SACRAMENTO -- Releasing his last annual budget plan, Gov. Arnold Schwarzenegger on Friday proposed slashing state worker pay and making wholesale cuts in social services to close the state's $19.9 billion deficit.
Taxes would not be raised and schools would not face more cuts in the governor's $82.9 billion general-fund plan for the fiscal year that begins July 1.
But the welfare cuts would take a huge toll in the Valley, where social service agencies already are stretched to the limit, said one lawmaker.
"When the state catches a cold, the San Joaquin Valley catches pneumonia," said Assembly Member Juan Arambula, I-Fresno. "I think the impact is going to be greater in the Valley, just because we're not as well off as other parts of the state to begin with."
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The plan requires legislative approval and is certain to change as lawmakers seek a compromise.
Schwarzenegger called for portions of his plan to be enacted immediately in a 45-day emergency special session.
And he again renewed his call for more money from the federal government, threatening the elimination of several welfare programs if Washington does not give up an additional $6.9 billion for the state.
"I will be relentless to get money for California because it's our money," he said, adding that the state's share of federal dollars has declined in recent years.
(A report released Friday by Sen. Barbara Boxer said California now collects more in federal dollars than it sends Washington D.C., thanks to federal stimulus money.)
But another long budget fight looks to be looming in Sacramento. Democrats immediately rejected the governor's plan to pressure Washington, vowing to protect social service funding no matter how much is pried from the nation's capital.
"Typically he threatens the Legislature, now he's threatening the president of the United States," said Assembly Speaker Karen Bass, D-Los Angeles. "We need to approach the federal government from a point of collaboration."
Unions and welfare advocates around the state bashed the governor's proposals. In Fresno, a couple dozen people protested in front of the governor's office downtown against looming state budget cuts. But Republicans gave the plan a more favorable review.
The state's budget is once again in the red because the economy is struggling to recover and previous fiscal solutions are falling short.
The governor's plan aims to close a $6.6 billion gap in the current budget year and a projected $12.3 billion shortfall in the 2010-11 fiscal year that starts July 1. The plan would leave the state with a $1 billion reserve and $82.9 billion in general fund spending, down from $87.2 billion this year.
The emergency budget session -- one of many special sessions the governor has called in recent years -- requires lawmakers to take some sort of budget action within 45 days. The deadline to pass the full 2010-11 plan is June 15, although lawmakers routinely miss the mark.
One of the major battles is likely to be over state employee pay cuts to replace furloughs, which have run into trouble in the courts. The three-day-a-month furloughs would cease at the end of June.
Instead, the plan would cut worker pay by 5% and require employees to contribute an additional 5% of their pay to pension costs. The combined 10% cut is less than the 14% pay reduction workers face in the furlough program.
Jennie Ruiz, a psychiatric technician at the state-run Porterville Developmental Center, said she was counting on soon recovering her entire salary. The governor's plan is "still wrong -- but not to such an extent. It's 4% less wrong."
The plan looks to be a nonstarter in the Democratic-controlled Legislature, where leaders called for the governor to negotiate directly with worker unions.
Perhaps the biggest loser in the budget plan are health and human services. Spending would drop by about $4 billion through slashing CalWORKs monthly welfare payments, reducing wages of in-home care workers and other cuts. In the Valley, county welfare programs still are dealing with previous state budget cuts.
"You give us more cuts, I don't know what we're going to do," said Catherine Huerta, director of Fresno County's Department of Social Services.
If the state does not snare the federal money, the governor's plan would eliminate CalWORKs, the Healthy Families children's insurance program and In- Home Supportive Services, which provides care to fragile elderly and poor residents.
Assembly Member Mike Villines, R-Clovis, praised the governor for seeking the federal dollars and laying out the consequences if Washington does not come through.
"As painful as that will be for a lot of people ... that's where we've got to focus the debate, because that is where the rubber hits the road," he said.
Elementary and high school spending would increase slightly to $36 billion. The governor touted the plan as protecting students, although teachers' union leaders called for more spending to make up for cuts in recent years.
Meantime, Fresno County Schools Superintendent Larry Powell said, "I think we're going to end up in a fairly tough position, but much better than I thought it was going to be."
To save $1.8 billion, the plan calls for a complicated restructuring of transportation funding. The state's 6% sales tax on fuel would be eliminated, but the excise tax on gas would increase from 18 cents per gallon to 28.8 cents, saving drivers a net five cents per gallon.
But the plan also would remove a dedicated source of revenue for inter-city rail -- including passenger train service through the Valley -- which would have to be made up through annual budget appropriations.