Gov. Schwarzenegger To Submit Final Budget Plan

fromKQED

California Governor Arnold Schwarzenegger presents his revised budget proposal Friday. It takes into account numbers that are worse than previously thought. Schwarzenegger is about to leave office.

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LYNN NEARY, host:

This is MORNING EDITION, from NPR News. I'm Lynn Neary.

RENEE MONTAGNE, host:

And I'm Renee Montagne.

Here in California, Governor Arnold Schwarzenegger took office nearly seven years ago, in the middle of what was being called a meltdown of the state's finances. Now he's about to leave office, and California finds itself in the middle of a state budget crisis. Later today, Schwarzenegger submits his final budget proposal. John Myers covers the California State House for member station KQED, and joins us now to talk about this budget.

Good morning.

JOHN MYERS: Good morning.

MONTAGNE: You know, I feel like - John, that we have been here many times before, having a conversation about California's epic budget crisis.

MYERS: I think we have. You know, in fact, really, for almost a decade, I think this state has been spending more money than it's been taking in. And that was really even before the global economic crisis, of course, which really caused tax revenues to drop pretty dramatically here.

In the last year and a half, Governor Schwarzenegger and the state legislature have been handed three huge budget deficits, about a combined total of $85 billion of red ink. Now, putting that into perspective, that's more deficit than the entire spending of 47 states in the country last year. That's really phenomenal, I think.

And a challenge here in California is that we rely on a lot of personal income tax revenues and capital gains taxes to balance the budget. And last month, they came in about $3.5 billion short, which only made the problem worse.

MONTAGNE: And it seems like this is a budget in a long line of budgets, that has a lot of things in it that no one really likes. So what's different about it that might, in theory, make it acceptable?

MYERS: Well, first, in years past, California has scaled back state services and programs. And in some years, in some cases, federal judges have actually blocked some of those actions from taking effect, saying that the state didn't have the power to do it.

And Schwarzenegger on Thursday actually said that will probably force him, instead, this year to simply eliminate programs, especially for the most needy. And we think that the budget deficit announced later today is going to be about $20 billion.

And second, you know, this is an election year. And the one person who will not be around after it's over is Arnold Schwarzenegger, who's termed out. And I think that does beg the question: Does he have any real power left to influence what happens?

MONTAGNE: Well, give us an example of the sort of programs that are being eliminated - because there's quite a hue and cry about, you know, some of the neediest being hit hard here.

MYERS: We think it's likely that Governor Schwarzenegger's going to propose the complete elimination of the welfare-to-work program called Cal Works, as well as a program that provides in-home care for the disabled. We may see a major shrinking of health-care coverage for poor children. And you know, beyond that, we could see another attempt to completely close down some state parks.

Now, the legislature would have to sign off on these cuts, but these are pretty dramatic cuts - even for a state like California, that's been dealing with this for a while.

MONTAGNE: And then there's cuts in public education, kindergarten through 12th grade. How do you think those budgets will be affected?

MYERS: Well, I think schools are probably in store, unfortunately, for more spending reductions here in California. You know, they represent about $.45 of every dollar that the state government spends. I think that could mean a few billion dollars less funding.

And this comes at the exact same time that school districts around the state right now have been sending out some pink slips to teachers. So that's going to be bad news again.

MONTAGNE: And as is often - or maybe even always the case - what happens in California doesn't seem to end at its borders. What sort of ripple effects do you imagine the rest of the country might feel from this?

MYERS: Well, I think it's a point, really, that can't be ignored because the fact is that more than one of every eight Americans lives here in California. And you know, we are, in many ways, a nation state. There's several economists that I've talked to over recent months - around the country - who say that they think these kinds of dramatic budget cuts, in a state that is so central to the U.S. economy, could slow down the national recovery.

And you know, we like to say that as goes California, so goes the country. Unfortunately, that saying would take on a whole new meaning, I think, when we talk about the state's financial problems.

MONTAGNE: John, thank you very much.

MYERS: You're welcome.

MONTAGNE: John Myers is State House bureau chief with member station KQED in San Francisco.

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