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Daniel Weintraub

California Insider

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« A bond is not a tax | | The Schwarzenegger plan »
November 25, 2003

Ugly cuts -- Round One

The governor’s first list of cuts – his first list – is out and the reaction is predictable, and understandable. Schwarzenegger may have shied away from cutting food for guide dogs, but the stuff he is willing to do demonstrates how ugly the situation is for California right now. He wants to cut reimbursements to doctors who care for the poor by 10 percent, a move that the medical profession says would prompt more doctors to close their doors to Medi-Cal patients and possibly increase the public’s cost for emergency room care. He wants to take away homecare services to the aged, blind and disabled, which advocates say would force more of those clients into nursing homes, driving up the state’s cost for that service. And he wants to freeze enrollment in state programs, including Healthy Families and aid for the developmentally disabled, that have been entitlements until now. He also has cuts for transportation and higher education which, while not matters of life and death, represent setbacks for the state’s future economic growth. All of this and more to cut just $2 billion next year – or half the $4 billion taxpayers will save from the rollback in the vehicle license fee. Even if the Legislature accepted every proposal, and early reaction suggests that is very unlikely, Schwarzenegger would still have to do this six more times, with deeper and deeper cuts, if he is to balance next year’s budget with spending reductions alone. He is facing a $14 billion gap between projected spending and revenues. This gets him one-seventh of the way there – and that’s assuming he can find enough cuts in this year’s budget to pay for the first installment of his car tax rollback. But the list should also be sobering for Democrats in the Legislature. They want a tax increase, to be sure. But with a $14 billion gap, they would need more than $12 billion in tax hikes to avoid cuts at least this deep. Say that somehow, the political winds suddenly shifted and Democrats won approval of an $8 billion tax increase. Probably fanciful, but indulge me. They would still need Schwarzenegger’s $2 billion in cuts and $4 billion more. Something has to give. Here is the Bee story on the proposal.

 
 

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