CALIFORNIA UCP BUDGET UPDATE
December 18, 2002 - Wednesday afternoon

STATE BUDGET SHORTFALL NOW OFFICIALLY PROJECTED AT OVER $34 BILLION SAYS GOV DAVIS - MORE CUTS TO HEALTH AND HUMAN SERVICES PROGRAMS FEARED - STEVE PEACE TO HEAD DEPT OF FINANCE

Governor Gray Davis, in a press conference this afternoon (December 18) at the State Capitol, said that new estimates now project a state budget deficit at a staggering $34.8  billion, raising the specter of even more reductions to needed programs and services. The new projection was even worse than what many legislators and advocates feared - and makes it the worse fiscal crisis in the state's history.

The Governor was somber and grim, and said the the problem was so immense that he wanted to share this information several weeks before he presented his 2004 budget proposal in January in order to prepare the public and the Legislature.
Davis already called a special session of the Legislature and submitted a proposal of $10 billion of cuts to the current year budget that the Legislature is considering.

The Governor also announced that former Sen. Steve Peace of Chula Vista will succeed outgoing Department of Finance Director Tim Gage in January.

The Governor cited huge historic drops in anticipated revenues including:
* 56% of the problem are reductions in revenue predictions for current budget
* 36% of the problems are one time reductions used last year to solve problem
* 13% of the problem are mandatory expenditure increases
The Governor also said that the state of the economy was another important reason why the shortfall is so huge and that budget actions last year were based on that assumption.

"We are faced with a very different situation, with a very different response" said the Governor.

The Governor earlier briefed members of the legislative leadership (Senate President Pro Tem John Burton (D-San Francisco), Assembly Speaker Herb Wesson (D-Culver City), Senate Minority Leader Jim Brulte (R-Rancho Cucamonga), and Assembly Republican Leader Dave Cox (R-Fair Oaks).

While the announcement by the Governor confirmed what many legislators and advocates have widely predicted, policy makers and advocates were stunned by the growing massive shortfall.  The shortfall of nearly $35 billion means that his January 10 2004 budget proposal must now fill a gap that is nearly $14 billion larger then what was officially projected in November. At that time in November, the Legislative Analyst Office projected a budget shortfall of over $21 billion. The Governor, at the time did not confirm those numbers, but later, on December 6, when he called released his proposal to cut $10 billion in spending in the current 2003 budget, said the deficit was billions of dollars worse than any current projection.

The Governor said that he hoped his Department of Finance and the independent Legislative Analyst Office will jointly assess the economic situation, including revenue projections in the coming weeks.

More details regarding the Governor's annoucement will be reported in tomorrow's UCP Budget Update.

WHAT DOES THIS ALL MEAN?
 Today news - while expected - means that more cuts and reductions to health and human service programs are likely to come when the Governor submits, on January 10, his proposed budget for the 2003-2004 fiscal year (which begins July 1, 2003). The Governor said he would submit a mix of cuts and revenues to bridge the gap.

IMPACT TO PEOPLE WITH DISABILITIES, SENIORS, MENTAL HEALTH NEEDS
Serious significant impact.  The Governor's announcement of the new budget shortfall projections offered no specifics in terms of additional reductions or cuts that would impact people with developmental (and other) disabilities, mental health needs, seniors, people with low incomes and others.

NEXT STEPS
LEGISLATURE:
* FLOOR SESSIONS - The full Assembly and Senate are not expected to convene floor
sessions either in special session on the budget - or in regular session, until
January 6 (Monday). Final action on the Governor's proposed spending cuts and
reductions are not expected until sometime in early to mid January.
* HEARINGS - No action will occur at any of these informational hearings (there is one on education finance being held in San Jose on December 18). The Senate will not hold any hearings prior to January.  The Senate is not organizing internal work groups (as previously reported) and is reviewing the Governor's proposal and
waiting to see the new numbers on the projected shortfall (to be released by the
Department of Finance and reportedly the Legislative Analyst Office, perhaps later
this week).
* Actual full scale budget hearings - in both houses - on the Governor's current year spending cuts proposal will occur sometime in early to mid January.
GOVERNOR:
* Continues preparations for submitting his proposed budget for 2003-2004 on
January 10 - which advocates fear will be the other proverbial shoe to drop - now with the deficit projected at over $34 billion. That proposal will contain a mixture of revenue increases and more program cuts, according to the Governor today.
 

WHAT YOU CAN DO
* Please see new UCP ACTION ALERT that will be issued later on Wednesday (December 18).
 

NOTE: This is a report to Californians with developmental (and other disabilities),
families, providers and other advocates from the California Coalition of United
Cerebral Palsy Associations. If you would like to get on the UCP Update distribution (and conversely, get off of it) please send an email with that request to: martyomoto@rcip.com. Please allow some time to be removed from the list (it takes time to delete names from distribution listing). Additions can be added immediately.  Please also send announcements of meetings, and any alerts or legislative reports you or your organization sends out etc. Sharing information is part of our organizing effort. Please feel free to forward or copy this (attribution is nice, but so are new boots).  Thanks! Remember - we are all in this together.

FOR MORE INFORMATION
Marty Omoto, Legislative Director
CA Coalition of United Cerebral Palsy Associations
1225 8th Street Suite 480 Sacramento, CA 95814
916/446-3204  FAX: 916/446-3206 email: martyomoto@rcip.com
Coalition Chair: Michael Williams (UCP of the Golden Gate)
Immediate Past Chair: Ron Cohen (UCP LA and Ventura Counties)