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Round 2 for Davis on deficit Davis' revised proposal also responds to some concerns from lawmakers of his own party by backing off -- in part -- on some cuts he proposed in January to health care and social services, such as the monthly grants paid to the aged, blind and disabled. It gives $700 million more to K-12 schools, allowing the state to continue funding a class-size reduction program, and $304 million to community colleges. In January, Davis proposed increasing fees at community colleges from $11 per unit to $24. He is now paring that to $18. Davis and his finance director, Steve Peace, took pains to make the case that the new plan won't work without taxes. Assembly Republicans released a plan last month that called for the deficit to be paid off with existing state revenue, avoiding tax increases. "Their plan doesn't pencil out," Davis said. Under the GOP plan, he said, "we're basically borrowing from one pocket to pay another pocket," leaving too little money for all the state's obligations. Peace said that using current revenue from the general fund, the state's main bank account, would pose a host of complications. For one, the Legislature each year would have to reappropriate the money, on a two-thirds vote, to pay off the bonds -- a requirement unlikely to assure Wall Street lenders. "Put yourself in the financial community's perspective and you'll understand why nobody in their right mind would lend money to this state if it wasn't a new tax" separate from the general fund, he said. But Republicans say experts they've consulted believe differently. "Let Wall Street say what they want," Senate Republican leader Brulte said. "Their job is to maximize profits for their people," not look out for the interests of Californians. Peace said the May budget revision tries to placate all parties so the budget can be passed on time. A late budget, he said, could cause financial markets to slash California's credit-rating or decide not to lend money the state needs in the next several months to avoid running out of cash. "If we don't deal with these things prudently, we're going to have both higher taxes and bigger cuts," he said. "The faster we act, the better we do." In January, Davis proposed cutting the state's share of grants to the aged, blind and disabled to the federal minimum. That would have forced grant recipients, most of whom are disabled, to get by on $49 less each month, said Lupe Diaz, legislative advocate for the Western Center on Law and Poverty. Davis got rid of that plan. But the governor still proposes to suspend cost-of-living adjustments, which would have added $34 to the monthly grants in the next year. CalWORKS recipients would also not get cost-of-living adjustments, while avoiding an earlier proposal to cut grants. "It's better, but certainly not what we would have envisioned," Diaz said. Davis reversed some cuts he had proposed in health care, such as denying Medi-Cal coverage to working parents who made more than 61 percent of the federal poverty level. But "most other health cuts remain, and would indirectly deny coverage to literally millions of Californians," said Anthony Wright, executive director of Health Access, a statewide health-care consumer coalition of 200 organizations. Overall, the revised budget calls for $18.8 billion in cuts and other savings, compared to $20.7 billion in his January proposal. The state's deficit through the next fiscal year is projected to be $38.2 billion, up from the $34.6 billion in January. The state's general fund this year is about $78 billion. The Legislature, in two rounds of budget cuts, has already trimmed $6.9 billion.
Lawmakers face a June 15 constitutional deadline for approving a budget
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