Schwarzenegger urges limit on Calif. spending

Lawmakers, educators protest governor's call for constitutional amendment

November 26, 2003|By Evan Halper and Jeffrey L. Rabin | Evan Halper and Jeffrey L. Rabin,LOS ANGELES TIMES

SACRAMENTO, Calif. - Gov. Arnold Schwarzenegger asked legislators yesterday to approve a constitutional limit on state spending that would greatly expand the governor's power over the budget and eliminate the long-standing guarantee that roughly half of all new state revenue go to public schools and community colleges.

The limit - which would be imposed next fiscal year if placed on the March ballot and approved by voters as a constitutional amendment - drew sharp criticism from educators and lawmakers who fear it would gradually restrict the flow of money to school programs.

With next year's budget already facing a shortfall of as much as $14 billion, the limit would also restrict the Legislature's ability to balance the budget through borrowing or on promises of unrealized revenues.

That means lawmakers would begin the new budget process in January knowing they must make severe cuts - about 20 percent of the state's general fund - unless taxes are raised or the economy improves more rapidly than expected.

State Sen. John Vasconcellos, a Democrat on the budget committee, characterized the spending limit as "inhumane and stupid," warning it would make it impossible for enrollment at the state's universities to keep pace with population growth.

Vasconcellos said the spending limit would set the base level of next year's expenditures "so low that we perpetually deny access to higher education in California."

But Republican leaders praised the governor's action.

"This proposal is a good first step on the road to recovery, and deserves serious and thoughtful consideration," said Assembly Republican Leader Dave Cox. "It's time for legislative Democrats to stop posturing and get serious about solving the state's budget mess."

The limit would also give governors broad new authority to make budget cuts at any point in the year if the state begins running a deficit. The cuts would take effect unless two-thirds of the Legislature voted to overturn them.

The Schwarzenegger plan was presented in legislative hearings yesterday, along with a proposal to borrow up to $15 billion to cover past debts, and to make $2 billion in immediate budget cuts, some of which have already been criticized by Democrats as unfairly targeting the poor.

In separate proceedings, state Finance Director Donna Arduin told the Assembly and Senate budget committees that the constitutional amendment is necessary because the state has spent $23 billion more than it has taken in during the past five years. "State bureaucracy has grown and agencies have been allowed to consistently spend above and beyond their budgeted levels," she said. "We have to face reality."

In her testimony, Arduin offered a glimpse of the far more severe reductions the governor is expected to present in his January budget. She talked about health and human services programs that are not restrictive enough in whom they serve, suggested that taxpayers may be too heavily subsidizing public universities, and that local schools have been consistently overfunded, while school districts have not been held accountable for improving student achievement - school by school.

"The combined result of this overspending is stark," she said. "California faces massive budget deficits and has run out of places to borrow."

She also made clear that the governor has the prison system targeted for significant reductions, and that the administration will push for privatization of some government services.

But Schwarzenegger's spending limit drew the most attention from lawmakers.

The proposed spending limit would not allow expenditures to exceed general fund revenues in the next fiscal year. After that, spending could grow no faster than the increase in per capita personal income and the growth in the state's population.

Any revenues over and above the spending limit would go to a rainy day reserve account. That money could be spent only to provide tax rebates, pay off deficit financing bonds in emergencies, or to supplement general fund spending when revenues drop during economic downturns.

To spend the money for any of these purposes would require a two-thirds vote of lawmakers.

School officials quickly expressed concern about the plan. Kevin Gordon, executive director of the California Association of School Business Officials, said the limit would change funding formulas for schools in a way that does not provide them the substantial increases they have traditionally received in good economic times.

The Los Angeles Times is a Tribune Publishing newspaper.

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