WASHINGTON AND SACRAMENTO — The $789-billion economic stimulus bill headed toward congressional approval is expected to pour $26 billion into California -- building roads, upgrading schools and launching other projects intended to create or save jobs.
The expectation is that the federal government will funnel at least $9.2 billion directly to the state treasury, mostly for education and healthcare, in the next 18 months. Millions of Californians will get a tax cut aimed at promoting consumer spending.
But the money will only go so far in easing the state's financial pains.
In Sacramento, lawmakers are gearing up to vote in the coming days on a state budget package that will hit Californians with nearly half a dozen new taxes and deep spending cuts in almost everything state government does. The federal windfall won't stop that from happening.
The state's deficit through mid-2010 is $41 billion, and not all of the federal money can be used to help erase it. Some won't arrive on time. Some is specifically directed to other purposes.
Still, lawmakers say the legislation's effect will be profound. "California cannot do without this bill," said Rep. Lois Capps (D-Santa Barbara).
The austere budget package in the works in Sacramento already assumes that the federal assistance will wipe out nearly a quarter of California's deficit. If it falls short of that, Californians are in for even more financial carnage; about $1 billion in extra program cuts and tax hikes would be triggered under the budget plan.
The extra cuts would apply to welfare grants, aid to the elderly and disabled, and Medi-Cal. State colleges and universities would also lose money, as would the court system.
The stimulus bill would also affect how much income tax Californians pay. A new surcharge proposed on annual state income tax bills would jump from 2.5% to 5% if California does not get all of the federal funds that budget experts anticipate.
The estimate that California would receive $26 billion comes from a preliminary analysis by the Washington-based Federal Funds Information for States, which studies how federal decisions affect states.
Included in that estimate is about $6 billion that California is projected to receive from the "state stabilization fund," designed to help states avoid layoffs and cuts in services while also creating jobs by funding projects to modernize schools and colleges.
