Cuts Will Be Both Deep and Broad

Times Staff Writers

From artificial limbs that Medi-Cal would no longer provide for the poor to road and transit improvements that Caltrans would not build for traffic-weary commuters, Californians will be getting less from their government as a result of the deep budget cuts proposed Friday by Gov. Gray Davis.

Hundreds of thousands of poor adults would lose health benefits, community college students would see the cost of attending class more than double, welfare checks would shrink and some state employees would have their pay and benefits cut.

The 3-inch-thick spending plan unveiled by the governor at a crowded Capitol news conference is filled with difficulties for people and programs, schools and colleges, cities and counties.

With California facing the worst budget crisis in a decade, Davis began his second term by proposing large spending cuts and increases in taxes and fees.

The governor said his proposed spending reductions would total $20.7 billion, or 60% of the budget gap he has projected for the next 18 months.

Though forcing about half a million adults off Medi-Cal, the giant state program that funds medical care for the poor, Davis spared the state's Healthy Families program, which provides health care for uninsured children. That program, one of the hallmarks of Davis' governorship, is one of the few that would grow.

Another place Davis didn't cut was the state prison system, which will receive $5.3 billion, near the current level.

The budget eliminates $1.6 billion in funding for highway and transit projects proposed by Davis in 2000 to relieve chronic traffic congestion in the state's crowded urban areas. Decisions on which projects would be delayed or scrapped are in the hands of state and local transportation officials, a Caltrans spokesman said.

Here is a look at the impact of Davis' proposals in various areas.

Health

Medi-Cal would serve fewer people, and those still in the program would get fewer services.

The cuts would reduce state spending on the program by $3.6 billion. The biggest losers would be adults enrolled in the program, as well as doctors and other health professionals who serve them.

This year Medi-Cal is serving 6.5 million poor people -- including 2.8 million adults -- and is projected to cost $29.2 billion, with the state spending $10.6 billion and the federal government paying the rest.

Many adults would no longer be eligible for Medi-Cal because they would no longer be considered poor enough. Those changes and new paperwork requirements are expected to push about 570,000 people out of the program.

Much of that decline would be offset, though, because the number of children enrolled in the program is expected to increase, and so is the overall number of poor people in the state. In the end, the net reduction in enrollment is expected to be 209,100.

For adults remaining in the program, the state no longer would pay for artificial limbs, optometry, hearing aids, physical therapy and hospice care, among other things.

Davis already had proposed eliminating coverage of dentistry, medical supplies and podiatry.

The benefit cuts would not apply to nursing home residents or children.

The reductions are expected to shrink overall Medi-Cal spending to $24.7 billion for 2003-04. The state's share would be $7 billion, according to the budget.

"We think that's pretty devastating," said Angela Gilliard, a legislative advocate for the Western Center on Law and Poverty in Sacramento. "It just seems like they're dismantling the Medi-Cal program for adults."

The California Medical Assn. held out the possibility of going to court to stop the cuts if they are approved by the Legislature. The governor's plan would slice reimbursements by 15%, which would save more than $1.4 billion annually.

"We simply won't have the resources to provide the kind of care that's needed," said Dr. Jack Lewin, chief executive officer of the medical association. "And many doctors will not be able to afford to stay in business."

Hospitals would be exempted from the cuts, as would certain rural and federally qualified health centers.

Welfare

Not since Republican Gov. Pete Wilson proposed welfare cuts in the early 1990s have recipients had to face the possibility of severe reductions in their monthly benefits.

Davis would trim payments to the needy by 6.2%, which would be deeper than the cuts approved by the Legislature under Wilson. That would mean a $42 drop in the maximum monthly benefit for a Los Angeles mother and two children who receive cash aid from CalWorks, the federal-state program designed to provide basic needs for poor kids and their families. Under Davis' plan, their total monthly benefits would fall from $679 to $637.

Welfare programs provide payments to more than 500,000 poverty-stricken families statewide and nearly 1 million poor people who are aged, blind and disabled.

For those who are aged, blind or disabled, average monthly payments would be cut by $49, dropping the benefits from $757 to $708.

Aid to the aged, blind and disabled comes through a federal program called Supplemental Security Income (SSI), but states can elect to contribute to it. Davis' proposed reduction is the maximum cutback allowed by the federal government.

"It's disturbing to see the depth of the cuts in this area," said Casey McKeever, an attorney and lobbyist for the Western Center on Law and Poverty. "Even though there are proposed tax increases on those in the upper-income brackets, I don't think there is an equivalent hardship on the wealthy. We hope the Legislature will think seriously about alternatives that do not exact this kind of pain on the poor."

Housing

In December, the governor had proposed moving roughly $500 million away from programs to build affordable housing and into the state general fund. The current budget proposes to move an additional $250 million, this time to help fund education.

But those who lobby for increased spending on housing said the passage in November of Proposition 46, the housing bond issue, will soften the blow.

"The good news is that the passage of the bond will provide funding for housing, despite the state's budget crisis," said Jean Ross of the California Budget Project.

Funding for shelters for the homeless would be cut by $1.3 million from last year.

The money Davis wants to move comes from redevelopment agencies. By law, they must set aside 20% of tax increments for affordable housing. Housing advocates say that money plays an important role in development because it can be used to pay for pre-development costs for which bond money cannot be spent.

K-12 Education

The state's public elementary and secondary schools would receive about $1.5 billion less next year than they did last year from the general fund.

The budget includes $28.2 billion in general fund revenue for the state's schools for the budget year beginning July 1. Last year, the state's general fund provided $29.7 billion for schools. The state's public schools enroll about 5.9 million students, a number that has been relatively stable.

The cuts probably would lead to layoffs, larger class sizes, less maintenance and fewer days of teacher training, local school officials said.

"It's going to be a difficult process for us to get through," said Jim Brown, superintendent of the Glendale Unified School District.

Davis' budget would give school districts more flexibility in how they spend money for programs that pay for such things as educational support for low-income children. But superintendents whose districts rely heavily on those programs said flexibility won't make up the difference.

"I know the governor has a real problem. I'm sympathetic," said Los Angeles Unified Supt. Roy Romer. "But I hope the Legislature looks at this so we don't take the biggest hit on the poorest kids."

Higher Education

At the state's community colleges, fees would more than double from the current $11 per unit to $24 per unit.

The fee hike, which would be the first for the state's two-year schools in a decade, would apply to about 70% of the state's 2.4 million community college students, according to officials with the Community College League of California. Community colleges waive fees for their lowest-income students.

In addition to the fee increases, the budget would cut spending on most community college programs by 10% -- or $524 million -- from the level approved last summer. That would reduce spending per full-time student from $4,684 to $4,026 next year. The colleges would lose $275 million from spending for the current year.

Community college officials warned that the cuts would fall hardest on the poor and minority students.

"Eighty percent of the students who come to the community colleges are students of color, and now you're going to further marginalize those students from accessing higher education," said Kevin Ramirez, president of the statewide association of community college presidents and the head of Sierra College in Rocklin. "I think it's unconscionable."

The California State University and University of California systems would have $700 million cut from their state funds. Students would also face an array of higher fees.

At the 23 Cal State campuses, in-state undergraduate student fees would go up $394 to a total of $1,968 annually. That comes on top of a 10% increase approved last month beginning in the current school year. Graduate students at Cal State would have a 20% fee increase, or $348, up to $2,082 annually, in addition to the 15% boost approved last month.

At UC campuses, in-state undergraduate students would pay an additional $795, bringing their systemwide fees to $4,629. Graduate students would pay an additional $855, bringing their systemwide fees to $4,869.

UC and CSU students pay additional fees that vary from campus to campus.

State Workers

The budget would eliminate 1,900 state jobs, most of which Davis says he hopes to achieve by layoffs.

At the same time, those who keep their jobs could have their pay cut, and employee unions will be asked to make concessions. Davis said he expects to save $500 million by renegotiating union contracts, and he threatened additional layoffs if unions balk at givebacks.

At least one union, Service Employees International Union Local 1000, was not swayed by the threat.

"We don't intend to entertain any givebacks until the Legislature and the governor deal with revenue issues," said Jim Hard, the union's civil service division director, who complained that there were not enough tax hikes for the rich in the governor's budget.

Transportation

The budget cuts could cost Southern California up to $1 billion in transportation funding and jeopardize billions more in state and federal funds, regional experts said.

At a meeting of the Southern California Assn. of Governments, budget experts warned that the cut in transportation funds could hamper the region's ability to meet federal air-quality standards.

According to federal law, if those standards are not met, the region could lose an estimated $8 billion in state and federal transportation funds over the next five years.

"We are in a Catch-22 situation," said SCAG Chairman Hal Bernson, who is also a Los Angeles city councilman.

Local and regional lawmakers said they will consider several alternatives to generate new local transportation money. Those options include asking voters to increase sales or gasoline taxes or approve bond measures.

"I don't think we have a choice," Bernson said.

The cuts will also hit mass transit. MTA officials said all of the agency's big-ticket planned projects are threatened with delays of at least two to three years because of the cuts. Agency officials hope to secure money for a few high-priority projects that are close to becoming a reality, including the Eastside light-rail line, a roughly $900-million, six-mile traveling six miles, and the Chandler Busway, a $285-million, 14-mile roadway dedicated to buses in the San Fernando Valley.

David Yale, director of regional transportation planning for the Metropolitan Transportation Authority, said Los Angeles County will lose at least $500 million in transit funds over the next 18 months.

Yale said that if the cutbacks remain in place through 2009, the county would lose $2.3 billion in state funds over that period -- roughly one-third of its total transportation program.

"This is real bad," he said. "This is something you go through every 10 years; it's not a good thing."

In Orange County, officials say the cuts would take about $265 million from road and rail projects, delaying several major projects and canceling street improvements in many cities. Officials say they are assessing which projects will have to be slowed down to accommodate the cuts.

Environment

Parks and environmental spending emerged largely unscathed, but to manage that feat, Davis proposed siphoning nearly $2 billion from two bond measures recently approved by voters: Proposition 50, a water bond issue, and Propositon 40, a parklands measure.

Money from the bonds would be used to help pay for programs such as local water quality grants, wetlands conservation and river parkways.

Environmental groups did not object to the bond money being tapped, given the gravity of the budget mess, but they wanted to ensure that the money was used to follow the voters' basic intent.

"We want to take a close look at the appropriateness of using Prop. 50 and Prop. 40 money in the budget," said Ann Notthoff, California advocacy director for the Natural Resources Defense Council. "I am sure some of it makes sense, but some of this may not match the spirit of what voters approved."

Davis also proposed raising fees, including annual fishing and hunting licenses, which would go from $30 to $33.50, yielding $4 million in new revenue.

Additionally, Davis is proposing to increase a number of regulatory fees on polluters and users of toxic products that require government regulation.

The Department of Pesticide Regulation would be funded entirely by fees on the sale of pesticides and pesticide use licenses, rather than general tax revenues. Environmentalists have long sought that.

Davis also is proposing to increase fees on stationary sources of air pollution such as refineries and power plants. The budget estimates the increases will yield $10 million.

Davis had already unveiled plans to raise an array of state park fees to raise $20 million.

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Times staff writers Miguel Bustillo, Virginia Ellis, Duke Helfand, Hugo Martin, Stuart Silverstein, Jocelyn Stewart, Kurt Streeter and Dan Weikel contributed to this report.

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