Tentative State Budget Proposed

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State Budget Agreement

Zach A. Williams questions Javier Panzar about the budget revision agreement between the Governor and State Legislature.

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After weeks of political infighting, top legislative leaders and Gov. Arnold Schwarzenegger reached a tentative agreement Monday on how to close the state's $26.3 billion budget gap.

The deal would make more than $14 billion worth of program cuts-including cuts to Cal Grants, CalWORKS and the Healthy Families program. However, these programs are not being eliminated completely, as Schwarzenegger proposed in May.

The state would also borrow $4.4 billion from local governments.

"That is a massive amount to take from local governments," said Alameda County Supervisor Keith Carson. "They already had to deal with closing gaps of their own."

The deal would make nearly $3 billion in cuts to the University of California and California State University systems.

While the budget's specifics have yet to be finalized, the few figures that have been released are already threatening the proposal's future.

A proposed $1.2 billion in cuts to state prisons is causing some Republicans, including Assembly Leader Sam Blakeslee, R-San Luis Obispo, to oppose the budget. They say the cuts will lead to an early release of inmates.

Other Senate leaders said concern about releasing the inmates is premature.

"That's not in the proposal, the early release is not in there," said Melanie Reagan, spokesperson for Senator Dennis Hollingsworth, R-Murrieta. "That is something that is going to be dealt with in August."

The Assembly and the Senate will vote on the proposal Thursday.

Cuts to UC, Cal Grants Expected

The proposal put forth would maintain funding for Cal Grants, a decision the UC applauds, said UC spokesperson Leslie Sepuka.

In May, Schwarzenegger proposed to completely eliminate the financial aid program.

The further cuts to the UC budget were not a surprise according to Sepuka.

"The gap in funding is what we anticipated," she added.

Before this agreement, the UC and CSU systems were bracing themselves for $2 billion worth of reductions. Sepuka said the university will have to wait until Thursday, when the budget is voted on and the details are made clear, to see the how the university will be affected.

State to Borrow County Funds

Many said the $4.7 billion the state plans to borrow from local governments will have a devastating effect on local services.

Some officials said borrowing from local gas tax revenue, which is meant to fund road maintenance, violates protections under state law.

Of the money the state plans to borrow, about $1.7 billion comes from local gas taxes, which, unlike the rest of the funds being borrowed, will not be paid back, officials said.

The California State Association of Counties plans to file a lawsuit against the state if the budget is signed by Gov. Schwarzenegger, according to Paul McIntosh, executive director of the association.

"We believe the actions contemplated in the proposed deal are unconstitutional and violate protections already under state law," McIntosh said.

The Alameda County Board of Supervisors voted unanimously to join the lawsuit, according to Carson.

The state plans on borrowing from three sources other than the gas tax: Proposition 1A funds, redevelopment funds and public health funds.

The county estimates it will lose $80 million in total, $35 million of which will come from gas tax.

"(This budget) is not fixing a problem," he said. "It's patch-working it and kicking that ball further down the road."

Mayor Tom Bates said although the cuts will hurt Berkeley, the city has prepared to take the damage.

"It's a sizable hit, but the state is in dire straits," Bates said. "The state has to decide whether it wants to cut public services to the bone or do they want to share the pain with cities."

Bates said the city will pool with other cities with good credit ratings and borrow to help fill budget gaps caused by state borrowing.

State May Stop Issuing IOUs

Now that a budget has been agreed upon, the state may soon stop paying its bills to state services with registered warrants, or IOUs.

"We need to see the details of the agreement before we can make determination on whether or not we can make it through the next three months without IOUs," said Garin Casaleggio, spokesperson for the State Controller's office.


Contact Javier Panzar at [email protected]

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