What the Governor's Revised Budget Means for California Workers

Governor Schwarzenegger released his revised state budget proposal on Friday, May 13, 2005. The "May Revise" reinstates $1.3 billion in transportation spending in accordance with Proposition 42 that the Governor had cut in his January budget proposal.

The May Revision of the state budget had a $500,000 allocation for upgrading the "CinemaScout" program on the California Film Commission web site. The CinemaScout stores photos of filming locations on state land in California so that film producers can find a suitable location for shooting. In early June, the Budget Conference Committee voted to eliminate this money from the budget.

However, the May Revise also maintains deep cuts in several other areas-including education. Last year the governor promised to fully fund education in accordance with Proposition 98, but reneged on his word. His May Revise proposes some new programs, but does not full fun education as Proposition 98 contends.

The May Revise also makes cuts to health care. The Governor's proposal would require over 500,000 Medi-Cal recipients to pay monthly premiums for Medi-Cal benefits. The proposal would also disenroll those who not pay premiums, cap dental benefits, and move more than 800,000 Medi-Cal beneficiaries into managed care.

The May Revise restores a tax assistance program for low-income senior homeowners and renters that had been cut in the January proposal. Other social service programs, however, see continued cuts in the May Revise. The revised budget denies cost of living increases for SSI/SSP (Supplemental Security Income / State Supplementary Payment Program) recipients and makes even deeper cuts in benefits for CalWORKS recipients.

In addition, the Governor continues to propose wage and benefit cuts for thousands of public sector workers in California. Teachers in California face potential retirement or wage cuts under the Governor's budget proposal. The May Revise retains the January budget proposal to shift nearly $470 million in state teacher retirement costs to school districts and community colleges.

The May Revise retains proposals to: (1) Reduce the state's reimbursement for wages for In-Home Supportive Services to the state's minimum wage; (2) Increase employee's share of retirement contributions by over $200 million for those covered by CalPERS; (3) Deny new employees health care coverage under CalPERS until 6 months of employment have been completed; and (4) Eliminate two state holidays for state employees.

The State's General Fund brought in more revenues than expected this year, allowing the Governor to drop his earlier budget proposal to issue $1.7 billion in deficit reduction bonds. However, the May Revise still leaves the state with a deficit of nearly $6 billion in 2006-2007, even with significant spending cuts. The May Revise illustrates once again that Governor Schwarzenegger is willing to cut spending - but he is not willing to increase revenues. Without revenue increases, the state will face continued budget deficits and lack the resources needed for real investment in schools, health care, infrastructure, and the state's workforce.