Governor, Lawmakers Weighing Options for California Budget

On Wednesday, Gov. Arnold Schwarzenegger (R) said California will see "devastating" cuts to state spending on health care, education and law enforcement after budget-related measures failed in Tuesday's special election, the San Jose Mercury News reports (Zapler/Davies, San Jose Mercury News, 5/20).

Schwarzenegger said, "We tried not to make those kinds of cuts, but now we have to." 

Speaking in Washington, D.C., before flying back to Sacramento, the governor added, "I think the message was clear from the people: Go all out and make those cuts and live within your means" (Sanders, Sacramento Bee, 5/21).

Voters' rejection of the ballot measures pushed the state budget deficit to $21.3 billion for fiscal year 2009-2010 (Bailey/Simon, Los Angeles Times, 5/20).

Schwarzenegger outlined his proposals for dealing with the budget deficit last week that included $9 billion in cuts, layoffs for 5,000 state workers, and $7.5 billion in borrowing from state and local governments and investors (Sacramento Bee, 5/21).

Meetings in D.C.

Before heading back to Sacramento Wednesday, Schwarzenegger met with HHS Secretary Kathleen Sebelius to discuss his proposal to cut $750 million in state spending from Medi-Cal, California's Medicaid program (York, Capitol Weekly, 5/21).

To avoid losing funds from the federal economic stimulus package, the cut would require a federal waiver (McGreevy/Rothfeld, Los Angeles Times, 5/21). The move also could require a change in federal law.

The Schwarzenegger administration has not provided details on the proposed Medi-Cal cuts, but Capitol Weekly reports that administration sources said they expect the next state budget to limit eligibility and benefits.

Health Access lobbyist Beth Capell said she does not expect the Obama administration to approve a waiver that would let the state cut Medi-Cal eligibility (Capitol Weekly, 5/21).

Schwarzenegger said Sebelius pledged to work with California on "flexibilities" to help the state (San Jose Mercury News, 5/20).  The governor also said Sebelius said she would work with California officials to "make sure that we're going to get as much money as we deserve."

Schwarzenegger also met with California's congressional delegation in hopes of building support for an effort to seek federal guarantees of loans to the state from private lenders (Los Angeles Times, 5/20).

The governor's Web site includes the full text of his comments after meeting with Sebelius.

Back in Sacramento

Schwarzenegger met with legislative leaders Wednesday to discuss the state budget (Surdin, Washington Post, 5/20).

In addition, Senate and Assembly members are set to kick off a series of public hearings on the budget today (Los Angeles Times, 5/20).

State Controller John Chiang (D) and Treasurer Bill Lockyer (D) are scheduled to appear at a hearing tomorrow and are expected to tell lawmakers that the state is in danger of not having sufficient cash to make payments (Steinhauer, New York Times, 5/21).

Lawmakers Weigh In

Assembly Speaker Karen Bass (D-Los Angeles) said the Legislature will try to reach a budget agreement by June 30.

Incoming Assembly Minority Leader Sam Blakeslee (R-San Luis Obispo) said, "The longer we wait, the deeper the cuts" (Lin, AP/San Diego Union-Tribune, 5/20).

Bass said she expects cuts to health care, education, human services and prison spending (Sacramento Bee, 5/21). However, Bass said she would oppose deep cuts to Medi-Cal eligibility (Capitol Weekly, 5/21).

Senate President Pro Tempore Darrell Steinberg (D-Sacramento) said, "I don't think there is any way to avoid significant across-the-board cuts.  Nothing will be immune from cuts" (AP/San Diego Union-Tribune, 5/20).

Blakeslee said Republicans will not support tax increases (Sacramento Bee, 5/21).