Schwarzenegger budget plan would divert gas taxes to help close gap

More than $828 million in gas taxes that is supposed to go to public transportation projects would be diverted to help bail the state out of its financial problems under a new spending plan Gov. Arnold Schwarzenegger is set to unveil this afternoon, according to people briefed on the proposal who were not authorized to speak publicly on the issue.

To close a $17.2-billion budget shortfall, Schwarzenegger also will propose even deeper cuts to healthcare for the infirm and for legal immigrants, as well as for welfare recipients, than he did in his initial budget plan in January.

His revised budget would:

* Restrict full in-home supportive services for seniors and people with disabilities, and cut the pay of the service workers to the minimum wage. Only the most severely impaired would get aides for household tasks, although in-home medical assistance would continue.

* Eliminate California’s $111-million program of healthcare for legal immigrants, and pare back the healthcare provided to impoverished people who have been in the country for five years or fewer. That would save $87 million.

* Eliminate cost-of-living increases for disabled people in the supplemental security income program, part of the Social Security system, with the state keeping $109 million the federal government is providing to California.

* Cut welfare grants under the Cal-Works program by 5% instead of providing a cost-of-living increase, saving $187 million.

The gas taxes Schwarzenegger wants to keep are a product of the higher oil prices Californians have been paying at the pump. The money is intended to improve public transportation, but the state in the past has rerouted the funds for such things as bond payments and school transportation for students.

In his new budget plan, which would need approval from the Legislature to be enacted, Schwarzenegger would ask voters for approval to borrow $15 billion over three years against future profits from the state lottery. The governor wants lawmakers to agree that if the electorate were to reject that idea in November, the state’s sales tax would automatically rise by 1 percentage point. The sales tax could remain in effect for as long as three years unless the state’s financial balance was restored.

Schwarzenegger backed away from his original proposal to close 48 state parks and let tens of thousands of low-risk prisoners out early. Park users pay fee increases of $1 or $2 instead.

And he is proposing to increase school funding by $1.8 billion, enough to meet the minimum required under law.

Healthcare advocates castigated Schwarzenegger for targeting medical care at the same time he was yielding to groups with more political clout such as teachers unions, park users and anti-crime activists. Some said it was particularly wrong given that Schwarzenegger has made expanding healthcare a priority of his second term.

“We had started the year working with the governor and we all had high hopes of passing healthcare reform and increasing access, and it’s a surprise to us that this is the first item that would be on the chopping block,” said Annelle Grajeda, president of the California state council of the Service Employees International Union, which helped Schwarzenegger get his healthcare plan through the state Assembly last year, only to see it defeated in the California Senate.

Michael Herald, legislative advocate for the Western Center on Law and Poverty, called the proposed cuts “callous and cynical.”

“The governor has declared war on the poor today,” Herald said.

 jordan.rau@latimes.com

Times staff writers Patrick McGreevy and Evan Halper contributed to this report.