Calif. budget targets social programs

Amy Scott Jul 21, 2009
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Calif. budget targets social programs

Amy Scott Jul 21, 2009
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Steve Chiotakis: The state of California has been a bit of a laughingstock for all of its recent IOUs. It’s certainly not alone in its budget battles, and it is after all the state with the biggest budget.
Today at least, it’s one big step closer to resolving its cash crisis. Last night, Governor Arnold Schwarzenegger reached a deal with legislative leaders to close the state’s $26 billion deficit. But there’s still a lot of pain ahead. Here’s Marketplace’s Amy Scott.


Amy Scott: The deal would cut $6 billion from public schools and community colleges, more than a billion dollars from the state prison system, and another $1.3 billion from the state’s health care program for the poor.

Governor Schwarzenegger had proposed eliminating the state’s welfare-to-work program and health insurance for poor children. But California Assembly Speaker Karen Bass says those programs survived.

Karen Bass: We wanted to make sure that during this time of economic recession, when people need services more, that we did not eliminate the safety net.

In exchange for deep cuts to social programs, Republican lawmakers avoided new tax increases. The legislature is expected to vote on the deal later this week. If it passes, it could resolve the state’s cash crisis.

For two weeks the controller’s office has been sending out IOUs to its vendors and contractors. Officials hope a balanced budget will allow the state to get short-term loans to cover its daily expenses.

I’m Amy Scott for Marketplace.

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