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Davis Finds 'No Good Choices' in Slicing Budget

Noting the toll taken on the poor and sick, he says, 'Nobody goes into government to do this.'

May 04, 2003|Gregg Jones | Times Staff Writer

SACRAMENTO — The mood was grim as Gov. Gray Davis and senior advisors gathered in his Cabinet room in mid-December. For weeks, they had struggled to come up with billions of dollars in spending cuts to close an enormous state budget shortfall.

Now, with a deadline at hand to print his budget, Davis peered through his reading glasses, staring at a list of cuts he already had rejected at least once. He pointed to an item that would eliminate 10 benefits now paid for by Medi-Cal, the state health program for the poor, including artificial limbs and braces used by 120,000 Californians.

"Let's do these," he said, grimacing as he spoke, a witness recalled.

Nearly five months later, the decisions that Davis and his aides agonized over in December are driving a tortuous debate in the Legislature over how to fix California's fiscal mess. Amid the bickering, Republican and Democratic lawmakers last week found enough common ground to agree on a $3.6-billion package of cuts and borrowing.

But they still have made only modest progress in addressing a shortfall estimated at $35 billion over the next 14 months. Like Davis, they have delayed agonizing choices, and in the weeks ahead will have to weigh cutting health care for the poor against reductions in education or transportation or some other slice of the state budget.

Davis' budget, which includes $20 billion in cuts and savings this year and next, is the sum total of hundreds of small choices -- things so seemingly coldhearted as denying prosthetics to amputees, a benefit that would save the state only $2 million next year in a budget of nearly $100 billion.

How the governor made those decisions illustrates the struggle to balance policy and politics as the gap between state spending and tax collections has hit record levels. The decisions were thrashed out in mind-numbing meetings that often lasted late into the night.

Davis captured the mood with a line that became a mantra for the sessions: "There are no good choices here," aides recalled him saying over and over as they attempted to balance the budget by partially dismantling programs they had championed for the last four years.

Tempers flared. Debates raged in which talk of dollars withheld would translate into discussions of sickness and death versus inconvenience and indignity. At one point when someone suggested rolling back health insurance for the children of the working poor, participants said, Davis banged a hand on the table and shouted: "We have to stand for something here!"

This account of the sessions that led to Davis' proposed health care cuts is based on separate interviews with the governor, four participants in the discussions and two people who observed parts of the deliberations.

Last fall, as Davis sought to fill the deepening budget hole, Medi-Cal was a logical place to look. The joint federal-state program, California's version of Medicaid, will serve about 6.5 million people and cost about $27 billion this year. That's nearly one-quarter of the annual state budget. But the Democratic governor said he proposed cuts in the health safety net for California's neediest citizens with great reluctance.

"I don't want to take prosthetics away from anyone," Davis said in an interview. "I don't want to deny injured or sick people the benefits they currently enjoy. It's an extraordinarily painful process. Nobody goes into government to do this. If somebody can show me how we can get out of this thicket without causing pain to individuals, I'll embrace it in a New York minute."

Critics accuse Davis of lacking convictions and a moral compass, but senior advisors say his internal discussions on the budget cuts offer evidence to the contrary.

"We had to ask: What's the difference between life and death?" said Susan Kennedy, the governor's Cabinet secretary and chief budget strategist during last year's deliberations. "Are we going to take syringes away from [diabetics] or throw these people off health insurance altogether? If you had to choose between dialysis and incontinence supplies, which would you eliminate?"

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Year-Round Struggle

Shaping the state budget has become a year-round struggle in Sacramento in recent years. The governor submits a budget to the Legislature by Jan. 10 and revises that plan in May to reflect changes in tax collections and demands on state services.

Lawmakers are supposed to submit their version of the budget for the governor's signature by midnight June 15, and the governor is supposed to sign it by June 30, the end of the state fiscal year.

Last year, the Assembly couldn't muster the votes needed to pass the budget until Sept. 1. By that time, the Davis administration was already at work on the 2003-04 budget.

In a normal year, state agencies submit wish lists during the summer for how an agency or department hopes to increase spending. Last summer, however, the Finance Department asked every office to show how it would cut up to 20% of its budget.

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