GropenFuhrer to Cut Ed Funding: Assault on the Poor Deepens

[Rich Gibson <rgibson@pipeline.com>]

http://www.latimes.com/news/local/politics/la-me-arnold7jan07,0,7172621,print.story?coll=la-home-center

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http://www.latimes.com/news/local/politics/la-me-arnold7jan07,0,2536629.story?coll=la-home-center
From the Los Angeles Times


Amid budget gap, 'fantastic' ideas joust with state's fiscal reality

Schwarzenegger is being forced to confront a 
basic and perennial question: whether California 
voters are willing to pay for the programs they want.
By Michael Rothfeld
Los Angeles Times Staff Writer

January 7, 2008

SACRAMENTO -- ­ He has prided himself on thinking 
big, and used his larger-than-life persona to 
advocate grand visions for California's future.

But as Gov. Arnold Schwarzenegger begins his 
fifth year at the helm of the state, he is hemmed 
in by the past, staring at a fiscal crisis much 
like the one he was elected to solve. That leaves 
little room for the "fantastic" ideas on which he 
has staked his reputation as a visionary.

Instead, political observers said, he will be 
forced to confront a basic and perennial 
question: whether California voters are willing 
to pay for the programs they want.

On Tuesday, Schwarzenegger, a Republican who in 
the last two years has been closer to Democrats, 
will use his State of the State address to lay 
the groundwork for a broad array of cuts to state 
services, according to his aides.He will call on 
everyone to share the pain of closing a budget 
gap the administration has projected at greater 
than $14 billion -- without raising taxes. And he 
plans to renew previously failed efforts to change the state budget process.

Two days later, he will lay out the sobering 
details. He will declare a fiscal emergency and 
offer proposals for slashing state programs now 
and outline a slim budget for the next fiscal year.

Those plans are likely to draw the battle lines 
for the year between his administration and 
interest groups, and between Democrats and 
Republicans in Sacramento, many of whom are already girding for a fight.

"The governor has set the stage effectively by 
asking that the state agencies cut spending 
across the board," said Ron Nehring, the state 
Republican Party chairman. "The choice is very 
clear. Either government has to prioritize its 
spending or the alternative is to raise taxes, 
which is something that Republicans will continue to resist."

Democrats, who control the Legislature, are 
insistent on increasing state revenues through 
higher taxes or closing tax loopholes.

"We're not going to cut our way out," said state 
Senate President Pro Tem Don Perata (D-Oakland). 
"I don't think anybody, unless they're really on 
the fringe, believes that providing healthcare 
for children or services in the home for a 
paraplegic is the wrong use of government."

Yet even as the governor asks the public to 
accept dramatic reductions, he pushes on with his 
ambition of the last year: to dramatically expand 
health insurance. He will have to deliver the 
message that programs must be cut to avoid 
raising taxes while simultaneously asking voters 
to raise taxes on cigarettes, employers and 
hospitals to support a new $14.4-billion health plan.

"The state should not come to a standstill 
because there is a budget problem," said Adam 
Mendelsohn, the governor's communications 
director. "Clearly, for Gov. Schwarzenegger the 
budget is the first priority, but that's not 
going to stop him from addressing healthcare and education."

Jack Pitney, professor of government at Claremont 
McKenna College, said it was natural for the 
governor to want the healthcare expansion for his legacy.

But, he added, "the deficit will overshadow everything else."

"It's tempting for him to think about big goals, 
but he has to think about the big deficit first," 
Pitney said. "He has to either cut spending or 
raise taxes. Either of those courses is going to 
be very politically unpopular."



Education funding

Schwarzenegger plans to cut education funding in 
a period his administration had previously billed 
as "the year of education." Mendelsohn said 
Schwarzenegger would still make education a 
priority by, for example, trying to improve 
school performance, which Mendelsohn said could 
be achieved without high expense.

And Schwarzenegger will revisit policies he has 
tried before without success. Administration 
officials said he would portray his fiscal battle 
as an effort to fix California's money problems 
permanently by automatically curtailing 
constitutionally required spending increases when revenues are flagging.

The state can already do that with approval from 
the Legislature, though it can be politically difficult.

Schwarzenegger and his aides are discussing a 
proposal that would require the state to set 
aside money when revenues are healthy so it can 
use them -- while limiting spending -- in tougher years.

Former Republican Gov. Pete Wilson, who pushed a 
large tax increase during a budget crisis in 
1991, spoke on behalf of Schwarzenegger in a 
Saturday radio address about the need for such a plan.

"It is terribly unwise to continue to allow the 
vast majority of state government spending to be 
driven by formulas . . . that cannot be changed 
without legislative approval," Wilson said. "So 
we absolutely must put in place a mechanism that 
requires that money be reserved in robust years 
to pay for needed state services in bad times when revenues fall."

Art Pulaski, leader of the California Federation 
of Labor, which represents 2 million workers, 
said that "this perpetual pinch of not raising 
taxes is going to, I think, send the state into a downward spiral."

"The question is whether we're going to stop the 
growth of California," Pulaski said. "A spending 
cap means we're going to regress -- we're going 
to stop growth. None of the visionaries have said 
we are going to put a cap on the state."

Starting each year of his tenure, Schwarzenegger 
has unveiled a visionary new goal, with mixed results.

First, he wanted to reorder the state 
bureaucracy, which did not come to pass. In 2005, 
his "year of reform," he sought to overhaul 
public pensions, impose merit raises for teachers 
and make other far-reaching changes.

But those efforts ended in a resounding defeat in 
a special election he called.

Then Schwarzenegger sought to shore up the state 
infrastructure in 2006, culminating in a 
$42-billion bond issue approved by voters.



Health legislation

His 2007 "year of healthcare" has dragged into 
this year. Legislation is still pending in the 
state Senate, and Schwarzenegger and Assembly 
Speaker Fabian Nuñez (D-Los Angeles) have 
proposed a measure for the November ballot to 
finance nearly universal insurance.

State Sen. Sheila Kuehl (D-Santa Monica), who has 
a competing vision for healthcare change, leads a 
Senate committee that will hold hearings on the pending legislation.

She has questioned the affordability of the plan 
for some voters and said the governor may be too invested in it.

"I think the governor believes that his major 
role is to initiate necessary change," Kuehl 
said. "The unfortunate thing for him throughout 
his entire term so far has been that in simply 
presenting a big idea, he then feels wedded to 
the idea, even as it looks less and less like a good idea."

Last year, despite his call for 
"post-partisanship," Schwarzenegger was unable to 
bridge the gap between Democrats who control the 
Legislature and Republican state senators who wanted more spending cuts.

The budget was passed nearly two months late 
because the Republicans, whose votes were needed, 
balked. "Many of the issues we brought up during 
the budget debate have come true," said Senate 
Republican leader Dick Ackerman of Irvine.

With the fiscal situation much more dire this 
year, legislators on both sides could be more 
entrenched, and Schwarzenegger's role as a mediator more difficult.

"It puts post-partisanship to its first real 
test," said Bill Whalen, a research fellow at 
Stanford University's Hoover Institution and a 
former Wilson speechwriter. "When the state is 
bleeding red ink, it's hard to keep everybody on the same page."

<mailto:michael.rothfeld@latimes.com>michael.rothfeld@latimes.com

Times staff writer Jordan Rau contributed to this report.




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