Labor & Economic News Blog

Tuesday, July 12, 2005

SACRAMENTO Budget signed, but work not done Structural deficit still a problem, governor says - Lynda Gledhill, Chronicle Sacramento Bureau

Sacramento -- Gov. Arnold Schwarzenegger signed California's budget on Monday, but as Sacramento braces for a week of sweltering weather the political battles in the Capitol may just be heating up. State leaders congratulated themselves for reaching a compromise on a $90 billion general fund budget just 11 days into the fiscal year, expressing a desire to use that political will to solve some of the state's other problems.

"No matter how good this budget is, we still have a problem with our structural deficit," Schwarzenegger said before signing the budget in the Capitol rotunda. "But I am convinced that ... with the same kind of team effort and bipartisanship we can also fix our broken budget system. I know that we can do it because where there's a will there's a way."

But as he was professing goodwill, the governor angered labor groups -- with whom he has battled constantly this year -- by using his line-item budget veto power to eliminate funding for two University of California labor research centers.

The $3.8 million cut will eliminate about 70 percent of the centers' funding, said Katie Quan, chair of the UC Berkeley Center for Labor Research and Education. There is also a branch at UCLA.
The centers, strongly supported by Democrats, hold workshops on how to increase union membership, get more at the bargaining table and fight globalization. They sponsor research on a range of workplace topics, from sex discrimination and health care to the role of unions in the economy.

"By picking on a research entity dedicated to helping create understanding of and opportunities for California's workforce, the governor has shown again how anti-worker he is," said Art Pulaski, the head of the California Federation of Labor. "Getting the next campaign contribution from his anti-worker supporters is more important than the changing needs of California's workers."
H.D. Palmer, a spokesman for the state Finance Department, said the money given to the center last year was one-time only and funds were not available again this year.

Senate President Pro Tem Don Perata, D-Oakland, said he would have preferred to see the institute money stay in the budget and said the governor isn't helping his own call for cooperation.
"The irony is that he's trying to work on a compromise, he would have been better advised, that this is something that is very important to labor, and he shouldn't add twist to the tail," Perata said. "It makes it a little harder to get something done."

Union groups have been upset with Schwarzenegger's policies all year, and nurses, teachers and firefighters protested the governor again Monday, when he made a private visit to Yahoo in Sunnyvale to talk to employees as part of a guest speaker series.

Schwarzenegger has put on a special election ballot in November measures that would change teacher tenure, redraw legislative boundaries and cap spending. Democrats are pushing ballot initiatives that would force drug manufacturers to establish a discount prescription drug program for poor Californians and change the way the state regulates its energy market.

Separately, Democrats are pushing for increased spending for education. Although they dropped the issue during the budget negotiations, Democrats say Schwarzenegger broke his promise to schools and still owes them $3 billion.

Assembly Speaker Fabian Núñez, D-Los Angeles, said at the budget-signing ceremony that the state needs to continue to invest in education.
"It is my hope that with the same spirit and enthusiasm we can come together to tackle to some of the bigger problems Californians continue to face today ... and work to build a California we can all be proud of," Núñez said.

With the budget behind them at the earliest date in five years, most lawmakers are preparing to head to their districts at the end of the week for a month-long recess. But legislative leaders said they would remain available to talk about a variety of issues.
Perata said the governor should move quickly to convene legislative leaders if he wants to strike a deal.
"If this were an Olympic event, the degree difficulty would be 10," he said. "And every day that we delay is one day more that it is less likely to happen."

A spokeswoman for the governor said his staff continues to meet to discuss issues.
Lawmakers and the governor agreed on a budget deal last week that spends $1.3 billion on transportation, $3 billion more than last year on education, gives $1.2 billion to cities and counties but does not contain new borrowing or taxes.

The state's credit rating went up on the news of the budget signing, with Moody's Investment Service raising the state's score from A3 to A2. California is still one of the lowest ranked states, however.
Moody's said the state's economy is doing better than expected and has a "moderately improved financial outlook for 2006 and beyond."

Exercising his executive power, Schwarzenegger vetoed $190 million from the budget, which totals $117.5 billion in general fund and special fund spending. Along with the labor center money, Schwarzenegger vetoed:
-- $20 million to ease the impacts of tribal gambling on local governments. The administration said it supports the effort but local governments have not filed the proper reports on how past assistance money has been used.
-- $3 million to expand a prostate cancer treatment. The administration said too much of the money already going into the program is spent on overhead.
-- $23.7 million, including $13.7 million in federal funds, to help the food stamp program. The administration believes it can achieve savings in the program and does not need the money.
-- $5 million for 40 new fish and game wardens to save the state money.

 



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