San Francisco Examiner - May 14, 2004
Adriel Hampton, Staff Writer

Gerardo Sandoval, chair of the Board of Supervisor's Finance Committee, said the new $103 billion state budget appears to be more favorable toward San Francisco's total deficit, estimated at $352 million before aggressive mid-year cuts and the revised state figures. But he criticized the governor for promising reform and then passing the state problems down to cities and counties.

"I think everyone is hoping it's going to be $10 million less," Sandoval said. "But even a $90 million cut from the state is not the reform that everybody was expecting when [Schwarzenegger] took office."

Mayor Gavin Newsom has until June 1 to deliver a balanced budget to the Board of Supervisors for consideration. Last year's city budget was just under $5 billion, but revenues have continued to lag behind spending.

San Francisco's state Assemblyman Mark Leno said the Republican governor responded to Democrats' concerns about cuts to the state Healthy Families program and funding for AIDS drug assistance -- two areas that would have heavily impacted The City -- and to protests of student-aid cuts.

However, he criticized Schwarzenegger for shifting funds and relying on more borrowing to balance the budget instead of attacking state spending and revenues on a structural level.

"The fact is there is no addressing the structural imbalance of our budget," Leno said. "He continues to borrow, fund-shift, defer and so in that perspective, there is nothing new going on."

Schwarzenegger should have used his massive popularity to deliver radical reform, Leno said. Now, he said, passing a budget by the June 15 deadline is on the shoulders of the Democratic majority in the Legislature, with little hope of marshaling the two-thirds vote needed for any substantial changes.

Leno said it would be difficult for him to vote for the governor's spending plan because "this is all done with more borrowing and more gimmicks." The proposal also relies on two years of deep cuts to local governments, which Leno said would be difficult to bear.

To help overcome the state's $17 billion deficit next year, cities, counties and local government districts across the state have agreed to give up $1.3 billion in state revenues in each of the next two years. In exchange, Schwarzenegger is promising to return the funding starting in 2006-07, along with roughly $2.5 billion the state had taken in previous years. The cuts come along with the governor's promise to support a constitutional amendment, planned for the November ballot, to protect local governments from future state takeaways.

Much of the hit to San Francisco is in health services, and the governor's new budget eases limits on public health services for children and cuts in reimbursements for indigent care. AIDS activists had also deeply criticized the plan to cap drug assistance benefits, which The City was preparing to backfill.

"That would have been very hard for San Francisco," Leno said. "Clearly, San Francisco is [still] going to take a major hit."

Carole Migden, chairwoman of the Board of Equalization, also slammed the governor for raising fees on public university students and carving out $1.3 billion in local government revenues. She also referred to the recent layoff of 79 school workers in The City.

"It hammers at the poor," Migden said.

The governor's budget has been the subject of regular protests here, and has led to proposals for deep cuts to local services and discussions about outsourcing. All city agencies are expecting 5.5 percent cuts, and have prepared contingency plans of 15 percent more. Newsom has said some of the three-score city departments could see their budgets halved, and has already cut 200 jobs.

The budget still has to be approved by the Legislature this summer. Also, the constitutional amendment must qualify to be placed on the November ballot, and then voters must approve it.

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