State Assembly, said lawmakers and the governor were within millions of dollars, not billions, of an accord. Democrats, who control the Legislature and who had worked to prevent what they called a gutting of the state’s social services, appeared to be prevailing in some measure by agreeing to cuts to other programs and localities. The deal also required the use of accounting devices used by all states in a time of crisis, like putting off programs or payments until the next fiscal year so the budget gap does not seem as large. Mr. Schwarzenegger, a Republican, held fast to his promise to reject all tax increases, and appeared on the brink of victory in achieving many — if not all — of the reforms he sought for some programs. Those who work as caregivers in the state’s $4.7 billion home health care program, for example, will most likely face more stringent screening processes intended to curb fraud, like fingerprinting and background checks. While the state’s health care program for poor uninsured children will not end, as the governor once threatened, its enrollment will probably be limited, state officials said, meaning that some children will be on a waiting list for health care. Medicaid recipients will probably be moved into a managed-care program. Further Medicaid cuts seem unlikely, as they would put the state in violation of federal standards. Benefits will also be trimmed in another program the governor eyed for elimination — CalWorks, which provides financial assistance to families with children ages 18 and under. The state’s education budget of nearly $52 billion seemed destined for another large hit, of about $1.5 billion, on top of large reductions earlier, officials said. Some school districts have already promised raises to teachers, leaving them even less able to continue to offer programs like music and physical education. Public colleges and universities across the state have prepared for millions of dollars in cutbacks by furloughing employees. Statewide furloughs of three days a month for government employees are likely to continue through the rest of the fiscal year. Local governments, which have already suffered their own losses of tax revenues, will probably lose far more as a result of the deal when the state begins dipping into tax streams on which they depend, including gasoline taxes. Cities can try to borrow the amount they are losing, and the agreement in progress calls for the state to repay them over three years, but many of the financially weaker localities may face the prospect of defaulting on their bonds. Read More. |
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