***From St. Senator Loni Hancock (D-Berkeley, 9th district)

Dear Friend,

Last week, as California's budget collapsed, the state Controller began
issuing IOUs. This week, California's largest banks say they will soon stop
accepting them. We have been brought to this place by the reckless and
unnecessary choices made by Governor Schwarzenegger.

In June, Democrats passed a $23 billion budget reduction package - the
Governor vetoed it. The package had more than $11 billion in heartbreaking
cuts which no Democrat wanted to make. However, we refused to shred the
safety net for millions of human beings, as the Governor demanded. We
recognized the crisis and made more than a good-faith attempt to address
hard economic times and meet the Governor halfway.

After the veto, Democrats attempted a second compromise. We proposed a $23
billion package, this time without taxes, just as he demanded. It included
cuts to almost every health and welfare program but still protected the
safety net for millions of Californians, although at a very minimal level.
We were able to do this without new revenue by re-allocating $1 billion of
redevelopment funds and using $1 billion of reserve funds. A rainy day fund
of $3 billion remained. Once again, the Governor refused to meet us
half-way.

Then, as June came to a close, the Governor rejected the Legislature's
attempt at a short-term solution that would have taken us through the summer
and avoided the need to resort to IOUs. With that irresponsible act the
Governor dug the state into an even deeper hole, adding at least $3 billion
to the deficit.  That means that more money will need to be cut from schools, cities, parks and health care.

Now the Governor is demanding long-term policy changes that have been
repeatedly turned down by voters through the initiative process and that he
cannot get approved through legislation. The Governor is insisting on his
way or the highway, and refusing to compromise.

As a result millions of Californians will suffer, and I'm learning that it
takes a lot of human suffering to reach even $1 billion in cuts. It didn't
have to come to this. California has reasonable and legitimate options to
raise revenues: An oil extraction tax (California is the only oil producing
state without
one) and a tobacco tax, for example, are two such options.

Additionally, we have the largest cash reserve the state has had in 20
years. If reserves are meant to be used on a "rainy day", now is certainly
the time to use them. But, the Governor says no.

Rather than move toward compromise, the Governor's position seems to have
hardened in recent days, veering away from working together to find a
reasonable solution. As a result, we will pay millions more in interest
payments and families and small business people throughout the state will
face hardship and an uncertain future.

If you would like to see more detailed information about the inaccuracy of
the Governor's statements regarding the state's safety net programs, I
recommend an analysis prepared by the California State Association of
Counties. The document can be viewed at:
http://www.csac. counties. org/images/ users/1/Myths% 20and%20Facts- %20Final. pdf

Additionally, Assemblywoman Noreen Evans, Chair of the Assembly Budget
Committee, has provided a comprehensive analysis of what's wrong with the
Governors so-called "reform" proposals. It can be viewed at:
http://democrats. assembly. ca.gov/members/ a07/Pressroom/ Press/20090708AD 07PR01.aspx

I hope that you will continue to make your views known to the Governor on
this crucial matter. As always, I look forward to hearing your comments and
suggestions.

Sincerely,
Senator Hancock

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