CA: Budget pitch puts faith in a growing economy (adds billions to educ.,hits health,welfare hard)

SACRAMENTO — Gov. Arnold Schwarzenegger unveiled a proposed $125.6 billion 2006-07 budget Tuesday that hikes spending 7 percent overall for education, transportation and other programs but trims services for the poor.

Schwarzenegger's budget depends on a growing economy and $7 billion in carryover from the current fiscal year to cover increased spending.

It will maintain or increase the long-term, multibillion-dollar structural deficit, though the governor said he intends to again seek the authority to make midyear budget changes.

"This budget continues California on the path of fiscal responsibility and economic recovery," Schwarzenegger said. The spending plan proposes no tax increases while adding $4.3 billion to education and allowing the state's public universities and colleges to postpone a planned fee hike in the fall.

The budget also provides first-time full funding of $428 million in additional money for after-school programs under Proposition 49, the ballot measure then-private citizen Schwarzenegger helped pass in 2002.

In addition, the spending plan protects Proposition 42 funds for roads and highways — gasoline sales tax money the state has raided in the past for other purposes. It also provides funds to kick-start his separate infrastructure improvement plan.

The Republican governor said he had to make many choices, including painful ones such as $333 million in cuts to health and welfare, considering that nearly three-quarters of the state's income goes into voter-mandated programs such as education.

Democratic legislative leaders gave generally positive marks to the areas of increases but said they would fight reductions to welfare and Supplemental Security Income, including the state retaining federal revenue meant for cost-of-living increases.

Assembly Speaker Fabian Nuez, D-Los Angeles, said the cuts would occur "over my dead body."

At the same time, advocates for the poor decried the general lack of investment in the health and welfare sector in recent years.

"The budget doesn't restore the cuts of previous years and from the federal government," said Anthony Wright of Health Access.

With education and transportation hikes in his budget, the governor had hoped to avoid an extended budget battle that would complicate his campaign for re-election.

The budget proposes a sprinkling of cuts throughout state government, but most are concentrated in the health and human services sector.

The governor's budget includes a $1.2 billion hike for health and welfare services to cover case-load growth, cost increases and augmented children's health care but trims spending in several programs, for a net funding increase of 4.5 percent.

Critics said the cuts in state health and welfare programs come at a time when federal allocations for the same services may be cut back soon.

State Treasurer Phil Angelides, a frequent critic of Schwarzenegger who is seeking the Democratic gubernatorial nomination this year, criticized the budget for cutting funds to the most vulnerable and continuing the deficit.

"He said he would be the people's governor, but even at this time he can't find it in him to provide the blind, disabled and aged what they are owed," Angelides said. "He's pocketing the federal money targeted to give them a cost-of-living increase."

Angelides supports tax increases to help balance the budget, including the closing of corporate tax loopholes and increasing income taxes on Californians making more than $300,000 a year.

Sen. Tom McClintock, R-Thousand Oaks, one of the state's leading fiscal conservatives, criticized the governor for again proposing to spend more than the state takes in.

"The budget is seriously out of balance, and the budget gap is widening," he said.

The governor said he could have eliminated the structural deficit if not for four policy decisions made since he took office: lowering the car tax after he was first elected, passing a ballot measure to protect funding for local cities and counties, fully funding Proposition 42 transportation funds and repaying $1.7 billion owed to schools from past borrowing.

Schwarzenegger's proposed budget will go through a series of legislative hearings during coming months, and he will then release a revised version in May.

The constitutional deadline for enacting a budget is June 30, though that date is often missed because of a two-thirds vote requirement, with budget stalemates extending weeks or months into the summer.

Schwarzenegger also faced criticism from his right flank. Sen. Tom McClintock, R-Thousand Oaks, one of the state's leading fiscal conservatives, criticized the governor for again proposing to spend more than the state takes in.

Senator Tom McClintock
Date: January 10, 2006
Publication Type: Press Release

Senator Tom McClintock today issued the following statement concerning the Governor’s budget proposal for 2006-2007:

“Today the Governor released his budget proposal for the 2006-2007 fiscal year.
“It projects general fund spending of $97.9 billion with income of $91.5 billion, for a general fund operating deficit of $6.4 billion. This brings the accumulated three year operating deficit to $9.8 billion.
“This deficit is funded entirely with borrowed funds from Proposition 57, approved by voters in 2004. Although the public was promised that this bond would only be used to pay for past deficits, it is in fact being used to cover deficits for 2004 ($0.6 billion), 2005 ($2.9 billion) and now 2006 ($6.4 billion).
“In November, the Legislative Analyst projected that if nothing were done to rein in spending, the 2006 budget would consume $95.1 billion. The governor proposes spending $2.8 billion above this figure.
“In the last three years, combined population and inflation will have grown 16 percent; revenues 19 percent; spending 25 percent. For the budget year, combined population and inflation will increase 4 percent; revenues 5 percent; spending 9 percent. Revenues continue to outpace inflation and population; spending continues to outpace revenues.
“I have always applied two fundamental tests to a budget: it must be balanced within existing revenues and it must contain a prudent reserve. The proposal as submitted to the legislature fails both tests.”

Look at what the Assembly is saying. Too much b*tt kissing, IMO. ( From 1Bakersfield.com )

SACRAMENTO – Members of the Assembly Republican Caucus had the following responses to Gov. Arnold Schwarzenegger’s budget proposal for the 2006-07 fiscal year:

Assembly Republican Leader Kevin McCarthy, Bakersfield
“I am pleased the governor has proposed a budget that does not raise taxes on hard-working Californians. Paying for improvements to our outdated infrastructure will be a challenge, one we are determined to meet by prioritizing our needs, finding cost-effective ways to fund them, and implementing reforms needed to stretch our dollars. However, we will not be able to meet these critical needs until we finally eliminate the structural deficit.”
Assembly Republican Caucus Chair Russ Bogh, Yucaipa
“I’m happy to see the governor’s budget focus on improving California’s ailing infrastructure without overburdening the hardworking families of California with tax increases.”
Assemblyman Sam Blakeslee, R-San Luis Obispo
“Underlying structural deficits continue to threaten the state. Fiscally responsible leadership demands that we resist the urge to escalate spending until significant structural reforms are enacted. Before we can truly address our state’s infrastructure needs, we must eliminate California’s structural budget deficit once and for all.”
Assemblyman Chuck DeVore, R-Irvine
“Unless we couple regulatory reform with the bonds, we will end up borrowing a dollar to get less than a quarter’s worth of construction.”
Assemblyman Bill Emmerson, R-Redlands
“I support the governor’s efforts and expect him to stick to his guns and not raise taxes.”
Assemblywoman Bonnie Garcia, R-Cathedral City
“Governor Schwarzenegger’s budget puts the needs of California’s families first – more classrooms, healthcare for low-income kids, police teams to track sexual predators and a plan to rebuild our crumbling highways. The ball is now in the Legislature’s court to make this budget proposal a reality.”
Assemblyman Tom Harman, R-Huntington Beach
“Taxpayers deserve an honest and accountable state budget that funds the state’s growing transportation projects and works toward reducing the state’s structural debt. I look forward to working with Governor Schwarzenegger and my colleagues over the next few months to develop a fair and sound budget.”
Assemblyman Guy Houston, R-San Ramon
“Governor Schwarzenegger believes that all children should be treated equally. The $200 million in ‘equalization’ funding that he is proposing for K-12 education helps erase decades of discrimination against my constituents. All of our children deserve an equal education, regardless of where they live.
“I also am pleased to see the governor’s plan to make a serious investment in our infrastructure. We cannot continue our business as usual. I came up to Sacramento to build roads, increase our water supply, improve our flood control system and increase our energy capacity. The time is right to make the tough choices needed to invest in our future.”
Assemblyman Bob Huff, R-Diamond Bar
“I am pleased that the governor has introduced a budget with no new taxes that emphasizes the need to invest in our long-neglected transportation infrastructure. At the same time, he has outlined the importance of remaining fiscally responsible. As negotiations continue, we must all keep in mind that while revenues are increasing, the state continues to face a structural budget deficit.”
Assemblyman Rick Keene, R-Chico
“It’s a great template for future budget discussions. I am very encouraged to see a new budget committed to catching up with prior obligations. I look forward to working with the governor to ensure that one-time monies are used for one-time expenditures.”
Assemblyman Bill Maze, R-Visalia
“If we want to further job growth and our newfound economic prosperity, we need a budget that finally makes structural reforms, which are long overdue, and contains no new taxes. The governor also stressed forward thinking with improvements to infrastructure, and I want to see improvements made in important areas such as transportation and above-ground water storage.”
Assemblyman Dennis Mountjoy, R-Monrovia
“The state of California must have a balanced budget. The continuing structural deficit can only be corrected with responsible spending of our current resources. I am pleased to hear that the governor is not proposing any new taxes or tax increases. Education and public safety can remain as top priorities without increasing taxes.”
Assemblyman Alan Nakanishi, R-Lodi
“The governor has shown his commitment to rebuilding infrastructure, including levees. It is great to have a governor who is investing in the future, and at the same time is not raising taxes, and not cutting Medi-Cal.”
Assemblyman Roger Niello, R-Fair Oaks
“The results of holding the line against new taxes are in, and are reflected in the increased revenues to the state. With no new additional taxes, California continues to make progress on the $35 billion deficit hole of only a few years ago. The Legislature now needs to craft a budget that handles these new revenues in a responsible manner and continues work on the structural deficit.”
Assemblywoman Sharon Runner, R-Lancaster
“The governor’s budget proposes dramatic infrastructure and transportation improvements that will benefit all Californians. While I look forward to thoroughly reviewing the entire budget over the next few weeks, I applaud the governor for his bold and ambitious agenda, and for continuing to hold to his commitment to not raise taxes.”
Assemblyman Todd Spitzer, R-Orange
“We must continue advocating for fiscal discipline in the coming year as we work to reduce the structural debt that has crippled our state for the past several years. Improving infrastructure and mobility in this state is vital to improving our business climate, but it is essential that these necessary reforms do not come at the expense of increased tax burdens on California residents. This budget places Sacramento’s focus where it belongs – on our schools, our children and our overall quality of life.”
Assemblyman Mike Villines, R-Clovis
“The governor has laid out a bold blueprint for rebuilding California. I look forward to working with Governor Schwarzenegger and my colleagues over the next few months to develop a fiscally responsible plan to finance his vision for our future. By enacting common-sense reforms and applying sound fiscal discipline, we can rebuild our state and prevent another spending crisis from crippling California in the future. The time for action is now – we can’t afford to wait.”
Assemblywoman Mimi Walters, R-Laguna Niguel
“In his State of the State address, Governor Schwarzenegger placed heavy emphasis on our state’s dire need for improvement of our infrastructure. If our state’s economy is to continue recovering, we must plan ahead and build the roads and other infrastructure we will need in the near future. Right now, we are driving on roads that exceeded their maximum capacity 10 years ago, while our commute times increase daily.”

You mean Arnold... LIED? Gasp! Whoda thunk it?

The head of the San Diego Tax Fighters, Richard Rider, (an author of the ballot argument against Prop 58) is on a rampage lately. He recently sent out email blasting this. Another one of his emails was posted at Flash Report a couple days ago regarding the State of the State speech and Arnold's leftward leaps. (It was titled "The Terminator Morphs into Girlie Man." You probably need to scroll back to the archived pages on the blog to find that one.)

Governor Spendanator Runs Amuck
San Diego – In his latest State of the State speech, Governor Spendanator has come up with another whopper of a budget, once again proposing to spend more than the state takes in. The Democrat legislators doubtless will match his figure and raise it. Since the governor never uses his powerful line item veto, the actual budget likely will be even larger than the one he is proposing.
But what about Proposition 58, the Balanced Budget Act? This constitutional amendment was overwhelmingly passed by California voters in the spring of 2004.
Doesn’t Prop 58 preclude such deficit spending? That’s what governor Schwarzenegger and his cronies told us in their ballot argument. Perhaps now is a good time to look back at what we were told by the politicians, and compare their promises with what actually occurred.
A little background: The new governor wanted $15 billion worth of bonds issued to give him the breathing room to get spending under control. That became Prop 57, and it passed easily. To make it legal, the California constitution had to be amended so that bonds could be issued to pay for routine operating expenses – there was a restrictive requirement that such bonds had to be used to actually build something! Thus Prop 58, the mislabeled “Balanced Budget Act,” was also put on the ballot to cleverly repeal this safeguard while pretending to control spending. It passed easily, getting over 70% of the vote. After all, how many voters would oppose a measure requiring a balance budget?
Three taxpayer advocates (including yours truly) co-wrote the ballot book arguments opposing this measure. We pointed out that this measure would NOT require a balanced budget. The proponents flat out lied about this requirement, as results proved. We were 100% right, and they were dead wrong.
(snip)

LOL. I didn't realize that Herb Wesson was in on this one too. What a bunch of scoundrels.

http://primary2004.ss.ca.gov/propositions/prop58-arguments.html

ARGUMENT in Favor of Proposition 58

State government spending in California is out of control. Over the past three years, state spending has significantly exceeded state revenues.

Proposition 58 will require the Governor and the California State Legislature to ENACT a BALANCED BUDGET. Right now, the Governor is only required to propose, not enact, a balanced budget. This loophole has led to the huge budget deficits that plague California.

The California Balanced Budget Act:

WILL require a BALANCED BUDGET;

WILL require that SPENDING NOT EXCEED INCOME each fiscal year;

WILL require general funds to be put in a "Rainy Day" fund to build a RESERVE to protect California from future economic downturns. The Budget Stabilization Account will also be used to pay off the California Economic Recovery Bond early;

WILL allow the Governor to call a fiscal emergency if revenues drop below expenditures or if expenditures exceed revenues; and

WILL prohibit the Legislature from acting on other legislation or adjourning if they fail to pass legislation to address the crisis.

California faces unprecedented budget deficits. Overspending has led to serious shortfalls which threatens the state's ability to pay its bills and access financial markets. This proposition is a safeguard against this EVER HAPPENING AGAIN. Proposition 58 will prevent the Legislature from ENACTING BUDGETS THAT SPEND MORE MONEY THAN WE HAVE.

The California Balanced Budget Act will require, for the first time, the Governor and the Legislature to pass a BALANCED BUDGET. This proposition, along with the California Economic Recovery Bond Act, will give us the tools we need to resolve California's budget crisis.

As California faced unprecedented budget deficits for the last 3 years, the problem was ignored, spending exceeded revenues, and there was no process in place to address the fiscal crisis. Proposition 58 will allow the Governor to call a Special Session of the Legislature to deal with future fiscal crises. If the Legislature fails to act within 45 days, then they will not be able to recess and they will not be able to pass any other legislation. This will force the Governor and the Legislature to work together to find a solution to the problem BEFORE IT IS TOO LATE.

The California Recovery Bond, Proposition 57, and the California Balanced Budget Act, Proposition 58, together will give California's leaders the tools necessary to restore confidence in the financial management of the State.

Please join Governor Arnold Schwarzenegger, State Controller Steve Westly, Superintendent of Public Instruction Jack O'Connell, the California Chamber of Commerce, the California Taxpayers' Association, and all 80 members of the California State Assembly—both Republicans and Democrats—and support Proposition 58.

ARNOLD SCHWARZENEGGER, Governor State of California
HERB J. WESSON, JR., Speaker California State Assembly
JENNY OROPEZA, Chairwoman Assembly Budget Committee

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