By Evan Halper, Jeffrey L. Rabin and Nancy Vogel
Times Staff Writers
November 25, 2003
SACRAMENTO — Gov. Arnold Schwarzenegger is expected today to propose
$3.8 billion in budget cuts over the next 19 months, including
reductions in services to the poor and disabled, as well as in higher
The cuts, intended to help close a budget shortfall of at least $17
billion through mid-2005, would end art therapy for the developmentally
disabled, scale back food stamp eligibility, reduce fees to doctors who
treat Medi-Cal patients and eliminate recruitment programs at public
universities. A draft was obtained by The Times.
FOR THE RECORD
Budget cuts — A front-page article Tuesday about
Gov. Arnold Schwarzenegger's proposed budget cuts misstated the size of
two program reductions. The article said repeal of a law that lets a
family get food stamps regardless of the value of its car would save
the state general fund $630 million. In fact, the repeal would save
$630,000 in budget years 2003-04 and 2004-05. The article also said a
proposal to cut financial assistance for foster children would save
$376 million. In fact, it would save $376,000.
Republicans who saw the cuts praised Schwarzenegger for taking the
initiative to solve a budget problem that they said will only get worse
"It's almost like a necessary pain that we have to go through," said
Kevin McCarthy (R-Bakersfield), who will become Assembly Republican
leader in January. "We have had a cancer growing on our budget and to
cure this we are having to go through the chemo. It is painful, but we
do have to shrink this tumor."
Democrats and advocates for the poor immediately vowed to resist the
proposal, which will be presented at legislative hearings today and
would cut roughly $1.9 billion in the current budget year and about the
same amount in the 2004-2005 budget. They criticized the proposal as
targeting low-income Californians to generate money to compensate for
the $4-billion car tax cut that the governor signed into law Nov. 17.
"This is not a centrist, bipartisan view of the world," said
Assemblywoman Jackie Goldberg (D-Los Angeles). "This is a radical right
view of the world. And if Gov. Schwarzenegger wants to position himself
in the direction of saying he wants bipartisanship, this is not a step
in that direction."
Officials with the administration declined to comment on the proposal,
which they said will be officially released today.
"The administration is putting forward recommendations on what we
believe is a comprehensive and responsible plan," said Schwarzenegger
spokesman H.D. Palmer.
The proposal also comes after Democratic legislators complained last
week that the governor wanted them to take action without providing
suggestions beyond calling for borrowing up to $15 billion and
implementing a constitutional spending cap.
The cuts affecting the developmentally disabled drew immediate
criticism. Schwarzenegger's proposal would save $282 million by
eliminating music, art, camping and other nonmedical therapy programs
for the roughly 626,000 Californians who have mental or physical
impairments that make it difficult to learn, speak or care for
themselves. Another cut involves suspending the Lanterman Act, which
guarantees myriad services for the developmentally disabled.
Issues involving the developmentally disabled have long been supported
by Schwarzenegger, in part because his mother-in-law, Eunice Kennedy
Shriver, helped found the Special Olympics program for the mentally
Another reduction would save $385 million by cutting cleaning,
transportation and other in-home services that the state provides to
the elderly, blind and disabled to help keep them out of nursing homes.
Advocates for the poor say it would result in 74,200 people losing
"These cuts clearly target the most vulnerable Californians, largely to
pay for a tax cut," said Jean Ross, executive director of the
California Budget Project, a nonprofit group that researches how budget
proposals affect low-income Californians.
Ross called the in-home services program extremely cost-effective for
taxpayers, because it serves Californians who would otherwise have to
be moved to costly nursing homes at state expense.
"They are people who will otherwise end up on Medi-Cal at a much higher
cost," Ross said. Half of Medi-Cal's costs are reimbursed by the
Assemblyman Ken Maddox (R-Garden Grove) said the negative reaction to
the cuts comes as no surprise: "I can't think of one group that is not
going to squeal when the cuts are made," he said.
"The governor is setting priorities and implementing a vision to get
our state out of its incredibly large deficit."
A smaller cut — $77 million — would freeze enrollment in several
programs, including Healthy Families, which provides health care for
children of the working poor, and which Schwarzenegger praised during
the campaign. The freeze would create waiting lists for that program.
The proposed cuts come as the new administration struggles to find a
way to balance the budget. Schwarzenegger already faced a budget gap of
$10 billion when he took office, largely as a result of the structural
imbalance between what the state is spending and what it brings in in
That grew to a $17-billion shortfall through mid-2005 when he cut the
car tax — $3.6 billion this year and $4.2 billion next — but also vowed
to continue sending local governments payments for the services that
tax was covering.
The swift negative reaction to the first round of proposed cuts — which
are typically the easiest to make — highlights how difficult it will be
for Schwarzenegger to close the budget gap without raising taxes.
Many Democrats and advocates for the poor would prefer combining cuts
with an increase in taxes on sales, the income of high earners or
They are also gearing up to fight a major Medi-Cal cut proposed by the
administration. Schwarzenegger suggests saving $595 million by cutting
10% from the rate at which the program reimburses doctors. That would
be in addition to a 5% cut that was approved last year, which several
health-care groups are challenging in court.
"It will not save money," said Jack Lewin of the California Medical
Assn. The rate cut would drive low-income Californians to hospital
emergency rooms, and leave the state stuck with the bill, he said. "It
just isn't going to work."
Education officials were distressed to learn that the governor was
proposing more cuts to the University of California and Cal State
systems after both were hit particularly hard in last year's budget.
Among the cuts they face are $110 million for outreach efforts, and an
additional $98 million in unallocated cuts.
UC spokesman Brad Hayward said the outreach programs, which seek to
help prepare students from disadvantaged backgrounds for college, focus
on the neediest students and ways to help them bridge the achievement
gaps that exist in California's public schools.
Other cuts proposed by Schwarzenegger include:
• Saving $630 million by repealing a new law to allow a family to
get food stamps even if it owns a car valued at more than $4,650.
• Effectively borrowing $475 million from local governments and
paying it back by mid-2007. The money would be carved out of the
payments Schwarzenegger promised to make to cities and counties in lieu
of the car tax money they had been receiving.
• Moving $800 million — some of it temporarily, some of it
permanently — from the transportation budget to help pay down the
• Saving $376 million by cutting financial assistance for foster
children when they make a transition into educational or training
• Saving $19 million by suspending tax breaks for people who
agree to permanently preserve their land.
Times staff writers Rebecca Trounson and Stuart
Silverstein contributed to this report.