Schwarzenegger’s budget a blow to the poor

Reporting from Sacramento —  Proposing a budget that would eliminate the state’s welfare-to-work program and most child care for the poor, Gov. Arnold Schwarzenegger on Friday outlined a stark vision of a California that would sharply limit aid to some of its poorest and neediest citizens.

His $83.4-billion plan would also freeze funding for local schools, further cut state workers’ pay and take away 60% of state money for local mental health programs. State parks and higher education are among the few areas the governor’s proposal would spare.

The proposal, which would not raise taxes, also relies on $3.4 billion in help from Washington — roughly half of what the governor sought earlier this year — to help close a budget gap now estimated at $19.1 billion. Billions more would be saved through accounting moves and fund shifts.

“California no longer has low-hanging fruits,” said Schwarzenegger at an afternoon news conference in Sacramento. “I now have no choice but to … call for elimination of some very important programs.”

Elimination of CalWorks, the state’s main welfare program, would affect 1.3 million people, including about 1 million children. The program, which requires recipients to eventually have jobs, gives families an average $500 a month. Ending those payments would save the state $1.6 billion, the administration said. It would also make California the only state not to offer a welfare-to-work program for low-income families with children.

Lawmakers rejected previous attempts by the governor to eliminate the program.

Families would also lose state-subsidized day care under the governor’s proposal; about 142,000 low-income children would be affected. That would save the state $1.2 billion. Preschool and after-school care would remain in place, as would some federally subsidized day care.

Schwarzenegger’s latest budget proposal is a starting point for negotiations that typically stretch well into the summer. His previous attempts to eliminate landmark state services have been upended by lawmakers who nevertheless agreed to substantial cuts last year. Their alternatives are limited, however; their tens of billions of dollars in temporary tax hikes and program cuts in recent years failed to end the state’s chronic budget problems.

The governor blamed legislative inaction for the deep wound to state services. He said if controls on state spending that he has long sought were in place, the budget gap would be much smaller. He also accused the Legislature of failing to move quickly to rein in spending after he called an emergency session of the Assembly and Senate in January for that purpose.

The Democrats who control the Legislature noted that Schwarzenegger vetoed measures they approved earlier this year to address a piece of the deficit. Voters twice rejected the spending controls the governor seeks.

Democratic leaders immediately vowed to reject the governor’s plans and craft alternatives, which they said could include new taxes on oil companies as well as the abolition of some corporate tax breaks.

“I am disappointed that the governor has chosen to surrender,” said Senate leader Darrell Steinberg (D-Sacramento), “that he proposes a budget that kills the economy and harms so many. … We will not be a party to devastating children and families.”

Outside the governor’s news conference, scores of union workers shouted, “Shame on you.”

Meanwhile, Republican lawmakers, who hold enough votes to block tax increases and budgets, embraced the governor’s approach.

“The Legislature should use this plan as the foundation for the final budget,” said Assembly Minority Leader Martin Garrick (R-Solana Beach). “New taxes are off the table with Republicans.”

Under the governor’s plan, local school funding would be frozen. Education officials say they are owed a $2.8-billion increase, without which they won’t be able to cover scheduled cost-of-living raises and other obligations. Education spending has already been rolled back substantially, forcing many districts to impose layoffs, eliminate programs and increase class sizes.

The governor had been expected to call for the elimination of in-home healthcare for the elderly and disabled. Instead, he proposed cutting roughly a third of the program’s budget to save $637.1 million. Previous efforts to scale back the program have been blocked in federal court.

Sandy Varga, a Los Angeles home care recipient who is partly paralyzed and must use a wheelchair, was outside the news conference protesting the cuts with unionized home health workers. She said she cannot get dressed or get out of bed by herself and may be forced into a nursing home if she loses her home care.

“The program is already at bare bones,” she said.

Another issue the governor’s plan addresses is prison costs. He would reduce them by shifting the responsibility for some state inmates to local governments, as he has proposed before. According to his estimate, the state would save $248 million by sending new low-level felons to local jails instead of to state prisons and by shifting supervision of state juvenile parolees to counties.

The counties would receive $11,500 to $15,000 per offender to help pay for probation, drug courts and “alternative” methods of custody, such as home detention.

Narcotic treatment programs for roughly 160,000 Medi-Cal patients would be eliminated to save the state $53.4 million. And state money for county mental health programs would drop 60%.

“You can’t make these numbers work,” said Rusty Selix, executive director of the California Council of Community Mental Health Agencies. “You’re basically destroying the system.”

The governor is proposing to borrow $1.2 billion in gas tax revenue and other transportation-related funds to help balance the budget. He has also revived a plan to raise more than $200 million by installing automated cameras at red-light intersections to ticket speeding drivers.

A bright spot appears in the plan for the University of California and California State University systems, whose slice of the state’s shrinking budget pie would grow after months of student protests over fee hikes, larger classes and faculty furloughs.

The governor also rolled back his plan to help balance the budget with funds from new oil drilling off the coast of Santa Barbara.

The budget unveiling marked the beginning of Schwarzenegger’s seventh, and final, season of budget negotiations. It was also a reminder that the imbalance between the state’s revenue and expenditures — the “crazy deficit spending” Schwarzenegger first railed against as a candidate in 2003 — remains stubbornly present.

On Friday, the governor said he would use his negotiating leverage to continue to push for changes in state government that the Legislature has blocked year after year.

Among them are installing a less generous pension system for newly hired state workers and significant changes to the state budget process — a requirement that California build a larger rainy-day fund, for example — that Schwarzenegger argues would stop the budget “roller-coaster ride.”

“I will not sign a budget if we don’t have pension reform and budget reform,” he said.

shane.goldmacher@latimes.com

Times staff writers Jack Dolan, Patrick McGreevy and Michael Rothfeld contributed to this report.