- The Washington Times - Monday, July 13, 2009

SACRAMENTO, Calif. | California’s top lawmakers Sunday focused on cost-saving reforms to social welfare programs and the extent of cuts to an array of state services as they dove into the complex task of closing the state’s $26 billion deficit.

Lawmakers on both sides warned that severe cuts to many state programs were unavoidable. But they also seemed more optimistic than they have been in weeks that they could find a way out of California’s fiscal morass.

“We’re all going to get through this, and California is going to come through it just fine,” Senate leader Darrell Steinberg, Sacramento Democrat, said before entering a closed-door meeting with Gov. Arnold Schwarzenegger and the three other legislative leaders.

That Republicans, Democrats and Mr. Schwarzenegger were back on speaking terms and making apparent headway was a welcome sign after two weeks of acrimony and partisan infighting that temporarily derailed budget negotiations. During a low point last week, the office of the Assembly speaker, a Democrat, accused the governor’s office of disrespecting female lawmakers.

Over the weekend, lawmakers focused on reform proposals advanced by Mr. Schwarzenegger, who wants to weed out waste and abuse in welfare, in-home support and health care programs. His office says such reforms could save taxpayers an estimated $1.7 billion this fiscal year, money that could be used to make up for cuts in other programs.

The governor also has sought pension changes for new state government employees.

Funding for K-12 schools is a main sticking point. Senate Minority Leader Dennis Hollingsworth, Temecula Republican, said closing the deficit would have to involve school spending because it accounts for at least half of California’s annual budget.

The lawmakers were debating whether to suspend Proposition 98, a constitutional amendment passed by voters in 1988 that guarantees a minimum level of funding for schools each year. The funding also is supposed to rise each year based on the previous budget.

Earlier this year, lawmakers cut education spending by $8.6 billion over two years. Many districts are planning to lay off teachers and increase class sizes.

The efforts to close California’s budget shortfall for the fiscal year that began July 1 are going on against the backdrop of a deep recession that has led to an unprecedented drop in tax revenue.

Personal income tax, a cornerstone of how the California government funds its operations, dropped 34 percent during the first five months of the year. The latest reports from the state controller’s office show that the slide has continued into the summer, widening the gap between California’s spending obligations and its tax income.

The $26 billion deficit represents more than one-quarter of California’s general fund spending. For perspective, eliminating all spending on state prisons and higher education wouldn’t come close to eliminating that shortfall.

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