Gov.’s Cuts to Hit Poor, Universities

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 education programs.

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.

Republicans who saw the cuts praised Schwarzenegger for taking the initiative to solve a budget problem that they said will only get worse with delay.

“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 retarded.

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 their care.

“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 federal government.

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 revenue.

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 tobacco.

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 deficit.

* Saving $376 million by cutting financial assistance for foster children when they make a transition into educational or training programs.

* Saving $19 million by suspending tax breaks for people who agree to permanently preserve their land.

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Times staff writers Rebecca Trounson and Stuart Silverstein contributed to this report.