Davis Cuts, Shifts Funds

By Evan Halper

March 19, 2003 12 AM PT

Times Staff Writer

SACRAMENTO —

Gov. Gray Davis signed into law on Tuesday a $3.3-billion package of program reductions and fund shifts that will affect several government services over the next four months, hitting education hardest.

The bill package represents the first significant patch that lawmakers have been able to make in a budget hole estimated to be as large as $35 billion through spring 2004. Davis called the cuts a down payment on balancing the budget, and stressed that many more difficult reductions will have to be made in coming months.

“These budget cuts are necessary to begin solving our budget shortfall,” Davis said Tuesday night. “There is still difficult work ahead, but I commend the members of the Legislature for taking this important step.”

The cuts he signed Tuesday include a $2.3-billion reduction in education spending. Lawmakers targeted education first because it accounts for nearly half the state budget, and if funding is not reduced before summer, they will be forced to raise education spending substantially next year.

The education funding formulas enacted through Proposition 98 base the minimum allotment the state must give to schools on education spending in the prior year.

The bills include hundreds of items, ranging from holding off on a $1,000 repair at the California State Library to a permanent deferral of $1.1 billion in across-the-board spending for K-12 schools. Water-quality programs will be scaled back in the current year. So will coastal preservation and emergency-service earthquake programs, to name two.

A significant portion of the funds being cut in those and other areas were allocated but never spent because the jobs they were to pay for went unfilled.

Many of the reductions are not cuts at all, but funding shifts that allow lawmakers to delay spending.

The K-12 schools deferral is an example of such a shift. Lawmakers will hold onto that money until July so it falls into the next year’s budget. The state captured $66 million by moving money for several environmental programs out of the general fund and paying for them instead with bond revenue from voter initiatives.

The bills the governor signed also allow the state to “borrow” $100 million in transportation money to help close the budget gap, on condition that the funds will be replaced later.

Republicans said that the reductions are far too little, and that lawmakers are way behind where they should be in bringing California into the black.

“It is a step, but a very small step,” said Senate Budget Committee Vice Chairman Dick Ackerman (R-Irvine). “We need to start addressing the serious financial condition the state is in. The governor needs to impress on the Democrats the urgency of the situation.”

Ackerman said these first cuts were the easy ones, and the job gets a lot harder from here. “Half of these are fund shifts and accounting gimmicks,” he said.

Democrats, however, say the actions set the stage for several more billion dollars in reductions next year, by changing funding formulas and suspending certain programs indefinitely.

The governor had called on legislators to produce nearly double the amount of current-year reductions that were in the bills that landed on his desk last week. But many Democrats said the cuts proposed by the governor were simply too hard on the poor. They also refused to make more cuts while Republicans continue to oppose any tax increases.

Davis has proposed $8.3 billion in new taxes, including raising the sales tax by 1 cent, increasing levies on tobacco and raising the income tax rate for high earners. Senate Republicans have called instead for rolling a large part of the state’s debt into 2005, enacting a spending freeze and cutting all government programs by at least 7%.

Schools, looking ahead, already have felt the pain of the budget cuts Davis approved Tuesday. Layoff warnings have gone out in several districts. And funding for various academic programs is being reduced.

In addition to a reduction in general funding to school districts, money from the state targeted for school libraries, textbooks, after-school tutoring programs, career education exams and mentoring for new teachers is cut in the bills.

Higher education also took a hit. Community college funding is being reduced by $141 million. The California State University and the University of California systems will lose about $60 million each.

One budget action lawmakers approved but Davis vetoed was a plan to save $70 million by granting work credits to more prisoners, allowing their release up to 27 days early.

Davis vetoed the bill a week after 11 Democrats who had previously voted for it asked him to kill the measure because they had not known that it would have allowed early release of people convicted of some types of crimes such as felony stalking and elder abuse.

The bills the governor did sign, however, include at least $7 million in cuts to the Department of Corrections.

Several of the budget actions involved state environmental programs. The bills include an increase in the fines that air and water polluters will pay, raising $23 million.

“It is only fair that those who contribute to California’s air and water pollution bear a greater share of the cost of regulatory activities to achieve clean, healthful air and water quality,” Davis wrote in his signing message.

Fees for using state parks will be going up as a result of the budget actions, and $58 million in unspent local flood-control money is being taken back by the state to help cut spending.

Times staff writer Nancy Vogel contributed to this report.

(BEGIN TEXT OF INFOBOX)

Budget highlights

Included in the $3.3-billion budget bill:

K-12 Education

* $1.2 billion withheld until next year

* $103 million cut from instructional materials grants

* $11.6 million cut from school library materials program

* $21.7 million cut from beginning teacher training

Higher Education

* $141 million cut from community colleges

* $59.6 million cut from Cal State universities