Funds for Disabled Restored

SACRAMENTO — Gov. Arnold Schwarzenegger is scrapping a plan he announced in January to block increases in welfare payments for elderly and disabled Californians, administration officials said Thursday.

The governor will not include the more than $43 million in planned reductions, which set off angry protests among advocacy groups and social services officials, in the revised state budget plan he releases today.

Schwarzenegger will proceed with a plan to cut $114 million in county programs that provide child care for parents moving from welfare to work. But officials say a windfall of higher-than-expected tax receipts in recent months has left the state flush enough for the governor to restore the money for the elderly and disabled.

“This [reduction] was proposed because of what the state’s revenue picture looked like at the time of the January budget,” said an administration official, speaking anonymously because the governor has not yet unveiled his revised plan.

“Now, we clearly have additional revenues, and this is something we are happy to be able to restore.”

The budget move is one of several the governor will announce today to help neutralize his critics as he gears up for his November reelection campaign. Education officials announced Wednesday that the governor already plans to repay schools $5 billion the state borrowed to balance the budget in recent years, starting with $2 billion in the fiscal year that begins July 1.

The money had been a source of friction between Schwarzenegger and school groups, which helped defeat his special election agenda last year.

Schwarzenegger also intends to pay down billions of dollars of state debt a year early and build the biggest budget reserve California has had since 1978. Today, Schwarzenegger will announce the welfare increases and proposals to cover more low-income children with health insurance and build housing for the mentally ill.

“There is much to feel great about,” Schwarzenegger said Thursday at a speech before a National Assn. of Counties gathering in Sacramento. “Revenues are at an all-time high.”

Democrats say the governor is finally making policy moves he should have made long ago.

They note that legislative committees they control were already taking action to put money into many of the programs that he will announce his support for today.

“It looks like the governor has been staying up late watching tapes of what Assembly Democrats have been doing to reverse his harsh cuts of last year,” said Steve Maviglio, spokesman for Assembly Speaker Fabian Nunez (D-Los Angeles). “This is another example of the governor’s election-year reversals that Democrats are pleased to see.”

The governor’s reversal on welfare assistance involves grants to low-income Californians who are elderly and disabled.

Rather than suspend scheduled increases, he would now raise the monthly grants from $836 to $849 for singles and from $1,472 to $1,491 for couples.

Jean Ross, executive director of the California Budget Project, a Sacramento nonprofit organization that advocates for low-income groups, said that with all the new revenues flowing into state coffers, the governor’s latest proposal “makes absolute sense.”

“The appropriateness of the suspension,” she said, “was questionable from the outset.”

The child-care cuts that remain, however, will be costly to counties. Los Angeles County alone stands to lose $38 million. Administration officials say local agencies do not need the money because the number of children they are serving is lower than expected.

County officials, however, say the cut will jeopardize their programs. And Ross noted that the proposed cuts come as officials brace for new federal welfare-to-work requirements that will expand their child-care caseloads.

Advocates for the poor also gave a lukewarm response to a $22-million proposal the administration unveiled Thursday to provide health insurance to 22,000 low-income children on waiting lists to receive care.

“This is the governor’s last chance to fulfill a campaign promise to cover all children,” said Anthony Wright, executive director of the Sacramento nonprofit Health Access. “Yet his proposal covers less than a tenth of the state’s uninsured kids.”

The money would help counties provide health insurance to children whose families earn too much for them to qualify for federal or state programs, but less than $60,000 for a family of four, three times the federal poverty level.

The state’s secretary of Health and Human Services, Kim Belshe, said that voters will be able to further expand health-care coverage to children through an initiative expected on the ballot in November. That measure, which the governor has not endorsed, would increase taxes on cigarettes by $2.60 per pack and allocate the revenue to enrolling more children in the government-sponsored Healthy Families insurance program.

Belshe described the programs the governor will propose today as “a transitional or bridge proposal pending a decision by voters on whether Healthy Families should be expanded.”

Belshe also announced that the governor will propose spending $75 million a year for the next 20 years on building housing for the mentally ill. The state would pay for it with a tax on millionaires that voters approved in November 2004.

The 2004 initiative imposed a 1% tax on every dollar Californians earn over $1 million, and required that the money be spent on programs for Californians with mental health problems.

Darrell Steinberg, a former assemblyman from Sacramento who heads a commission created to oversee the spending of the money, said the governor’s proposal would mean 10,000 new housing units in the 20-year period.

“This is a big step,” Steinberg said. “There hasn’t been this kind of investment in a long time.”

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Times staff writer Peter Nicholas contributed to this report.