STATE TRIMS DEFICIT, BUT KEY CUTS (Education, Health and Human Services) DELAYED

Wyatt Buchanan, SF Chronicle Sacramento Bureau

(02-23) 04:00 PST Sacramento - --

Tuesday, February 23, 2010 -- The California Legislature began chipping away at the state's $20 billion budget deficit, passing $2.8 billion in cuts, fund shifts and other solutions, though political wrangling held up about an additional proposed $2.2 billion Monday evening.

The Legislature was facing a deadline to respond to Gov. Arnold Schwarzenegger's call for midyear budget cuts. He asked for about $8.9 billion in cuts and other changes to the budget over the next 16 months, but the Legislature was considering a package of bills worth about $5 billion. Lawmakers will not take up cuts to education and social services until later in the year.

Some of the most significant changes approved by the Legislature included an $811 million reduction in funding for prisoner medical costs, a 5 percent cut in state employee payroll, saving $182 million by turning over illegal immigrants in state jails to the federal government and $228 million by suspending some mandates for local governments and deferring certain payments to them.

Assembly Speaker Karen Bass, D-Baldwin Vista (Los Angeles County), acknowledged that the Legislature is taking up some of the easier proposals while leaving more painful cuts until later in the year.

"The reason for that is we want to take time with some of these decisions," Bass said. "The idea that we would take this time right now and whack education, health and human services - obviously people were not willing to do that."

The Senate already had passed many of the proposals and the Assembly was the final hurdle for most proposals Monday before they move to Schwarzenegger's desk.

Republicans in the Assembly lambasted the action on Monday.

"Lawmakers should be working together to address California's $20.7 billion budget deficit in a responsible and bipartisan way. Instead, Democrats have bypassed Republicans to push through a package of gimmicks, tax increases and phantom spending reductions that do next to nothing to address our state's fiscal crisis," said Republican Assembly Leader Martin Garrick of Carlsbad (San Diego County).

Several more controversial pieces are to be heard in the coming days, including a complicated change in gas taxes that will free up money for general fund spending and guarantee money for local transit agencies. The Assembly passed that plan, but it has yet to clear the Senate.

Another plan to increase tax enforcement on businesses that sell to Californians from out of state, often called the Amazon.com tax, passed the Senate but not the Assembly. Neither house has heard a proposal to add a surcharge on residential and commercial property insurance policies to fund emergency services.

Schwarzenegger spokesman Aaron McLear said the governor believes lawmakers are "clearly focused on solving the deficit." However, he said it would be "very difficult" for Schwarzenegger to approve the gas tax proposal as it includes a continued suspension of tax breaks for some corporations, which McLear called a "job killer."