Gov. Uses Veto Pen in Signing Budget

After using his blue pencil to nix a number of healthcare, environmental and schools programs, Gov. Arnold Schwarzenegger on Monday signed the state budget, putting in place a spending plan with no new taxes and limited borrowing.

The approval, which came 11 days into the new fiscal year, will allow the state to continue making billions of dollars in payments to schools, community colleges and vendors doing business with the state.

The signing followed an announcement by Moody’s Investors Service that it was moving California’s credit rating up a notch, though it stayed below average. Moody’s said a factor in the upgrade was the decision by the governor and lawmakers to scrap a plan to balance the budget with $1.7 billion in new borrowing.

But the upbeat news from Wall Street was dampened by warnings from budget analysts that state expenses are projected to continue growing much faster than revenues, leaving the state with an estimated shortfall of $7.5 billion in fiscal 2006-07.

Before signing the $117.3-billion budget into law, Schwarzenegger closed enrollment in a program that provides prostate cancer treatment to the poor, canceled plans to hire dozens of new game wardens and blocked the purchase of $20 million in educational materials for students learning English.

The governor also used his veto authority to kill a controversial labor studies program at the University of California that conservative groups have wanted axed for years.

“This budget is the result of hard work, a lot of negotiations and a lot of compromises,” Schwarzenegger said at a signing ceremony in the Capitol rotunda.

He called the document “a great budget,” one that is fiscally responsible and compassionate.

“It serves the needs of our children, the elderly and the poor, and everyone else that needs our help,” the governor said.

The 93 items he cut cost $190 million. Some supporters of those programs were shocked to learn the news.

“It comes as a complete surprise to me,” said Dr. Mark Litwin, a UCLA professor of urology who runs the statewide IMPACT prostate care program. The governor’s cut will allow the program to continue treating the 341 patients already enrolled, but the 104 patients on the waiting list will be denied access.

“This is effectively a death sentence for those men,” Litwin said. The low-income patients do not have health insurance and are not eligible for state or federal subsidized healthcare programs. “They have no other place to turn,” Litwin said.

In his veto message, Schwarzenegger said he was cutting the program because too much of the money spent on it -- 45% -- was going to overhead and not to direct patient care. Administration officials said prostate cancer patients turned away from the program would be able to receive treatment in county hospitals.

Litwin said the administration is misinformed. He said the program’s overhead is 15%, and that most counties do not have the resources to care for the people denied access to IMPACT -- Improving Access, Counseling and Treatment for Californians with Prostate Cancer.

The University of California labor studies program has been tagged “Union U” by conservative groups. The governor proposed cutting it last year, but in final budget negotiations agreed to keep it in place.

Democratic leaders said the governor had pledged to do the same this year.

“We did not bring up too many things, but that was one of them,” said Senate Leader Don Perata (D-Oakland). “I thought we had an understanding.”

Administration officials denied any such deal was made.

Labor groups expressed outrage at the governor.

“The governor has shown again how anti-worker he is,” said Art Pulaski, secretary-treasurer of the California Federation of Labor, who noted that the state’s business schools were not cut. “Getting the next campaign contribution from his anti-worker supporters is more important than the changing needs of California’s workers.”

The governor’s veto message on the item was brief, saying simply that the state could not afford to continue funding the program in these lean times.

Environmentalists, meanwhile, were taken aback by some of the $24 million in cuts made to programs they support.

The governor slashed $5 million intended to pay for 40 new game wardens. He cut $4 million from salmon and steelhead trout restoration projects, and eliminated a $3-million program to keep open fish hatcheries that are in danger of closing.

“He calls himself a green governor, but when he had a chance to prove it, he fell short,” said Bill Allayaud, state director of the Sierra Club.

Brian Stranko, executive director of the nonprofit Cal Trout, which works to maintain the state’s fisheries, called the cuts “a serious setback for recreational fishing and recreational projects throughout the state.”

The governor wrote in his veto message that the state needed the money from those programs to help California avoid future deficits.

Regarding the warden positions, the governor wrote, “While I am supportive of enforcing California’s Fish and Game Code, I am unable to concur in this specific augmentation because of the need to ensure a prudent reserve for economic uncertainties.”

The governor also erased from the budget a plan to use $10 million in transportation money to landscape highways, protect urban forests and construct roadside bike trails. He said that though preserving open space is “extremely important,” the program “is not the best use of scarce transportation funds.”

One of the biggest cuts in the veto package was the $20 million for materials for English learners, which the Legislature wanted to add to $30 million set aside for that purpose in last year’s budget. Administration officials said he eliminated it because the $30 million remains unspent.

Schwarzenegger also took out of the budget $1.2 million for the hiring of 14 new tax investigators to go after cheaters. The investigators would have been assigned to collect payments from businesses and individuals that owe the state more than $15,000.

Tax board officials say there are 10,000 such cases. Budget analysts projected that the investigations would result in payment of $4 million in back taxes and penalties to the state each year.

The governor wrote that he is “concerned that this program might result in charges against persons who innocently failed to recognize that they had taxable income.”

The budget Schwarzenegger signed was the earliest in five years, largely because of a tactical move by Democrats in the Legislature, who dropped their demand that it include $3 billion that schools say they are owed under an agreement with the governor last year.

The Democrats, who say they will fight for the schools money outside the budget process, feared that a delayed spending plan could drive voters to support measures on the Nov. 8 special election ballot that would restrain state spending and otherwise curtail lawmakers’ powers.

On Monday, the governor expressed hope that Democrats would work with him to avert a showdown on those measures in November.

“No single budget can fix a broken system scheduled to put our state into a deficit year after year,” Schwarzenegger said. “We need budget reform to fix our broken system. Let’s keep our momentum going by working together to reform the budget once and for all.”

Should the governor and Legislature reach agreement on spending and other issues, lawmakers could vote to place the compromise package on the ballot in the form of propositions.

The governor presumably would then abandon his support of the original measures and campaign with Democrats for the new ones.

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Spending cuts

These are among the expenditures that Gov. Arnold Schwarzenegger cut from the state budget he signed Monday:

$20 million for educational materials for children learning English

* $20 million for local governments to mitigate the impact of Indian casinos

* $10 million in grants that local governments could use for highway landscaping, urban forestry programs and construction of roadside bike trails

* $5 million for the hiring of about 40 new game wardens

* $3.8 million for a labor studies program at the University of California

* $3 million for new patients in a program to treat prostate cancer in low-income Californians

* $3 million for the operation of fish hatcheries

* $2 million to help metal-plating factories upgrade their environmental protections

* $1.2 million to hire 14 tax investigators who would target misdemeanor tax cheats

* Authorization for the city of Maywood to use an unspecified amount of state money to buy land for a riverfront park

Source: California Department of Finance

Los Angeles Times