Governor: Budget Deficit Due to Health, Schools Overspending

By Judith Scherr
Thursday June 05, 2008 - 09:52:00 AM

If education, health and other state services were spent responsibly within their budgets, there would be no budget crisis, Gov. Arnold Schwarzenegger told a group of local elected officials and community representatives at a meeting in Oakland City Hall Monday morning.  

The meeting was one of a number of meetings the governor has held in the state to talk about the budget crisis and share his solutions. 

The state is running at a $17 billion deficit and legislators are yet to approve the 2008-2009 budget, which must be passed by a two-thirds majority. 

“The responsible thing to do is to bring spending and revenues together,” Schwarzenegger said. “We have to live within our means.” 

The governor was questioned on inadequate school funding by Alameda Mayor Beverly Johnson, Oakland State Trustee Vince Matthews and others. Matthews pointed out that California spending per pupil is 47th in the nation. 

The governor, however, said school districts waste money, spending millions of dollars on consulting fees. “The school system should be more efficient,” he said. 

Schwarzenegger said he was about to launch a website where the budget of each school will be made public, giving all an opportunity to see the spending going on outside the classroom. 

“We’ve got to let people know where the schools are spending their money,” he said. 

Sherry Hirota, chief executive officer of Oakland-based Asian Health Services, told the governor she blames Proposition 13 for the growing budget crisis.  

Schwarzenegger responded that raising taxes isn’t the answer: “You can’t keep going back to the people,” he said. “We have to live within our means.” 

While some “are screaming to raise taxes,” he said that is not the responsible way to move forward, especially given that funds the state borrowed four years ago have yet to be paid back. 

Several community speakers recommended reinstating the Vehicle License Tax, which Schwarzenegger eliminated when he took office.  

“For every dollar you take away from people, they’ll spend less in the economy,” he responded. The money people saved by not paying the vehicle license fee has gone back into the economy, he said. 

Someone suggested an oil severance tax, but the governor said California companies are not to blame. The profits on gasoline “go to the Middle East,” then, wealthy Middle Easterners “come back and buy up our stuff,” he said. 

Assemblymember Sandré Swanson said tax loopholes should be fixed to fund schools, but the governor answered, “What one person calls a tax loophole, another calls a tax incentive.”  

For example, the governor said New Mexico has given the movie industry tax incentives, and companies have left Hollywood for New Mexico. 

Contra Costa County Sheriff Warren Rupf called on the governor to increase funding for law enforcement. Schwar-azenegger told Rupf to get 200 police officers to circle the capital and knock on doors and the funding would get into the budget. 

Encouraging such lobbying, the governor said, “I’ve had a lot of Democrats come to my smoking tent and light up a stogie ... The rule is the squeaky wheel gets the grease.” 

The governor’s solution is to balance the budget by borrowing $15 million against future lottery proceeds and changing the lottery to make it more profitable. Any additional funds needed to balance the budget would come from a temporary sales tax hike. However, the governor said the Republicans don’t want to raise the sales tax. 

If the legislature approves the lottery plan, it would go to the voters in November for approval.