Democratic state lawmakers said during a Capitol hearing Friday that government cuts would hurt the economy by eliminating public sector jobs, while Republicans asserted that tax increases would prolong the state's woes by deterring consumer spending and business investment.
All the while, nonpartisan Legislative Analyst Mac Taylor and Department of Finance Deputy Director Ana Matosantos warned that lawmakers can't afford months of debate because the current year's $11.2 billion budget shortfall becomes harder to close each day.
In the first public discussion of Gov. Arnold Schwarzenegger's latest budget proposal, Democrats and Republicans in the Assembly Budget Committee found little agreement on policy, other than to acknowledge that the state's fiscal situation is in dire straits.
"It's been a very depressing morning this morning," said Assemblyman Kevin Jeffries, R-Lake Elsinore, summing up two hours of testimony.
The Republican governor last week proposed a mix of $4.7 billion in tax increases and $4.5 billion in spending cuts, and legislative leaders met this week behind closed doors to negotiate ways to close the state's latest revenue shortfall. California, like other states, anticipates a severe drop in tax revenues due to the plunging stock market, job losses, home foreclosures and a lack of consumer spending.
While the Department of Finance last week projected an $11.2 billion revenue shortfall in the current budget year, Matosantos said it stands to grow worse because officials have yet to account for increasing demand for state programs in the declining economy.
Lawmakers took no action Friday, instead interspersing questions with their own opinions on the governor's plan.
Democrats often portrayed state spending as economic stimulus, asserting that education dollars pay for jobs, while payments for elderly, disabled and blind people go back into the economy. They said proposed state worker furloughs also would prove detrimental.
"Why in this environment of stimulus … would we consider proposals that cut employment and reduce spending for schools?" asked Assemblyman Sandré Swanson, D-Alameda.
Other Democrats urged the state to preserve funding for programs for which the federal government matches funds, such as Medi-Cal.
Republicans, meanwhile, said the state should focus on making existing programs more efficient and eliminate optional Medi-Cal benefits before considering new taxes.
Assemblyman Mike Duvall, R-Yorba Linda, also criticized Schwarzenegger's proposed 1.5-cent sales tax increase, as well as the governor's plan to extend that tax to amusement parks and other services.
"To raise the fee for the parks at Disneyland, at Knott's Berry Farm, at Magic Mountain, by $8 to $10, is going to have the biggest adverse effect I can ever believe," he said.
Call Kevin Yamamura, Bee Capitol Bureau, (916) 326-5548.
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