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Democrats, Gov. Jerry Brown arrive at California budget deal

Published: Friday, June 22, 2012

Updated: Friday, June 22, 2012 11:06


 

SACRAMENTO, Calif. - Setting the stage for a tough campaign to raise taxes, California Democrats and Gov. Jerry Brown on Thursday announced a budget deal with "more difficult cuts," squeezing another $1 billion from the state's safety-net for the poor.

Most welfare-to-work recipients will get cut off state assistance after two years, instead of four, if they are not meeting tough federal work requirements.

And the state will eliminate the Healthy Families medical program that serves low-income children. Instead, nearly 1 million youths will be shifted over the next three years to Medi-Cal to help close a $15.7 billion deficit and eliminate future shortfalls with the permanent changes to safety-net programs.

The deal ends a showdown over the last $1 billion in cuts needed to balance the budget. Legislators on Friday had approved a main $92 billion spending plan to meet the June 15 constitutional deadline and avoid forfeiting their own paychecks.

It cut short speculation that Brown would veto a budget bill for a second straight year and gave Democrats a chance to crow about an on-time budget as they head into the campaign season.

"This agreement strongly positions the state to withstand the economic challenges and uncertainties ahead," Brown said. "We have restructured and downsized our prison system, moved government closer to the people, made billions in difficult cuts, and now the Legislature is poised to make even more difficult cuts and permanently reform welfare."

Yet, the whole deal hinges on November when Brown's tax proposal goes before voters. He's asking for a temporary boost in income taxes for the wealthy and a quarter-cent hike in the state sales tax, which would provide $5.9 billion in the first year. Nearly $6 billion in new budget cuts, $5.5 billion to schools, $500 million to universities, would be automatically triggered if the measure fails.

The governor's tax proposal, along with a competing initiative backed by wealthy civil rights lawyer Molly Munger, which seeks to raise taxes on everyone, qualified for the November ballot on Wednesday.

Brown has made it clear that he intends to win voter support for taxes by extracting sacrifice from state government programs that mainly serve low-income residents.

The on-time budget, along with pension reform Democrats hope to complete by the summer break, "puts the governor and Legislature _ and most importantly, the state _ in a position to take the case to the taxpayers that we need revenue to avoid even deeper cuts," Senate President Pro Tem Darrell Steinberg, a Democrat, said at a news briefing.

Some are not too sure the strategy will work.

"The gut reaction by many to making these severe cuts to the poor will be, 'that's not Governor Moonbeam, that's not the governor I know,'" said Melissa Michelson, a political science professor at Menlo College in Atherton.

Legislators are expected to finalize the spending plan with a floor vote Tuesday. Majority votes are all that's needed in both houses, and the governor is expected to sign the bills before the June 27 deadline.

Brown won a concession from legislators when they backed off their plan to divert $250 million from county redevelopment funds to the general fund. The money will instead go to counties, schools and special districts.

The agreed-upon $430 million in cuts to CalWORKs is closer to the Legislature's plan than the $880 million cut the governor sought.

Under the deal, new CalWORKs recipients would be shifted to the tougher federal work requirements after two years instead of the current four years. They could continue receiving benefits for another two years if they work 30 hours a week.

But, as part of the deal, counties would be able to extend benefits for up to 20 percent of their CalWORKs population who are parents of young children, in drug treatment, are nearing completion of their education or who live in high unemployment areas.

If counties hit their 20 percent threshold, they would still be able to grant exemptions to others who are eligible, Steinberg said.

Democrats wanted to continue allowing parents to stay home and keep receiving benefits to avoid paying for costly child care, transportation and job training. Instead, they will increase funding for those programs over the next two years to help parents get jobs.

Health advocates were outraged by the decision to eliminate the Healthy Families program and divert children into Medi-Cal, which they say will not be able to provide quality care.

"The governor and Legislature are experimenting with the health of 900,000 children," said Peter Manzo, president and CEO of United Ways of California. "Shifting all of those children out of a popular, successful program, with no guarantee that they'll actually have access to providers, is an unprecedented and reckless move."

Steinberg said that children will not be moved until "it can be demonstrated there is a provider for that child. That's why it has to be done with a phased approach."

The transition would have little effect on children who go to clinics such as Asian Health Services in downtown Oakland, which accepts  Medi-Cal and Healthy Families patients, said Dr. Ricky Choi. But he noted that some doctors who see Healthy Families patients do not accept Medi-Cal, so those children would have to change providers.

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