SACRAMENTO AND WASHINGTON — The economic stimulus package congressional leaders are drafting would wipe out nearly a quarter of California's budget shortfall, a potential windfall that could help end the impasse over how to close the nearly $42-billion gap.
The House bill, which is likely to be voted on next week, would bring the state more than $11 billion in healthcare and education money that could go directly to reducing the deficit through mid-2010, state officials learned Thursday night.
"This takes a big bite out of the state's budget gap," said Jean Ross, executive director of the California Budget Project, a Sacramento-based think tank. "It is better news than many of us had anticipated."
The money would come from the $825-billion stimulus package that President Barack Obama has made a top priority. The package would also increase spending in California into 2011 for various federal programs, such as job training and food stamps.
The amount of money slated for California could change, however. The Senate is preparing to write its own version, and Republicans are increasingly objecting to the plan, saying it would not do enough to stimulate the economy.
But congressional Democrats hope to send a bill to the White House by Presidents Day.
"The president asked for action, swift and bold. That is what we are doing," House Speaker Nancy Pelosi (D-San Francisco) said Thursday. "The American people are in a desperate situation."
Most of the money that California could use to whittle down its deficit would come in the form of healthcare spending. According to an analysis by the Washington, D.C.-based Center for Budget and Policy Priorities, California's Medi-Cal healthcare program for the poor would get a $7.3-billion boost through the coming state fiscal year. The money is intended to keep states from cutting the programs as they struggle with ballooning deficits.
The state is also positioned to receive nearly $4 billion in education spending. Budget analysts said that money can also be used by state officials to help limit cuts in existing school programs.
"It will be a huge help to us in resolving our current fiscal problems," state Senate President Pro Tem Darrell Steinberg (D-Sacramento) said.
But he and Assembly Speaker Karen Bass (D-Los Angeles) warned that it solves only part of the state's problem and lawmakers are running out of time to deal with the rest. "We have to make really horrible cuts, and we have to raise revenue, but we are just hoping whatever we get will help us avoid deeper cuts," Bass said.
