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Californians Wrestle with Massive Budget Cuts - 2003-07-17


Californians hope to blunt the impact of expected cuts in public services, as the state's politicians wrestle with a massive budget deficit. The anticipated cuts will affect education and health care.

The problem is a $38 billion hole in the state budget, which is larger than the gross domestic product of many nations.

Wednesday, the regents of the University of California recommended raising student fees by as much as 30 percent to cope with the shortfall in state funding. The university may also reduce support-programs for students, restrict enrollment, and borrow up to $50 million to cover costs. The university system expects to lose $400 million in direct funding, and indirect losses will be even higher.

Also Wednesday, the state's second public system of higher education, California State University, approved a similar 30 per cent increase in student fees.

Student protesters criticized the move, which university chancellor Charles Reed called necessary. "We needed to serve as many students as we could with quality and we needed to not reduce or lay off any of the CSU faculty," said Mr. Reed.

In Los Angeles, staff and residents of two nursing homes staged a walkout to say proposed cuts could put sick or elderly residents on the street.

In the state capital of Sacramento, Republicans and Democrats are still deadlocked in their budget talks, with Democrats reluctant to cut social programs and Republicans refusing to raise taxes.

One Los Angeles business group is urging a compromise. The Los Angeles Chamber of Commerce usually opposes tax hikes, but president Rusty Hammer supports a Democratic proposal for a half-percent increase in the state sales tax, if it is coupled with measures to help business. "Without a combination of significant cuts, economic stimulus, and some new revenue, we're not going to solve this problem.," said Mr. Hammer.

Tuesday, the state legislature rejected a Republican for even more drastic cuts in spending than are already projected. The proposal contained no tax hikes, which Republicans say would slow recovery.

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