In an effort to combat what could be an enormous deficit in next year’s state budget, Gov. Arnold Schwarzenegger’s financial advisors have suggested he consider a 10 percent across-the-board budget cut, H.D. Palmer said.
Palmer, the deputy director of the California Department of Finance, said that while he is not willing to comment on the specific aspects of the proposal, he, Schwarzenegger and other advisors consider troubling aspects of the upcoming budget at this time every year.
Bob Mulholland, a campaign advisor for the California Democratic Party, said he believes that if the budget cut goes through, Californians will begin to feel the effects almost immediately and such cuts could hurt California students the most.
“The cuts will hurt the average Californian and college students. He will implement another tuition increase and take millions away from universities,” Mulholland said.
Palmer emphasized that the potential budget cut is only one of many strategies Schwarzenegger will be considering to close the estimated $6.1 billion hole legislators are expecting in the 2008-2009 state budget.
“We’ve indicated publicly and clearly from the day we signed last year’s budget that we had a sizable problem to solve for next year’s budget,” Palmer said.
While analysts estimated a large deficit when Schwarzenegger signed this year’s budget, revenue returns have indicated that the deficit may be greater than initially expected, Palmer said.
As a result of falling housing and subprime loan markets, state revenue from July to September was short about $777 million, Palmer said.
While no final decisions have been made, Palmer said he and Schwarzenegger’s other financial advisors will be compiling a set of options for Schwarzenegger to consider.
Palmer said he expects that Schwarznegger will announce his choice in December.
“We’re certainly hoping for the best but we’re also prudently planning for the worst,” he said.
But while Palmer said a unilateral budget cut is on the table, opponents say they are concerned that the downsized budget may hurt many Californians who can least afford them.
Mulholland added that he was concerned that California’s existing reputation for poor education funding will only worsen if Schwarzenneger goes through with the cuts.
Congress recently announced that they may pass legislation to penalize states that cut their higher education budgets.
Mulholland said he believes the proposal will only make matters worse for students.
“California ranks in the 40s for student performance and Schwarzenegger will soon have us ranked in the bottom,” he said, referring to the nationwide public school rankings.
According to an article published in the San Jose Mercury News, several Democratic state legislators expressed concern over the budget cuts.
Assembly Speaker Fabian Núñez said he worries that California social services programs will see sizable cuts in their funding.
With reports from Will Weiss, Bruin staff.