State budget proposal projects enough to cover spending without
significant borrowing
By Tom Chorneau, Associated Press Writer
Sacramento – California’s tax revenues are surging ahead of expectations, giving an election-year jolt to the state budget and providing more money for public schools, health services and higher education, according to Gov. Arnold Schwarzenegger’s budget proposal.
The Republican governor revealed a $125.6 billion spending plan Tuesday for the 2006-2007 fiscal year that does not raise taxes while providing a 7 percent boost in spending over the current fiscal year.
The plan also marks the first time in several years that the state projects enough tax revenue to cover spending without significant borrowing, a reversal from budget deficits that reached into the billions before Schwarzenegger took office.
The governor’s budget proposal includes $97.9 billion in general fund spending and $25 billion in spending from special funds. The rest of the spending, $2.7 billion, is to repay bonds.
Among the highlights, the governor’s spending plan:
– Does not raise taxes.
– Reduces the state’s structural deficit from $16.5 billion when Schwarzenegger took office in 2003 to $4.7 billion in the next fiscal year.
– Repays $1.7 billion the governor says is owed to public schools.
– Eliminates fee increases at colleges and universities.
“As far as the current budget is concerned, we made a real effort to present a really good and responsible budget that means we are going to reduce our structural deficit,” Schwarzenegger said.
Assembly Speaker Fabian Nunez, D-Los Angeles, said he was concerned about a proposed $199 million cut to welfare programs, as well as plans to remove cost-of-living adjustments for some public-assistance programs.
“Over the past several years, we balanced the budget on the backs of the disenfranchised, the poor and the disabled. We are not going to do it this year,” Nunez said.
The structural deficit results from the state spending more money each year than it takes in. The problem in recent years is largely the result of decisions the state made in the good economic times of the late 1990s to expand services – especially education and health care – that tax income could not sustain. In some cases, the state was mandated to support the expanded programs. In others, the Legislature lacked the political will to make cuts.
As with previous budgets, the 2006-2007 plan proposes to spend more – $97.9 billion – than the state expects to receive – about $91 billion. But Schwarzenegger is able to avoid significant cuts because of an unexpected $7 billion in tax revenue the state is currently collecting.
That allows him to boost funding for education, road improvements, health care and other programs in the fiscal year that begins July 1.
Schwarzenegger proposed a $4.3 billion boost in funding for kindergarten through 12th grade education and community colleges, boosting per student spending to its highest level ever in California – $11,000.
Education groups have said they will seek even more money once the budget gets submitted to lawmakers, yet the increase has succeeded in partly defusing some of Schwarzenegger’s most vocal critics.
Education groups attacked Schwarzenegger last year and they claimed the governor failed to repay billions of dollars educators said he owed to public schools.
Education spending, from K-12 to four-year public universities, accounts for 52.2 percent of this year’s budget.
Students at California State University and University of California campuses approved of Schwarzenegger’s plan to halt a series of recent fee increases that were prompted by a deal university administrators reached with Schwarzenegger.
The governor also tempered fears that he would neglect spending on social services as he sought to placate education groups with a huge spending boost.
His budget proposes spending $72 million to enroll more children in the Medi-Cal and Healthy Families programs. The additional money is expected to provide medical services to about 300,000 uninsured children over two years.
By proposing increases in school and health funding, Schwarzenegger seeks to avoid an extended budget confrontation with the Democrats who control both houses of the Legislature. Such a skirmish could complicate his re-election campaign and distract him from pushing the $222.6 billion public works spending plan he announced last week.
That plan is separate from the state budget proposal and seeks to raise money over a 10-year period to repair California’s freeways, transit systems, levees, schools and government buildings. As part of that plan, Schwarzenegger wants voters to approve about $25 billion in bonds this year.
Budget at a Glance
Some details from the budget plan released:
Winners:
– Education: Proposes a record $54.3 billion for kindergarten through 12th grade education and community colleges. Would provide $1.7 billion more than is required under the Proposition 98 funding guarantee and would increase per student spending to nearly $11,000 a year.
– Proposition 49: After-school programs approved by voters in 2002 will receive $428 million, the first funding ever for the program.
– Public Health: Proposes $170 million aimed at providing health care over the next two years to 300,000 children that are now uninsured. The budget proposes $72 million to help counties and state agencies enroll children into public health care programs and another $100 million to help pay for the medical care.
– Transportation: Provides $1.2 billion to fully fund Proposition 42, a measure that dedicates a portion of the sales tax on gasoline for highway improvements. The governor also proposes $920 million to repay a loan taken from the same fund.
– State universities: Funds the UC and CSU systems without fee increases that would have cost students a combined $130 million next year.
Losers:
– Welfare Recipients: Delays a cost-of-living increase in payments to 1.2 million blind, elderly and disabled residents.
– Childcare: Cuts $199 million from childcare programs aimed at helping welfare recipients returning to the work force.
– Education: Even with the additional money schools will receive, educators say they are owed $4 billion more. They also are concerned they could lose another $500 million because of the way the administration is proposing to account for the Proposition 49 after-school programs.
