February 2, 2008

Plugging the multibillion-dollar hole in the state budget will be painful, and if various constituencies fight only to save their own dollars, it's going to hurt more, Assemblyman John Laird told city officials Friday.

Laird and Assemblywoman Anna Caballero briefed the City Council on the state fiscal crisis at an annual legislative breakfast, held in the community room at the recently opened Civic Plaza.

"You can't just say we don't want cuts," Laird said. "You need to stand with the people in the Medi-Cal community. You need to stand with the people in CSU, UC and K-12, and say this isn't the future of California we want. We just can't absorb all of this."

Both Laird and Caballero pointed to a deal made when Schwarzenegger took office in 2003 to roll back an unpopular vehicle license fee and tap state coffers to backfill the more than $3 billion it provided to local governments. That decision is costing the state more than $6 billion today, a big chunk of the state's shortfall, estimated by the governor at $14.5 billion.

"It locked a hole in the budget," Laird said.

Between license fees and debt service on money borrowed to keep the state in the black to fix the last fiscal crisis, "we're now hemorrhaging," Caballero said. A fundamental restructuring of the budget is needed, she said.

Laird said a deal that doesn't include massive cuts will be tough to get, especially since nearly every Republican has pledged not to pass new taxes.

He advised city leaders not to fight the governor's plan to postpone some of this year's funding until the next fiscal year. The deferral will solve a cash flow problem, buying time for legislators to craft a better deal, he said.

Otherwise, Laird said, by July or August the cash flow crisis will be "like a gun to our head."