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One of the defining cuts of Gov. Arnold Schwarzenegger's proposed May budget was the elimination of welfare-to-work.

The proposal would make California the only state without a welfare program and cost the state more than $3.7 billion in federal funds to save $1.2 billion in state expenditures. For those reasons, many people considered the elimination a negotiating ploy.

Schwarzenegger and Republican lawmakers still say publicly that the state can't afford CalWORKs, which is heavily subsidized by the federal government but not required. Democrats have used the elimination as a prime example of why they think Schwarzenegger's May budget isn't very realistic.

But in an interview last week, Senate President Pro Tem Darrell Steinberg suggested that Republicans have backed away from the CalWORKs elimination in private talks. He noted that Republicans are now asking for $500 million in CalWORKs cuts - short of the $1.2 billion CalWORKs elimination.

Steinberg mentioned Republicans are also seeking $500 million in cuts to state-subsidized child care -- thereby also backing off the $1.2 billion child-care elimination in Schwarzenegger's budget.

Schwarzenegger spokesman Aaron McLear wouldn't confirm or deny that the governor has proposed smaller cuts but acknowledged that different ideas have been floated.

"We've offered a number of alternatives in the meetings with Democrats, but they've rejected them so far," McLear said.

Steinberg did not say how Republicans would buy down the cuts, only that their proposal didn't pencil out in his view. Democrats have proposed roughly $4.5 billion in new tax revenues, from delaying corporate tax breaks to a complicated shift in tax rates on sales, vehicles and income.

"We have gone through what they have discussed with us, and their numbers don't add up," Steinberg said. "You cannot get there credibly without some form of revenue to substitute for deep, deep cuts, whether it's the complete elimination of programs or it's half a billion dollars worth of cuts to child care or CalWORKs."

Senate Republican Leader Dennis Hollingsworth said he hasn't offered the $500 million welfare cut as a budget alternative, though he said such a proposal "isn't impossible" if Democrats target other programs.

"If the Democrats don't want to cut the $1.2 billion that's on the table from CalWORKs, then they need to find other places to cut," Hollingsworth said. "So if they find other cuts that make the budget stable and reach a sustainable level of spending, then a $500 million cut to CalWORKs isn't impossible. I'm just of the philosophical bent that we should not be raising taxes in order to preserve welfare programs that we can't afford in these times."

It appears that the $500 million cut proposal would rely largely on reducing grants to welfare families by 15.7 percent, a proposal that Schwarzenegger offered in his January budget. The governor also wants to eliminate CalWORKs benefits for legal immigrants who have been in the country for less than five years; the federal government does not pay for those individuals.

Frank Mecca, director of the California Welfare Directors Association, said the governor's grant cut proposal would have severe consequences for poor families.

"Right now, in nominal dollars, grants today are exactly where they were 20 years ago," Mecca said. "So we're talking about a cut that would put poor children that much further into poverty. My members are convinced a grant cut of that magnitude would cause widespread homelessness."



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