Adding Up Possible Budget Solutions Still Leaves State Short

Adding up potential budget solutions still leaves Gov. Arnold Schwarzenegger – and lawmakers — a sizable hole to fill in the revised version of his budget the GOP governor presents May 14.

The likely size of the gap between revenues and spending commitments that must be closed is likely to be around $22 billion.

In February lawmakers approved $1.3 billion in spending reductions that were signed into law by Schwarzenegger. He vetoed another $2.3 billion, including a more than $800 million reduction in prison spending.

Assuming those measures were signed and an additional $375 million in cost-saving measures still pending in the Legislature are passed and win a signature that budget hole – counting the savings from January – is roughly $4 billion smaller.

Schwarzenegger’s January budget balanced based on California receiving an additional $6.9 billion in federal funds. That number won’t be reached but, as of the first week in May, the state had secured $3 billion and, there’s optimism another $700 million or more could also materialize.

Subtracting that roughly $4 billion brings the problem down to $14 billion.

The GOP governor’s January budget contains a series of actions, which he says maintains the state’s financial support for public schools at current levels. Public school officials and advocates say it lowers spending on schools by more than $2 billion.

It is unlikely in an election year that lawmakers will suspend Proposition 98, the 1988 initiative whose formulas dictate state school spending and cut deeper into school spending, particularly after shorting schools more than $14 billion over the past two years.

Approving something akin to the governor’s proposal lowers the shortfall to $12 billion.

In his January budget, the GOP governor said that if federal revenues didn’t materialize at the levels he sought, he would postpone the implementation date of several tax credits and postpone restoration of several tax credits reduced to save the state money.

Doing so would save the state some $2.5 billion. The governor’s press secretary has said, however, the governor now doesn’t want to do that because the credits are helping businesses.

So where does the $12 billion come from? Through the week of May 10, the governor has been calling representatives of county and city governments and other interested parties to his office. He has provided them with no details of what his revised budget contains but has warned them it will be dire.

And since the governor and Republican lawmakers, whose votes are necessary to increase taxes, say no tax hikes will be considered that suggests much of the remaining $12 billion will be filled by spending cuts.

In his January budget, the governor proposed a variety of deep cuts in the state’s social services programs if federal funds didn’t reach the levels he sought. Among them are elimination of welfare and in-home care for the elderly. It’s likely he will include them in his revised budget proposal.

Democrats, however, will not countenance either of those proposals.

Senate President Pro Tempore Darrell Steinberg, a Sacramento Democrat, says he wants to find ways to shift programs off the state’s books and let local governments carry out the responsibilities – equipped with revenue to do so.

Among the programs local governments carry out on their own – with financial support from the state and federal governments are child welfare services, foster care and child protective services.

Sacramento conventional wisdom predicts a stalemate lasting deep into the summer.

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