Arnold to DC: Give Us The Money, Nobody Gets Hurt

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It may not quite have been a ransom note dressed up as a state budget, but Governor Arnold Schwarzenegger is making it clear that a whole lot of things Californians won't like will have to happen if the feds don't hand over the cash. And soon.

In a sense, the most notable thing about the 2010-11 budget proposal the Guv rolled out at midday may be that the eternally optimistic, 'I never admit defeat' Schwarzenegger is admitting that he needs a Budget Plan B. And as we now know, neither it -- nor the main 2010-11 proposal -- is pretty.

The budget plan, which first and foremost seeks to close a $20 billion gap stretched across the current fiscal year and the one that begins in July, hinges on almost $7 billion in help from the federal government. And in a way that's strikingly similar to the 2009 Capitol drama over the state's share of federal stimulus dollars, Schwarzenegger has included a 'trigger' mechanism... a plan that forces deeper spending cuts and fewer tax breaks if D.C. doesn't deliver.

Invoking the epic fight of his late in-law Ted Kennedy for national health care reform, Schwarzenegger said it doesn't matter that he's asked for more federal money before... and come up short. "I will be relentless to get money for California," said the governor. "It's our money. And I expect our congressional delegation, bipartisan delegation, to fight for California rather than the federal government."

That last part may have helped spark an afternoon call with reporters by U.S. Sen. Barbara Boxer, who distributed a memo put together by her staff that argues California is actually getting back more these days than it sends to the feds, as much as $1.45 by the Boxer staff's calculation in 2009. (You can read the analysis here.) "The governor is free to threaten people," said Boxer. "And if that's what he wants to do, that's what he wants to do."

The threat would be additional cuts made on July 15 if the federal money fails to materialize. They include: elimination of the entire welfare-to-work program CalWORKS, the entire In-Home Supportive Services (IHSS) program, the entire Healthy Families program, all new enrollment funds for the UC and CSU systems, more felons housed in local jails... and the list goes on.

But as we've noted before, the storyline of Schwarzenegger as "Collectinator" has, to date, gone nowhere. And economist Stephen Levy suggests the governor would be better off asking the feds for another stimulus package, and doing so with other governors in order to make the case that much stronger.

Schwarzenegger dismissed such a suggestion when I asked him about it today. "It's one time revenue," he said. "We're not looking for one time revenue. We're not looking for two times revenue. We are looking for fairness."

Not surprisingly, other parts of the governor's spending plan are being themselves attacked for a lack of fairness.

"The cuts proposed by the governor's budget will devastate the safety net to the point that it may not be able to sustain itself," said Carmela Castellano-Garcia of the California Primary Care Association. The spending plan returns to already trimmed down social services programs for more reductions.

Fairness is also a bone of contention for advocates of public transit and transportation. After the Schwarzenegger administration lost in court over gasoline sales tax proceeds being used to help balance general state expenses, they've come back with a plan that -- depending on your politics -- is either clever or cynical. That plan would completely eliminate the sales tax from gasoline, and replace it with a higher excise tax... none of which would go back to the transportation projects funded by the existing sales tax. The swap would ease up transportation project costs on the general fund and, according to the Guv's budget team, save drivers $976 million at the pump (the additional excise tax would actually be lower than the disappearing sales tax).

But what about those who don't drive, says Joshua Shaw of the California Transit Association? "What about the thousands of families who depend on public transit to get to work or to go out and buy food to put on their tables, the kids who need transit to get to school, or the elderly and disabled persons who rely on transit to access medical services?," he said in a statement.

And eliminating the sales tax on gas would have another effect -- one that you can be sure is going to get an awful lot of attention in the coming weeks: it would reduce current estimates for public school funding. That's because -- yes, it's a Proposition 98 thing -- less sales tax revenue for the state means less mandatory funding for K-12 schools and community colleges.

Now, flash back to Wednesday's State of the State speech where Governor Schwarzenegger said the following: "I will protect education funding in this budget."

A few Capitol observers noted at the time that "protect" might not mean the same thing as "not cut." And, they will now argue that they were right. The Prop 98 effect of the gas sales tax proposal was not lost on Senate President pro Tem Darrell Steinberg. "Despite scores of maneuvers and the shells moving back and forth over the little ball," he told reporters, "in fact, when you read the governor’s budget he calls for cutting education $2.4 billion."

Yes, it looks as though 2010 will see another chapter in the long-running saga 'What Is a Budget Cut and What Is Not a Cut?'

And there's much, much more in this budget proposal... including a plan to trim the budget of the federally court-appointed prison health care receiver by $811 million, controversial cuts to state employee pay, and a reemergence of the controversial offshore oil drilling proposal known as Tranquillon Ridge. (That one is particularly interesting, because it says the profits from the drilling project will be what pays for state parks... that's quite a fight, eh?)

This and a lot more will get chewed over quite a bit in the weeks to come. Today's event is only the opening gambit in the annual budget dance.

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About John Myers

John Myers is senior editor of KQED's new multimedia California Politics & Government Desk.  He has covered California politics for most of the past two decades -- serving previously as Sacramento bureau chief for KQED News and, most recently, as political editor for KXTV News10 (ABC) in Sacramento. He moderated the only gubernatorial debate of 2014, and was named one of the nation's top statehouse reporters by The Washington Post. Follow him on Twitter @johnmyers.
  • CAHC

    Californians can’t afford Washington’s healthcare reform. One study estimates that the average health insurance premium for a healthy young Californian would grow by more than $1,200. For a family of four in Los Angeles, premiums would increase by more than $9,150 a year.

    And there’s a special interest “carve-out” (read: back-room deal) that will raise Californians’ insurance premiums even higher. Remember all of those special deals the Senate made to pass the bill? One of them would exempt an insurance company in Michigan and an insurance company in Nebraska from paying a tax that the bill would charge to every other insurance company. It was authored by Senator Levin from Michigan. His largest campaign contributor is that same insurance company. And remember that the key vote to pass the bill was the senator from Nebraska.

    Guess what happens if those companies are exempt from paying the tax? Consumers in other states – like California – would have to pay more. In fact, more consumers in California than in any other state would pay higher premiums as a result.

    Let’s tell our Members of Congress to do reform the right way and get rid of special deals like the Levin Amendment.

  • Web Smith

    Arnold hasn’t been around long enough to recognize the entitlement game. That where the feds give you just enough of something to let you get by, but not enough to allow you to get ahead. In this way, they keep you dependent on and under the government’s thumb. Government-run health care will do the same. Everyone will get just enough health care to keep an uprising from happening, but everyone will not get enough health care and pay so much for what little they get that they will be broke and can’t do anything about it. This is the SOP for the IMF, world bank, and all other socialist operations around the world.

    Arnold should ask himself why is the 8th largest economy in the world forced to go to the federal government begging? The answer, of course, is that the feds are taking to much and whatever amount that they decide to give back will not be enough and would have been California’s money in the first place.