Calif: More Cuts as Federal Aid Falls Short

By: Judy Lin AP
By: Judy Lin AP

SACRAMENTO (AP) - State officials on Friday said California will not receive enough direct aid from the federal stimulus package to prevent nearly $1 billion in cuts and higher taxes.

The state finance director and state treasurer determined that the federal stimulus bill will provide almost $8.2 billion to offset declining general fund revenue between now and June 30, 2010.

The state needed nearly $10 billion to avoid certain cuts and higher taxes under the budget deal lawmakers and Gov. Arnold Schwarzenegger reached in February.

That means taxpayers will see an increase in the personal income tax rate of 0.25 percent, an amount that would have been cut in half had the state received the $10 billion for its general fund.

Spending cuts to courts, health care programs, higher education and social services that were previously approved in the budget package will now be made.

State Treasurer Bill Lockyer said he is particularly concerned about cutting dental care for poor adults and capping pay for in-home supportive service workers at $9.50 an hour.

"I consider the suffering that would be caused by these particular cuts to be both severe and compelling," Lockyer wrote in a letter to the governor and legislative leaders.

Friday's determination was just the latest bit of bad budget news the governor and lawmakers have received in recent days.

The Legislature's budget analyst found that state revenue is declining rapidly, leaving an $8 billion shortfall for the fiscal year that starts July 1. A survey released this week by the Public Policy Institute of California found that likely voters so far are not supporting the five budget-related propositions lawmakers placed on a May 19 special election ballot.

If those five measures are rejected, it would add $6 billion to the deficit.

"The choices before the Legislature and governor become bleaker with each morning's headlines," Lockyer wrote.

Schwarzenegger and lawmakers thought they had solved California's budget problems through June 2010 when they closed a $42 billion shortfall in February. That budget package patched a deficit in the current fiscal year and passed a new budget for the 2009-2010 fiscal year, but it now appears they face even more difficult choices in the months ahead as the economy continues to deteriorate.

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