California lawmakers OK $2 billion in budget cuts

The Legislature today approved roughly $2 billion in budget cuts that will affect schools, healthcare providers and others as part of an effort to lower the state’s deficit and help avert a potential cash crisis.

The cuts followed Gov. Arnold Schwarzenegger’s call last month for emergency action to address California’s $14.5-billion budget gap. State revenues have been in such rapid decline that fiscal analysts warned California was in danger of not having enough cash on hand to pay its bills by this summer.

Among the hardest hit by the budget reductions voted on today are doctors who provide healthcare for the poor. Their reimbursement rates will fall by 10%. Activists say the rates are so low that many poor Californians can’t find physicians who accept Medi-Cal, the state’s healthcare program for the poor.

Also targeted are schools, which will lose $506 million. Lawmakers say the cut will not affect classroom instruction, an assertion that school officials dispute.

One group that emerged unscathed is yacht owners. Democrats had hoped to raise $26 million in revenue by closing a loophole that allows the boat owners, as well as owners of airplanes and recreational vehicles, to avoid paying sales tax by keeping their newly purchased vessels out of state for 90 days. Republicans in the Assembly blocked the proposal, saying it was a tax hike that would ultimately drive down yacht sales.

Today’s actions come as the Legislature’s chief budget analyst, Elizabeth G. Hill, prepares to release a report next week that many in the Capitol predict will show an even larger budget shortfall than currently projected – one that could wipe out the cuts made today.

“Today was the first taste,” Senate Leader Don Perata (D-Oakland) said of the reductions. “There is a lot of time ahead with a lot uglier issues.”

evan.halper@latimes.com

patrick.mcgreevy@latimes.com