Leaders in Legislature Meet With Schwarzenegger To Discuss Budget Proposals, Reach No Agreement

Republican and Democratic leaders in the Legislature on Thursday met with Gov. Arnold Schwarzenegger (R) to discuss his budget proposals but "emerged with no public signs of a deal," the Contra Costa Times reports. Schwarzenegger hopes to place a $15 billion bond proposal and a state spending cap proposal on the March 2004 ballot, which requires the state Legislature to approve the proposals by a two-thirds majority by the end of Friday (LaMar et al., Contra Costa Times, 12/5). Schwarzenegger also has proposed $3.8 billion in state budget reductions over the next 18 months, which includes a $440 million budget reduction in fiscal year 2003-2004 for the Department of Health and Human Services. In addition, over the next two years, he has proposed to limit enrollment in Healthy Families and other state programs; end state wage assistance for employees of long-term care facilities; reduce by 10% Medi-Cal reimbursement rates to physicians, in addition to the 5% reduction approved earlier this year; end nonmedical therapy for state residents with developmental disabilities; and eliminate in-home services that help elderly state residents and residents with disabilities live in their homes rather than nursing homes (California Healthline, 12/2). Some Democratic lawmakers, who have concerns that the proposed cap on state spending could lead to additional budget reductions of billions of dollars to state health and social programs, on Thursday proposed an alternative state spending cap proposal (Lucas/Gledhill, San Francisco Chronicle, 12/5). The Democratic proposal would use half of surplus revenue to establish a "rainy day reserve" of as much as 5% of the budget of the previous fiscal year; the state could not use reserve funds in the absence of a budget deficit, the Los Angeles Times reports. Unlike the Schwarzenegger proposal, the Democratic proposal would count reserve funds as part of state revenue. In addition, unlike the Schwarzenegger proposal, the Legislature by simple majority, not the governor, would have the authority to "remedy any imbalance" in the state budget, the Los Angeles Times reports.

Reaction

Schwarzenegger spokesperson Rob Stutzman said that the governor remains "optimistic" that he will reach an agreement with the Legislature on the budget proposals by Friday but added that the agreement must include structural reforms to prevent future state budget deficits, the Times reports (Halper et al., Los Angeles Times, 12/5). Schwarzenegger has not commented on the Democratic state spending cap proposal (Hill, Sacramento Bee, 12/5). The Legislature remains "deeply divided" over the state spending cap issue, according to the San Diego Union-Tribune. Assembly member Jackie Goldberg (D-Los Angeles) said, "Should we be Texas? No taxes, but no services. That's where we are headed." Senate Minority Leader Jim Brulte (R-Rancho Cucamonga) said the Legislature must pass a state spending cap to ensure that the state budget "never again" moves from a surplus to a deficit in a short period of time (Mendel, San Diego Union-Tribune, 12/5).

Additional Coverage

"Governor Counting on Voter Clout": Schwarzenegger has traveled around the state to raise voter support for his budget proposals. The governor hopes that "he can use his immense popular appeal" to "persuade voters to refinance $15 billion in debt," according to the San Jose Mercury News (Gladstone/Ostrom, San Jose Mercury News, 12/5).
"Governor Is Keeping Lawmakers Guessing": Schwarzenegger has "confused, irritated and amused lawmakers" with "a string of dual messages and contradictory rhetoric" on issues such as spending reductions for state health programs in his budget proposals and workers' compensation reform, the San Francisco Chronicle reports (Salladay, San Francisco Chronicle, 12/5).
"Governor's Rhetoric on Plan Softens": The Sacramento Bee examines how Schwarzenegger has used "toned down" rhetoric to raise support for his budget proposals from Democratic lawmakers, many of whom have concerns that the proposal would reduce health services for children and individuals with developmental disabilities (Mecoy/Rojas, Sacramento Bee, 12/5).
"Spending Cap Would Shift Power": Republican and Democratic lawmakers both have expressed concerns that the state spending cap proposed by Schwarzenegger would allow him and future governors to make budget reductions without the approval of the Legislature, which would "handcuff the Legislature and strip away its most important constitutional responsibility -- administering the budget," the Los Angeles Times reports (Rabin/Halper, Los Angeles Times, 12/5).
"The Going Gets Tough for Schwarzenegger": The Schwarzenegger budget proposals have "run up against a dual threat: a deeply divided Legislature ... and the determined opposition of organized labor," which maintains that the proposals "would sharply scale back spending on health care and other programs for decades," the Los Angeles Times reports (Finnegan/Mathews, Los Angeles Times, 12/5).

Editorial, Opinion Pieces

Investor's Business Daily: Even though Democrats want to raise taxes to balance the budget, Schwarzenegger should "[p]ull spending back to the revenue level and then make sure it stays there for good," an Investor's Business Daily editorial states. Schwarzenegger should not "feel pressured to cut deals with" Democratic lawmakers, but instead he should "offe[r] the Legislature a deal: Either put his plan on the ballot largely in the form he has proposed, or let voters enact it, without legislative input, next November" (Investor's Business Daily, 12/5).
Steve Lopez, Los Angeles Times: Schwarzenegger "trashed former Gov. Gray Davis (D) for not getting more low-income kids into a health care program, then proposed freezing enrollment in the program," columnist Lopez writes as part of a satirical letter to Assembly and Senate members (Lopez, Los Angeles Times, 12/5).
Daniel Weintraub, Sacramento Bee: While Schwarzenegger has been associated with the Special Olympics since 1979, one of his budget cuts "would eliminate respite care, camping, social and recreational activities, and music, art and equestrian programs" for people with developmental disabilities, columnist Weintraub writes in a Bee opinion piece. Instead of a cut that "amounts to hacking off a limb," Schwarzenegger and supporters of such programs "ought to be able to find middle ground that would help the governor meet his fiscal goals without creating the hardship that some fear his ideas will bring to their loved ones," Weintraub concludes (Weintraub, Sacramento Bee, 12/2).
Joan Ryan, San Francisco Chronicle: Because Schwarzenegger campaigned as a "protector of children," it "comes as a bit of a shock" that he would propose limiting the enrollment of Healthy Families and capping the number of "low-income, acutely ill children who have access to state-funded medical treatment," columnist Ryan writes in a Chronicle opinion piece. While California Children's Services "costs a lot," the "alternative is to let children suffer and die because they had the bad luck of being born to parents without insurance," Ryan contends (Ryan, San Francisco Chronicle, 12/5).
Donna Arduin, Wall Street Journal: To "help lead California out of [its budget crisis]," Schwarzenegger is proposing a constitutional spending limit, a general obligation bond and an effort to the "start curtailing overspending" by the Legislature, Arduin, finance director for Schwarzenegger, writes in a Journal opinion piece. The previous administration and the Legislature "create[d] or expand[ed] programs that the state couldn't afford," prompting Schwarzenegger to create a "comprehensive plan to begin to fix fiscal problems that have grown in the past five years," Arduin concludes (Arduin, Wall Street Journal, 12/4).

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