Budget Cuts Hit Poor the Hardest

SACRAMENTO —  Faced with a $12-billion budget shortfall, Gov. Gray Davis has targeted his deepest cuts at some of California’s most vulnerable residents, from welfare recipients to low-income working parents to the mentally ill.

Of the $2.6 billion in spending Davis has proposed shedding in the 2002-03 budget, about half comes out of programs relied on by the poor. Programs that provide them with medical and dental services, child care and housing would take at least a $1.1-billion hit.

Davis conceded during the unveiling of his budget Thursday that some of the cuts would be difficult to make. But his administration defended the spending plan, saying the governor’s proposal to overcome the shortfall by borrowing more than $5 billion against future revenue rather than making deeper budget cuts maintains the social safety net.

Even critics of the Democratic governor quickly acknowledged that his proposals pale in severity compared with cutbacks made by former Gov. Pete Wilson, who faced a worse budget mess.

Yet liberal lawmakers and social service advocates fear that the plan erodes many of the gains they have made since Davis was elected in 1998. Some are upset--but not surprised--that in an election year, the governor would spare politically sensitive areas such as education and public safety but take aim at programs for people with less political clout.

“The cuts all seem to fall on the most disadvantaged Californians,” said Casey McKeever, directing attorney for the Sacramento office of the Western Center on Law and Poverty, an advocacy group for the poor. “Even Gov. Wilson had some additional measures that affected upper-income taxpayers and other parts of the population.”

The list of cuts Davis is proposing includes eliminating two elements of CalWORKS, the state’s welfare-to-work program: $36 million for adult education and career training and $58 million to help community colleges develop programs to assist welfare recipients. It also freezes a cost-of-living increase in welfare benefits and aid to the disabled.

A major budget-driven reform would require the state’s child care programs to do more with less, a strategy that some question.

Davis administration officials are pushing the changes because they are concerned that the welfare-to-work program is resulting in a flood of expensive new child care costs from former welfare recipients who are moving into the workplace.

They also are responding to criticism that low-income families that were never on welfare have a harder time getting child care subsidies.

But the reforms are expected to encounter resistance in the Legislature, particularly from the Women’s Caucus, which has pushed to protect the quality of care. Davis’ budget would add 100,000 children who are currently on child care waiting lists.

At the same time, it would toughen the eligibility requirement for households seeking child care, from 75% of the state’s median income to as low as 60%, or from roughly $30,000 to $24,000 a year.

It also would increase co-payments for child care, as in the Wisconsin model adopted under former Gov. Tommy Thompson, the welfare reform leader who now heads the U.S. Department of Health and Human Services. And it would lower state reimbursement payments for child care providers, which critics fear would erode both the quality and availability of the care.

Davis’ proposal to tighten the income requirements for child care strikes not at the poorest Californians but at working-class people teetering on the edge of insolvency, said Bruce Fuller, a UC Berkeley professor of education and public policy.

Facing a choice between massive child care bills and staying home, some low-income parents might choose unemployment, reversing a critical welfare-to-work incentive strategy, Fuller said.

“You knock out of the subsidy system thousands of families that earn between $24,000 and $34,000 a year,” he said. “You’re not talking about the hard-core poor, but you’re talking about folks who are working at a Denny’s in Riverside.

“The upside [of the Davis budget] is he wants to stay the course on school reform,” Fuller added. “The downside is that he doesn’t want to do anything that erodes his support in white suburban areas. Bad times can give a window for serious structural reform, but Davis is so risk-averse that he forgoes that opportunity.”

Repeated cuts under Wilson left many social service agencies with diminished expectations and an attitude of defeat. Their sense of gratitude for gains made in Davis’ first three years has somewhat diluted their outrage at his proposed cuts this time around.

“We were wildly ecstatic that we got anything,” said Randall Hagar, legislative director for the California chapter of the National Alliance for the Mentally Ill.

Still, they worry about giving back ground on programs that, in many cases, are still in formative stages. One example of the turnaround: Under Davis’ proposal, a housing initiative by the Department of Mental Health would lose 75% of its $25-million allotment.

“That just really hurts,” Hagar said.

Some advocates said the seesawing, give-in-one-year-then-take-away-the-next elements in Davis’ budget present a more systemic problem: Programs don’t ever take root, making long-term progress much more difficult.

“We need to address the instability of the state budget,” said Jim Keddy, director of the Pacific Institute for Community Organization.

“We can’t be so reliant on the stock market and capital gains. We need to look more at taxes and fees, for income streams that will be steady.”

Though Davis is clearly trying to chart a middle course, his budget is being assailed by Republicans, who say the state needs to cut more programs instead of mortgaging its future.

“It’s like the beginning of a football game, and the first play he’s calling is a punt,” said Assemblyman John Campbell (R-Irvine), vice chairman of the Assembly Budget Committee.

“He is not really dealing with the fundamental issue of the imbalance between revenues and spending. When he takes 60% of the deficit and deals with it with loans and accounting changes, he is not dealing with the issue.”

By contrast, leading Democrats, including Senate President Pro Tem John Burton (D-San Francisco), support raising taxes rather than eroding the level of social services.

Thus, Davis faces a tough political fight in getting the two-thirds approval he needs to pass the budget this summer as he attempts to wade between liberals and conservatives.

“At this point, I am not prepared to accept we have to make these cuts. You have to make sure you are not being penny wise and pound foolish,” said Assemblyman Gil Cedillo (D-Los Angeles), who heads the Assembly’s budget subcommittee on health and welfare.

“It is a value judgment we have to make. We’re Democrats, and I think we need to consider other sources of revenue.”

Assembly Speaker-elect Herb Wesson (D-Culver City) believes that lawmakers will find ways to make the cuts more acceptable. But the seriousness of the shortfall will clearly require some difficult choices, he said.

“I am concerned, without a doubt, but I am not alarmed [about cuts in social programs], because I know we will have a deliberative process,” he said.

“Even when we have a surplus, the budget is a painful exercise, and this is going to be a more painful exercise.”