New Deficit Projections Raise Stakes for Special Election Ballot
In a letter to California legislative leaders Monday, Gov. Arnold Schwarzenegger (R) shared projections that the state budget deficit could climb to $21.3 billion if voters reject propositions 1C, 1D and 1E on the May 19 special election ballot, KQED's "Capital Notes" reports (Myers, "Capital Notes," KQED, 5/11).
Details of Propositions
Proposition 1C would let the state borrow $5 billion against future state lottery revenue.
Proposition 1D would shift funds from First 5, which was created in 1998 when voters approved Proposition 10 to increase the state tobacco tax to fund early childhood health care and education programs.
In fiscal year 2009-2010, the measure would shift as much as $608 million in Proposition 10 revenue to the state general fund for other state health and human services programs for children who are not older than age five.Â The measure would shift as much as $268 million to the state general fund in each of the next four fiscal years.
The measure also would eliminate funds for statewide media campaigns and permit First 5 to allocate funding only for direct health and human services.
Proposition 1E would shift $226.7 million from mental health care programs that Proposition 63 funds to the existing Early Periodic Screening, Diagnosis and Treatment Program for low-income children for two years.Â
In 2004, voters approved Proposition 63, which increased the state income tax on high-income Californians to fund mental health services.
Schwarzenegger and the Legislature placed the measures -- and three others -- on the ballot as part of a February budget agreement (California Healthline, 5/11).
Even if voters approve the initiatives, the state will face a budget deficit of $15.4 billion, according to the state Finance Department (Yamamura, Sacramento Bee, 5/12).
At an event in Culver City Monday, the governor said the state would face deeper budget cuts to health care, education, prisons, public safety and local government if the measures do not pass (Zapler, San Jose Mercury News, 5/11).
Schwarzenegger said, "The way it is right now, severe cuts will happen."Â He added, "And it's important also for people to know this is not a scare tactic.Â This is just to let you know what could happen" (Rothfeld, Los Angeles Times, 5/11).
Because of the new budget projections, the governor on Thursday will release two outlines of proposals to deal with the state budget deficit: one dealing with a $21.3 billion gap if the ballot measures fail, and one for a $15.4 billion deficit if voters approve the measures (Sweeney, San Diego Union-Tribune, 5/12).
The release of the governor's revised budget proposal had been scheduled for May 28, but the governor said he wanted Californians to know what the options were when they headed to the polls Tuesday.
Schwarzenegger attributed the larger deficit projections to the recession, noting that California is expected to collect less revenue from personal income taxes this year than last year, something that has not happened in more than 70 years (Los Angeles Times, 5/11).
The governor urged legislators to take immediate action to bridge the budget deficit (Williams, AP/San Francisco Chronicle, 5/11).
Mac Taylor, California's nonpartisan legislative analyst, said, "The numbers are clearly within the ballpark that we were considering."Â He added, "What they've added in are some expenditure increases and a worsening economic and revenue picture since March when we had our last estimate.Â It's not surprising to us."
Opponents of the ballot initiatives dismissed the governor's announcement as a campaign maneuver (Sacramento Bee, 5/12).
Dave Fratello, spokesperson for the No on 1D and 1E campaign, said, "They clearly need to go back and come up with something else."Â He added, "The hope, or fiction, that this was going to solve the California budget was over in a couple of weeks, and the story is just getting worse and worse" (Yi/Buchanan, San Francisco Chronicle, 5/12).
Senate Minority Leader Dennis Hollingsworth (R-Murietta) said, "I don't think you're going to see any appetite in our caucus for taxes" (Sacramento Bee, 5/12).Â He said he agreed with Schwarzenegger's call for "immediate action, and that means some pretty painful cuts are going to have to be done" (San Francisco Chronicle, 5/12).
Hollingsworth said the state should cut funding for programs to the dollar amount used several years ago.
Senate President Pro Tempore Darrell Steinberg (D-Sacramento) also said that "deep and painful cuts" will be needed.
Steinberg and Assembly Speaker Karen Bass (D-Los Angeles) have said the tax increases remain a possibility, but Steinberg said he will not push for tax hikes as his first move toward balancing the budget (Sacramento Bee, 5/12).
Bass said, "I don't know how you close a $21 billion deficit."Â She added, "Everything is going to be back on the table" (AP/San Francisco Chronicle, 5/12).
"It's time for voters to send a message that the fiscal chaos in Sacramento must end," a Union-Tribune editorial states, recommending that voters reject propositions 1A through 1E on the special election ballot (San Diego Union-Tribune, 5/12).
On Monday, KQED's "The California Report" included a segment on propositions 1D and 1E (Myers, "The California Report," KQED, 5/11).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.