Gov. considers major cuts in services
The two strategies are among broad spending reductions Schwarzenegger will outline to address a projected $14.5-billion state budget gap. On Friday, the governor announced that he would declare a fiscal emergency Jan. 10, when he unveils his next budget.
State officials with knowledge of the governor's plans said cuts may be so deep that they could pave the way politically for tax increases, which Schwarzenegger has previously disavowed.
"Gov. Schwarzenegger does not believe tax increases are the way to solve this problem," spokesman Adam Mendelsohn said Friday. "If you are unwilling to raise taxes, then you have to look at very significant cuts."
Most of the austerity measures for this fiscal year would require legislative approval. The governor previously told agency heads to draft plans for 10% reductions across the board in state spending for the fiscal year that begins July 1. Prison officials came up with the proposal to decrease the inmate population by up to 30,000 in response to the directive.
When warned by various departments' leaders how far the 10% cuts would reach, Schwarzenegger's chief of staff, Susan Kennedy, instructed them to move ahead.
Sen. Denise Ducheny (D-San Diego), chairwoman of the Senate Budget Committee, said a 10% across-the-board cut might not be possible in some agencies and could jeopardize federal matching funds in others.
"It's not as easy as it sounds," she said.
In education, healthcare, social services and other sectors, advocates are anxious about what Schwarzenegger has already told them will be painful.
"As the governor has met with various groups, he has said the budget is very bleak," said Chris McKenzie, executive director of the League of California Cities. "We're hoping very strongly and believing that local tax funds should be immune from use to balance the state budget."
When the governor reveals the details of the cuts, the state's interest groups are "going to be squealing beyond belief," said one official, who spoke on condition of anonymity because budget discussions are confidential.
The official described Schwarzenegger's approach as: "Don't talk about taxes. Talk about services. Make the public say, 'I want the prison system funded. I want education funded.' . . . He won't talk taxes until there is a consensus that these services are what the state wants."
The governor's challenge in taming the state's perennial budget woes is integral to his legacy. Schwarzenegger, a Republican, was elected in 2003 promising to end years of deficit spending and put a stop to budget gimmickry but finds himself now largely where he started after taking the reins from ousted Democrat Gray Davis.
The governor's fight on education, which represents 40% of the budget, is likely to be fierce because school districts are still nursing the wounds of 2004, when the governor deferred pledges to restore education funding that they agreed to surrender.
Scott Plotkin, executive director of the California School Boards Assn., said his group will not agree to any cuts until the Legislature begins a discussion of increasing revenues through taxes.
"This is too big a problem to be solved solely through cuts," Plotkin said. "We've been down this road before, and we got burned."
The governor's plan to cut $1.4 billion from this year's money for schools is based on new estimates of what is guaranteed under Proposition 98, a constitutional provision that determines the minimum of state revenues that must go to education. The formula is based partly on state revenues, which have plummeted since education funding was allocated last summer.
By cutting education funding this year, the state would also reduce the baseline for guaranteed funding in the next year's budget, so the savings would multiply. But cutting from schools is sure to generate controversy.
Kevin Gordon, a lobbyist for hundreds of school districts, said $1.4 billion is "almost insurmountable as a number for districts to really give up."
Cuts would inevitably fall heavily on the Los Angeles Unified School District, which, with about 700,000 students, receives about 13% of the state's education dollars. The school board was already weighing at least $100 million in cuts anticipated for next year. It also faces a restive teachers union, which is demanding raises.
School board President Monica Garcia said the proposed cuts would undermine the district's efforts to develop and pay for reforms. L.A. Unified is one of 99 California districts that, under federal law, face state sanctions because of continued poor performance on standardized tests.
"The cuts to education always mean we'll be paying higher prices in the future for the absence of education," Garcia said. "I'm hoping that the state stands behind the accountabilities it has put in place."
Schwarzenegger met Thursday with members of the powerful California Teachers Assn. and with California Supt. of Public Instruction Jack O'Connell.
"I believe a commitment was made to the schools in terms of the funding level that was signed in August, and we should respect that," O'Connell said.
But H.D. Palmer, a spokesman for the California Department of Finance, said the budget crisis does not allow the state to give schools more than the minimum required. He noted that the governor's proposals could change before Schwarzenegger makes details public: "It is three days before Christmas, and we're still working on this."
The governor does not plan to suspend Proposition 98 this year; doing so would permit spending to fall below the guaranteed level and require a two-thirds vote of the Legislature. It is unclear whether he would seek a suspension for the next fiscal year, but state Sen. Dick Ackerman (R-Irvine), the Senate Republican leader, said he would support the idea.
The proposal to release prisoners early -- which Schwarzenegger's aides said he had not yet committed to -- would reverse a promise the governor made five months ago not to let inmates go free because of overcrowding.
It would involve releasing nonviolent prisoners with less than 20 months of their sentences remaining. The state would put those inmates on parole but would not check on them, dramatically reducing the practice of sending former convicts back to prison on technical parole violations, said Joan Petersilia, a criminologist at UC Irvine who advises Schwarzenegger on prison issues.
That practice results in tens of thousands of parolees cycling through the prisons every year. Officials envision an overall reduction of up to 30,000 inmates, according to people familiar with the discussions.
"This really is a back-end reduction of the sentence," Petersilia said
In July, Schwarzenegger said he would resist any moves by federal judges who are examining state prisons to cap the population or release inmates before they completed their sentences. "I am here to tell you that the early release of inmates is totally unacceptable," the governor said then.
Assemblyman Todd Spitzer (R-Orange) denounced releasing prisoners early to save money as short-sighted. Spitzer accused the Schwarzenegger administration of using the budget shortfall as an excuse to kick people out of prisons and off parole, and to help reverse an embarrassing recidivism in which two-thirds of all California parolees wind up back in prison within three years.
Early release "might be a short-term fix on the budget, but in the long term it's going to cost the state billions of dollars," Spitzer said. "You don't fix recidivism by kicking people out the door. . . . That's the time you use intensive intervention to influence their behavior."
Times staff writers Howard Blume, Patrick McGreevy and Nancy Vogel contributed to this report.