On Tuesday, state Assembly Speaker John Pérez (D-Los Angeles) proposed a budget plan that relies on loans and tax maneuvers to prevent major cuts to health and social service programs included in Gov. Arnold Schwarzenegger's (R) latest budget proposal, the Los Angeles Times reports (Goldmacher, Los Angeles Times, 5/26).
The governor has proposed cutting:
- $750 million from the state's In-Home Supportive Services program;
- $532 million from Medi-Cal, California's Medicaid program; and
- $15 million from Healthy Families, California's Children's Health Insurance Program.
Schwarzenegger's budget plan also calls for the elimination of CalWorks, California's welfare program (California Healthline, 5/25).
Assembly Democrats' Plan
In announcing his budget plan, Pérez said the governor's proposed program cuts would lead to the elimination of thousands of jobs, including 116,000 IHSS caregiver positions. Pérez said his budget proposal would help avoid some of those job losses (Herdt, Ventura County Star, 5/25).
The Assembly Democrats' budget plan calls for the state to borrow $8.7 billion in Wall Street bonds to be repaid over 20 years with interest (Lagos, San Francisco Chronicle, 5/26). The state would secure the loan by paying investors with $600 million annually from the California Beverage Recycling Fund, which collects deposits on recyclable containers (Yamamura, "Capitol Alert," Sacramento Bee, 5/25).
To backfill the recycling fund, Assembly Democrats proposed instituting an oil extraction tax, which is expected to generate about $1.2 billion annually and bolster the recycling fund by $200 million annually (Ventura County Star, 5/25).
Assembly Democrats tied the oil extraction tax to other tax reductions in an effort to allow a simple majority vote to pass the measure, meaning that it would not need Republican support (Theriault, San Jose Mercury News, 5/25).
The Assembly plan also would suspend corporate tax breaks to raise about $2 billion and secure a $500 million loan from the state Disability Insurance Fund (Yamamura, Sacramento Bee, 5/26).
Assembly and Senate Democrats' proposals for new and increased taxes are "a political necessity" to plug California's $19 billion budget deficit, a San Francisco Chronicle editorial states. The editorial continues that an important element in upcoming budget discussions will be "each side's willingness to acknowledge the need for negotiation, openness and flexibility." It adds, "Every option must be on the table, and that includes taxes" (San Francisco Chronicle, 5/26).