A state budget panel Monday rejected some of Gov. Arnold Schwarzenegger’s most extreme proposals to close the state’s deficit through cuts to government programs as the leaders of the Assembly and Senate announced their own plans for billions of dollars in additional taxes.
The joint legislative committee nixed Schwarzenegger’s plans to borrow $1.9 billion from local governments, close adult day-care centers and eliminate a health insurance program for low-income children. The panel voted to shave $70 million from the Healthy Families program that serves those children, but that cut, like most others the members agreed on, was significantly smaller than the governor’s.
Committee members also said no to cutting off state funds for roughly 220 parks, proposing to keep them open with a new annual $15-per-vehicle fee on California drivers.
At the same time, Assembly Speaker Karen Bass (D-Los Angeles) announced that she wants $1 billion in new taxes on the tobacco and oil industries. And Senate President Pro Tem Darrell Steinberg (D-Sacramento) said Democrats in his house will push next week to suspend $2 billion in corporate tax breaks that were passed in February but have not yet taken effect.
Both leaders said the revenue from such moves would soften the blow for the state’s neediest, who rely on services that will certainly be reduced as the Legislature looks for ways to plug a projected $24.3-billion shortfall.
“Would you rather take 900,000 kids off the healthcare rolls or delay a corporate tax break?” Steinberg said in an Internet question-and-answer session with Californians on Monday evening.
Bass said she expects the Legislature to take “a balanced approach” combining new revenue and service cuts.
“The cuts will be deep and painful,” she said, “but we will not eliminate basic safety net programs.”
Bass said a 9.9% tax on oil pumped from California land is “absolutely on the table.”
Democrats are also eyeing possible tax hikes on tobacco products and liquor, though they did not provide details.
Schwarzenegger and GOP lawmakers, some of whose votes would be needed, have said they would not support new levies to balance the budget.
Schwarzenegger’s spokesman, Aaron McLear, said Monday that the governor was not prepared to go along with the proposals to raise taxes or roll back corporate tax breaks, and he said the legislators’ efforts at cutting state programs so far have been insufficient.
“They are nowhere near solving the $24-billion deficit that the state faces,” McLear said.
The jockeying comes as California faces the prospect of being unable to pay all its bills as of July 28, according to Controller John Chiang. Members of the panel, which includes both Assembly and Senate members, said they hope to complete their work and send a budget plan to the full Legislature for approval within the week.
Though lawmakers have raised the possibility of resolving only part of the deficit immediately and addressing the rest later, Schwarzenegger has insisted that they send him a plan to close the entire shortfall.
Republicans on the committee criticized the dominant Democrats for not tackling the full deficit.
“We’re falling well short,” said Assemblyman Roger Niello (R-Fair Oaks).
Schwarzenegger had said that eliminating the Healthy Families program would save roughly $368 million. The panel’s proposal for a $70-million reduction in the program says panel members hope charitable donations will make up the difference.
The governor proposed shuttering any state parks that could not generate enough in visitor fees to operate without government money. Niello said Republican votes for the higher car fees the committee wants instead are about as likely as the “survival of a scoop of ice cream on the pavement in the middle of July.”
“This is our best effort to save the parks,” countered Assemblywoman Noreen Evans, the Santa Rosa Democrat who chairs the joint budget committee. “If the Republicans want to close the parks, then the Republicans want to close the parks.”
Schwarzenegger would eliminate Adult Day Health Care programs, a $170.5-million savings. But the panel restored much of that money, lowering the savings to $26.8 million. Cutbacks to a handful of AIDS/HIV education, prevention and treatment programs were lowered by roughly $50 million, to $33.5 million.
The lawmakers agreed with the governor’s proposal to shift $336 million away from transit programs to the state’s general fund. And they supported his one-year suspension of state payments for an open-space program that gives property-tax exemptions to certain landowners. Under the program, the state reimburses counties, mostly in rural areas, for the exemptions. But counties would be on the hook for the $34.7-million tab in the fiscal year that begins July 1.
The panel also agreed to reduce a state requirement that local governments keep shelter animals alive for six days before euthanizing them, shortening the mandate to three days for a projected savings of $25 million.
The lawmakers rejected Schwarzenegger’s proposals to save $28 million by indefinitely suspending a state law requiring local governments to give absentee ballots to any voter who requests one and to maintain lists of permanent absentee voters. And they dismissed his plan to save $14 million by putting on hold another law requiring local officials to intervene in child custody disputes, including the recovery of abducted children.
Meanwhile, on Monday evening Steinberg announced that he would voluntarily cut his salary by 5%. He urged all other legislators to follow his lead.
“We have to demonstrate we will share the sacrifice, share the pain as well,” he said. Steinberg’s salary is $133,639 a year.
Times staff writers Eric Bailey, Patrick McGreevy and Michael Rothfeld contributed to this report.