Budget-Cutting Talks Targeting Popular Projects

The length of the California middle school year will remain the same, a desire to bolster a tax credit for poor seniors has been abandoned, and an elaborate plan to overhaul the state’s foster care system is being dramatically scaled back.

These are among the casualties of budget negotiations now taking place between Gov. Gray Davis and lawmakers as they undertake the politically unpleasant task of scaling back spending to add more than $1 billion to the state’s reserve.

Reports of dwindling revenues and warnings of a deficit in future years have prompted Davis to try to fill California’s emergency account with as much as $3 billion. Contributing to Davis’ decision is a combination of softening state revenues and the repeal of federal estate taxes, which is expected to cost California $500 million over the next two fiscal years.

But the decision to establish a more substantial budget reserve is a costly, difficult one, as it has forced Davis and lawmakers to drop many of the pet projects that they had championed earlier in the year.

For Davis, that means giving up--at least for now--a plan to extend the middle school year by 20 days, a move that will save the state $65 million during the 2001-02 fiscal year, which begins July 1. The governor also has signaled that he is prepared to walk away from a $5-million grant program designed to stir interest in math and science among disadvantaged young people.

The cuts are among $570 million in education reductions being considered by Davis. But even so, state spending on education is still set to rise by about $2.9 billion in the upcoming fiscal year compared to the current one.

Sen. Budget Chairman Steve Peace (D-El Cajon), however, warned that the half-billion-dollar cut could force the state to find an extra $1 billion for education in the 2002-03 budget year due to the way in which education funding laws are set up. That extra $1 billion, he added, could force cuts of existing programs such as providing insurance to the poor and paying for trial courts.

Davis is not alone in giving up on favored ideas. Senate Democrats have dropped for now their efforts to continue for another year an increase in a tax credit for low-income seniors. The plan carried a $265-million price tag.

As a result, a qualifying senior who received a property tax credit of $816 during the current fiscal year will see that amount fall to $326 in the upcoming one.

And a plan pushed by Assembly Democrats to reform the state’s foster care program is set to take a significant hit.

Assemblyman Tony Cardenas, the Sylmar Democrat who is chairing a six-member committee of lawmakers negotiating the state’s next budget, said he believes that spending on foster care could plummet from $300 million to about $30 million or perhaps even less.

“We’re having to cut that down quite a bit,” Cardenas said.

Those cuts are part of an effort to find an additional $1.5 billion in cash. That is because the Senate’s version of the budget, which negotiators are now working from, includes a little more than a $1.5-billion reserve.

All told, Davis is pondering reductions of more than $300 million in tax relief, $200 million in Health and Human Services, $90 million in the Department of Resources, $30 million in youth and adult corrections, and $35 million in general government.

Cuts proposed so far by Davis and lawmakers have triggered mixed reactions.

Patricia Yeager, executive director of the California Foundation for Independent Living Centers, warned that rolling back the tax credit for poor seniors would be tough for them to swallow.

“It’s just another nail in the coffin for seniors and people with disabilities who are struggling to pay their own power bills,” Yeager said. “Benefits are disappearing right and left and this is an example.”

Wayne Johnson, president of the California Teachers Assn., said he was glad that Davis appears ready to ditch his plan to extend the junior high school year--a proposal that failed to garner the support of teachers or lawmakers.

“Five hundred million dollars can be cut out of the education budget,” Johnson said. “We hate to see it happen, but it can be done.”