We wanted to be sure and share the following report from today's Sacramento Bee regarding today's anticipated release of Governor Schwarzenegger's proposed overhaul for Medi-Cal.

The Administration now says it plans to release its detailed redesign proposal by the end of summer. Some experts had warned that the controversial redesign would hold-up budget negotiations.

Please note the following report also discusses an agreement struck between counties and the Administration over budgetary issues. Counties have agreed to accept $2.6 billion in cuts over the next two years in exchange for future financial protections – including a proposed constitutional change that would prevent state lawmakers from forcing local governments to provide state-mandated services unless the state supplies funding.

---------------------------------------------------------------------------

They accept governor's promise to fight for their funding in the future.

Officials from California cities and counties said Wednesday that they are willing to stomach $2.6 billion in cuts over the next two years in exchange for Gov. Arnold Schwarzenegger's word that he will fight to protect their funding in the future.

City, county and law-enforcement leaders stood with Schwarzenegger at Elk Grove City Hall to announce the agreement, the fourth such deal that the governor has struck to win support for the revised budget he will present to the Legislature today.

He is scheduled to unveil a budget overhaul that includes deep cuts to social programs and, like his January budget proposal, does not call for raising taxes. The budget also will reflect an unexpected boost to the state treasury from an improving economy and a one-time amnesty program for taxpayers using tax shelters, but the state still faces billions of dollars of red ink.

"Cuts are never easy to accept, especially not cuts of this magnitude, but we are keeping our eyes on the prize," said Alex Padilla, Los Angeles City Council president. "This is short-term pain for long-term gain."

The deal with cities, like others Schwarzenegger made with a powerful teachers union and top officials from state courts and universities, still is subject to approval by the Legislature. Lawmakers and others have criticized Schwarzenegger for striking deals without their input and making guarantees that could strap the state with costs in future years.

But the GOP governor promised Wednesday to wield the same political power he used to win support for an unpopular bond measure and workers' compensation reform to carry out his pledge to local governments.

Under the latest deal, local governments - including cities, counties, special districts and redevelopment agencies - say they will accept $1.3 billion in cuts in each of the next two years. Schwarzenegger, in return, will press lawmakers to place a constitutional amendment on November's ballot that would prohibit the state from raiding local governments' share in future years.

The amendment would make permanent in the California constitution a reduction in the state's vehicle license fee, and it would require the state to reimburse local governments the same amount that they lose from the vehicle tax cut beginning in the 2006-07 budget year.

Cities and counties say the deal will eliminate uncertainty over whether they will receive funding crucial for law enforcement and other services.

"With this agreement I am keeping my promise to the cities and to the counties that they should also have a reliable revenue stream to pay for local services," Schwarzenegger said.

In another key part of the agreement, the proposed constitutional change also would prevent lawmakers from forcing local governments to provide state-mandated services unless the state supplies money to defray the costs of providing the programs.

Schwarzenegger said he will include the proposed savings from the agreement in his revised budget, which he is scheduled to release this afternoon. He was mum about other details of the budget, but advocates and legislative staff said Wednesday that an expected plan to overhaul Medi-Cal that some had predicted would hang up budget talks will not be included.