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What does California budget have in store for the Central Valley?

SACRAMENTO -- When Gov. Arnold Schwarzenegger signed the 2009-10 state budget in February, he suggested that the state finally had found its fiscal footing.

"We had to make some very difficult decisions, but I am very proud that California is back on the best path forward," he said in a statement the day he approved the $92.2 billion general fund blueprint.

The good feelings didn't last long.

Just three months later, lawmakers are tearing up the plan in search of more cuts and possibly new taxes or fees, setting up another summer of debate.

Budget writers failed to predict the extent of the economic downturn, which has left the state with less tax revenue. And voters recently rejected short-term borrowing maneuvers that would have helped some.

The bottom line: State lawmakers have no easy solutions to close what at last count is a $24.3 billion gap through June 30, 2010.

Democrats and Republicans have yet to counter the governor's new plan, which includes nearly $16 billion in spending cuts, plus borrowing and accounting maneuvers. But both parties agree that every state program is on the table as they seek a solution by July 1, the start of the new budget year.

The governor has ruled out new taxes, after pushing through increases earlier this year. Democrats have not taken new taxes off the table, but Republicans have vowed to oppose them.

Here is a closer look at what is at stake in the general fund budget and what it could mean for the Valley:

K-12 education

* 33.3 billion: The governor's plan would cut school funding by $6.1 billion in the next 13 months. Federal stimulus money could help blunt most, if not all, of the hit in the short term, easing some of the anxiety for education leaders.

"I feel good about where we're at, given the bad situation we're in," said Larry Powell, superintendent of the Fresno County Office of Education.

Still, cuts are likely because state funding is below expectations of a year ago.

Valley districts are taking a hard look at cutting arts, music, sports and other programs -- but should be able to avoid mass layoffs or large increases in class sizes, Powell said. Also, no districts appear ready to consider cutting the school year by 7.5 days, as the governor's plan would allow, Powell said.

At Fresno Unified, the district is cutting back on equipment purchases and administrative staff, such as vice principals, officials said. Clovis Unified expects to make cuts but has yet to identify them, officials said. Visalia Unified officials said they expect to exhaust reserves, but should avoid major cuts for at least a year. Teachers unions, a powerful lobbying force in Sacramento, will fight education cuts. But some slashing is inevitable because school spending accounts for about 40% of the state general fund.

Health and social services

* $31 billion: Health and welfare programs could see some of the biggest cuts. At risk are two major safety-net programs heavily used in the Valley. The governor wants to save $1.3 billion by eliminating the California Work Opportunity and Responsibility to Kids Program, or CalWORKS.

The welfare-to-work program provides short-term cash to parents and children for housing, food, utilities, clothing and more. In the five-county central San Joaquin Valley, 56,049 families rely on the program, according to state data.

Also on Schwarzenegger's chopping block is Healthy Families, which provides health insurance for children in families that earn too much to qualify for Medi-Cal but cannot afford private insurance. If the program is eliminated, 57,230 children in the Valley would lose coverage, according to the California Budget Project, which advocates for low-income residents.

Other cuts could include eliminating certain Medi-Cal services, including breast and cervical cancer treatments for residents age 65 and older.

Democrats have greeted the proposals with skepticism -- but might be hard-pressed to avoid significant social-service cuts without pushing through more tax hikes.

Criminal justice

* $13 billion: The headline-grabber is Schwarzenegger's plan to release "nonviolent, non-serious" prisoners one year early, saving $121 million. Further, he wants to save $789 million by cutting back prisoner rehabilitation programs, such as substance-abuse counseling and vocational training.

Fresno County District Attorney Elizabeth Egan worries that parole agents won't be able to keep up with prisoners released early, "which means more crime," she said.

Local officials also don't like the governor's proposal to change sentencing options so that more crimes can be punishable by local jail time, rather than at state prisons. This could stress already-stretched county jail budgets, sheriffs say. Finally, the governor has floated the idea of releasing early and deporting some of the 19,000 undocumented immigrants in the state's prisons. Moves like this would allow state corrections officials to lay off prison workers -- and that could hit hard in the Valley, home to about one-third of the state's prisons.

Previous early release programs have been rejected by Republicans and Democrats, so it's doubtful these plans would be enacted as is. However, corrections accounts for an increasing share of the state general fund -- about 11% -- so some prison savings are likely.

Higher education

* $12 billion: The California State University system already has approved higher undergraduate fees and enrollment cutbacks to deal with state budget cuts approved earlier this year.

Under the governor's plan, CSU officials say they face $687 million in additional cuts -- which Chancellor Charles B. Reed has characterized as "unprecedented and unfathomable." The Legislative Analyst notes that some, but not all, of the cuts could be made up with federal stimulus money.

Fresno State will not outline specific cuts until late June, but university President John Welty said the governor's proposal would have an "adverse impact" on "protecting the quality of our institution."

Excluding accounting maneuvers, community colleges face $820 million in cuts under the governor's plan. Some of that could be filled with federal money, according to the LAO. In the Valley, the State Center Community College District expects to make cuts, but officials are waiting to see how state negotiations play out.

The governor also has proposed phasing out Cal Grants, the state's financial-aid program for public colleges and most private and independent colleges. For the 2009-10 academic year, 4,044 students were offered grants to attend Fresno State, Fresno City College and the University of California at Merced, according to the California Student Aid Commission. The average income of these students is $24,201.

Local government

Mayors and county supervisors are blasting the governor's plan to raid nearly $2 billion from local government budgets. The borrowing is allowed under a law that requires the state to pay back the money within three years.

Counties also would have to deal with losing millions of dollars. The cuts would come on top of losses from the governor's proposed elimination of the Williamson Act program. The program provides revenue to counties that give property tax breaks to landowners who agree not to develop farmland.

Tulare County could lose around $3 million from the state, officials said. That, and other possible state cuts, led officials to send a letter to employees last week warning of a hiring freeze, layoffs, furloughs, and other money-saving maneuvers.

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