Partial Transcript of Gov. Schwarzenegger Discussing State Budget Impasse

JIM WHIPPLE:

Hello, I'm Jim Whipple, I'm the administrator here at Marshall Medical Center and I want to welcome the Governor to our county and our city and to Marshall.

Besides introducing, I'm also here to talk about the crisis we are facing right now with the budget not being passed and I want to thank the Governor for truly leading in this state, as the legislature has basically acted irresponsibly by not finishing a budget and having it where they pay their obligations. And I understand how tough it is to pass a budget when you have expenses taking off on you, a revenue due. But the obligation is they must do that and lead.

The hospital is doing the same thing right now. We're fighting with a budget right now because of shortfalls. We have challenges; 22 percent of our admissions are Medi-Cal presently, so we have cash flow problems due to the state budget crisis. Also the fact that Medi-Cal pays less than half of the cost to provide care to their patients; 60 percent of our BRS in this county are Medi-Cal patients. So we struggle very hard but we have to pass a budget, which we will. The state needs to do that also.

Some of the challenges we're seeing is presently I have a patient in and she has been in the hospital for 80 days. For the last 40 she has not needed acute care, does not need to be in the hospital but needs ongoing skilled nursing care. We have not been able to find a place that will accept her in the state of California for care either due to the rates that are paid by Medi-Cal but primarily now because they know they're not going to be paid for the next month or two and they just cannot take on the obligation of a patient when they know they're not going to receive any money for that.

From right to left: El Dorado County Sheriff Jeff Neves, Placerville Mayor Carl Hagen, Governor Arnold Schwarzenegger and Marshall Medical Center Chief Executive Officer James Whipple. Photo by Peter Grigsby, Office of the Governor.

The hospital, currently the state is withholding almost $2 million of money that normally would come to Marshall - I think they call it 'deferral of payment' or whatever but it's basically a fancy name for their not paying their bills - and so we're living with $2 million less than we should. What that has caused is our accounts payable has gone out where we're paying our vendors, our local small businesses, up to three months after we've received services. So they are being hurt in this community because we are unable to pay bills timely because of this budget crisis.

We're currently, our board has authorized us to pull money out of our construction fund. We're building a four-story new wing that the board has been saving money for, for the last 10 years. We're having to use that now to try to stay current.

We are also losing discounts. It's costing us about $40,000 a month in lost discounts and fees. And in health care, where you're losing money anyway on care, you cannot afford to have a loss of discounts and other services to do it. So we are being hurt.

I know there are also physicians in the community who are being hurt, who are working in large clinics. Dr. Mostofi is here from our Community Health Clinic that serves the indigent and Medi-Cal in this community. They have not been receiving payments. We have doctors who are going without checks from their practice and pulling out of their savings to pay their employees, bills. And we're getting fewer and fewer physicians who will take care of Medi-Cal patients because every year we go through this.

I know many of my other hospitals in the rural areas, the 66 rural hospitals, are in worse shape than we are. We're not in the case where we're going to be closing in the next year or a few months but we have many, like Eastern Plumas and Portola, Bear Valley, Coalinga, a variety, that are just living paycheck to paycheck and they cannot withstand this. I want to thank the Governor. They've released special emergency funds to 10 hospitals who were basically going to close this last week if they had not received those funds.

So I really do thank the Governor for really taking a proactive approach to this and I wish our legislature would do this too. We need the legislature to pass a budget. We need not to have any further Medi-Cal cuts. We currently are paid 15 percent below the average state in the United States for Medi-Cal and the lowest in the nation for what they pay for care. We need a budget now or this health care system is going to collapse.

So that's sort of my remarks. I'd like to introduce Jack Sweeney. Jack has been a servant to this community through the Board of Supervisors and he and his family have been integral in Marshall starting and providing care. And in our history, from the time Jack was a child up through today, he has been a real friend to this community and the hospital, so I'd like to turn it over to Jack. (Applause)

SUPERVISOR SWEENEY:

Thank you, Jim. I'm kind of glad to know it's not just the county getting hurt; we've got friends that are in the same basement with us.

Governor, I personally want to thank you for offering up a compromise budget. I think that the thing that people are supposed to do as legislators is to try to work together and put some of the ideological differences apart and get down to the business at hand. And we certainly have a legislature that doesn't want to seem to do that.

They haven't even taken up the Governor's compromise and that seems silly to me. They're going through some process - I'm not sure what it is. I heard this morning that they want to pass a temporary funding measure and I agree with the Governor, let's get it done, let's get it done right.

For the county, as one minor example, we just had some severe fires in this state. We sent firemen from El Dorado County, fortunately, all over this state. And when we do that the state is supposed to reimburse those fire districts and there are at least two fire districts who have more owed to them because of those services rendered than their annual budget. We've agreed, as the Board of Supervisors, to backfill that for those districts. Now, that's a big undertaking, it's not to be done lightly. We can't fund everybody but we've been somewhat frugal. We saw some of this coming.

And as one example, the Medi-Cal payments; we're about $8 million in arrears with the state, money they owe us for services we've rendered in the county. Some of that money trickles down to the clinics in this county, some of that money trickles down to both Barton and Marshall Hospitals. And we need, absolutely need, to get this budget passed.

The biggest problem we have is we probably receive about $40 million in funding for various programs that the state tells us we must do. That funding is not coming. We don't know how we're going to pay employees. We don't know how we're going to provide those services but we need to provide them. You people need those services and we'll find a way to do it.

But most importantly, I would encourage the state legislature to look hard at the Governor's offer of a middle-of-the-road budget and work from there and get something done and get it done quickly. This is not only a hardship on the people here at home, it's an embarrassment for the sixth largest economic machine in the world not to have a budget. It's an embarrassment worldwide and we need to stand up and be heard. (Applause)

With that, I just met this gentleman this morning but I will tell you that I'm proud of the Community Clinic that we have over on Golden Center Drive and I'm proud to introduce the director, Dr. Mostofi of the - is it Marshall?

DR. MOSTOFI:

No, the Community Health Center of El Dorado County.

SUPERVISOR SWEENEY:

The Community Health Center of El Dorado County. I ought to know that. Dr., thank you. (Applause)

DR. MOSTOFI:

Thank you. Thank you. I'm very honored to be among such great people here that take care of all us in this county and in this state. I represent the Community Health Center of this county. We're a private/non-profit group and we take care of about 7,500 to 8,000 people. Small by state standards; there are larger groups, certainly, than we are.

The budget not being passed and signed impacts us in one very specific way, as you may have gathered by now, in that the patients who have Medi-Cal, who have that insurance product, they have stopped paying us. And so what that means is that we're no longer getting money for the services we give to about 50 percent of our patients. And again, there are people who take care of more patients than us and some less but that's, of course, as you can imagine, a huge impact on our budget, our ability to pay our own staff, our ability to pay our medical systems and such.

And last year when this happened it was a much shorter timeframe and we barely hung on. We had a hard time getting a loan secured just in case and we were at risk of firing people. This year we looked further ahead, thought that maybe they would do it again. And they did, unfortunately. And now the timeframe is even longer and, again, we're getting towards that point of just hanging on. We haven't needed a loan; I don't think we will.

But what's happening now - in fact, not just us but also community health centers throughout the state and I want to speak for them just a little bit, take that opportunity. There are places out there, when they take that loan that I talked about, to kind of bridge the gap, now they owe money to a bank in addition to the money that was theirs in the first place that they weren't getting. It seems very unfair to punish a group of people who are trying to take care of those less fortunate of us and those less able of us in the state, to punish them for the tardiness of the budget.

So I certainly hope that the people in the legislature, along with the Governor, can work together and come up with a budget that can provide the funds we need to keep doing the good work that we're doing in providing care for the people less fortunate than some of you out here and maybe some of you out here already.

I'd like to introduce the - thank you - the Sacramento Superintendent of Schools Dave Gordon. Please. (Applause)

SUPERINTENDENT GORDON:

Thank you very much, Doctor. And first of all, I want to say I applaud Governor Schwarzenegger for pushing hard for a compromise budget. I've worked in Sacramento now for 36 years and this is the worst of the partisan gridlock that I have ever seen.

But now I'm here to tell you, enough is enough. Here in El Dorado County you have nearly 30,000 children in school today. In my county, Sacramento, over 230,000 children are sitting at their desks. Their school leaders and board trustees have done all that we have asked of them and more. They have made difficult cuts, they've taken the heat from parents and constituents in doing that and they've maintained our state's high expectations for student performance. Now the state controller is saying that without a budget schools will be shorted some $1.1 billion dollars in categorical programs this month.

So, enough is enough. We owe it to our hardworking schools' staffs, to our families and, above all, to our children, to work with the Governor and come up with a compromise that keeps our schools and our state moving forward.

Thank you and it's my pleasure to introduce Sheriff Jeff Neves. (Applause)

SHERIFF NEVES:

I also would like to recognize the Governor and thank him for his leadership in the compromise to get this budget impasse resolved. Prior to the Governor's compromise, public safety funding that is essential to all chiefs of police and sheriffs throughout the state was being held hostage and was not even considered within some of the budget proposals that were out there. And the Governor, a strong public safety advocate and supporter, put the funding that is so critical to keep all of us in all of our communities safe back into the budget.

Without the budget being passed and this impasse that's in place, the longer it goes on the worse the impact is going to be for public safety. Local agencies', cities' and counties' most basic and fundamental responsibility is that of public safety for you and I and our families. Without our agencies and the boards or city councils and boards of supervisors having a budget that they know they can work off of, with the known certainties of what the impacts will be from the state, allows them to then plan for the public safety standpoint. And we don't have that today. It's irresponsible that we continue to operate with a big question mark as to what level of revenue is going to be available to public safety - or excuse me, to local counties and cities - to fund their public safety.

And the impact, just pick up any newspaper. I read today an agency is considering implementing two-man cars. Well, functionally what that does is it cuts their response by 40 percent. It doesn't cut their personnel, it cuts their car expenses. But who potentially may suffer from that is the citizens that they serve, because they've cut their workforce effectiveness in responding to calls by 40 percent. And it's all driven by budget issues and the uncertainty, because of the impasse, of knowing what funding is available to us.

Something that touched this sheriff's office personally and while it's not one of my sworn staff it's one of my volunteers - sheriffs are responsible constitutionally for search and rescue to safeguard citizens when they become lost or injured - we had one of our disaster workers, a search and rescue volunteer in a lifesaving effort who nearly lost her own life in an accident when we had this rescue going on. Fortunately, through outstanding medical care, she recovered from her electrical shock that nearly killed her.

But the tragedy of it is now, without a state budget - she's covered under what's called the 'Disaster Workers' statute. Well, she can't get her costs reimbursed. She's going broke because there is no mechanism at the state, without a budget, to reimburse her. She operates a business herself, a private business. She has no income coming in and just a debt that continues to go.

As we heard, that the hospitals and others are all impacted. But the impact of this is real, it's hurting people and it's time for the legislature to come together, such as the Governor proposed with the compromise and approve a budget that works for the state, that works for public safety, so that we can plan and we can provide for the safety of the citizens.

And keeping on the public safety note, it's my privilege to be able to introduce Roseville Fire Chief Ken Wagner. (Applause)

CHIEF WAGNER:

Thank you very much. Governor, thank you once again for showing leadership in this trying time.

As in most local jurisdictions, the city of Roseville adopted a balanced budget to be effective July 1. And that was not without challenges. We have not been, as most local government agencies and jurisdictions, we have not been immune from the changes in the spiraling economy. We've made those cuts, we've met those challenging times.

But right now this irresponsible behavior in the legislature, to not tell us what will happen with our future funding streams and to even consider removing revenues that we keep at the local level to provide those grassroots services, is very challenging for us and is very problematic. We must maintain our budgets. We cannot survive if the state comes in and takes revenue sources from us when we've already done our jobs to make reductions and to meet these challenging times.

With that, I would echo many of the things that the other speakers have said in regards to public safety. This continues to be challenging for us. And Governor, once again, thank you for your support in this time.

I would now like to introduce the mayor of the city of Placerville, Mr. Carl Hagen. (Applause)

MAYOR HAGEN:

Good morning and welcome to Placerville, not only to the Governor but all of you that are here and work here and the news media that is not familiar with this area, or maybe new to this area but thanks again for showing up and being here.

I want you to know that in the city we did pass a budget. It's very constrained, it's very tight. We made cuts, we dipped into reserves. We've got hiring freezes going on and there will be no raises for any employees. So it affects us, it affects everybody. And I think it's time, as I've been telling my assemblymen, that it's time that you guys move and get a budget passed. One way or another, it's got to get done and you've got to give a little bit on each side.

So with that, I would like to welcome the Governor to the city of Placerville. And Arnold Schwarzenegger, thank you for showing up. (Applause)

GOVERNOR SCHWARZENEGGER:

Well, thank you very much, Carl, for the wonderful introduction and thank you also for being a great leader. I also want to thank Dave Gordon and Sheriff Jeff Neves for being here and then, of course, Chief Wagner, thank you very much and everyone else from James Whipple all the way down, all the people that are behind me and in front of me here. It's great to have you all here and to be here also in front of the Marshall Medical Center, which is an extraordinary medical center, one of the top, top in the country. (Applause)

As I've always said, that there's a massive weight we must lift off our state - and I've said this since I've come into office - and I've said that I cannot lift it alone. I need everyone to help with the lifting. And this is why I'm here today, to ask all of you to help us with this because, as you have heard, that the legislators are now more than two and a half months late with the budget.

Now, we have had this problem in the last few decades. There is nothing new here. In the last few decades - because we don't have a budget system that is sound, we have a dysfunctional budget system - every single time the economy goes down we have this stalemate and it goes on and on and on. Budgets go into September, then there are the big debates and the fights, should we raise taxes or should we borrow money, or should we make it all in cuts and all of those things, all because we don't have a system in place that works.

And so here we are again, two and a half months late and the legislators are arguing and fighting. And I say to them, get out of your ideological corners and go and make decisions not based on ideology, not based on what is best for your party but make decisions what is best for the people of California, because that's what we were sent to Sacramento to do. (Applause)

As you have heard from previous speakers there are different versions of budgets that are being introduced. Well, we have seen already the Democrats introduce their budget. They are asking for a tax increase of $10 billion. That was voted down.

Then you have the Republicans, who are now preparing their budget. Even though it's two and a half months later after the deadline they're still preparing their budget, may I remind you. And now they want to put that up but it relies on borrowing, so that's why that will not work and it will be voted down.

All relying on borrowing, which of course is exactly what we have done in 2003, we borrowed. We haven't even paid off that debt yet, we still owe $9 billion. And now they want to go and borrow more money, even though that's not paid off yet. It's like a family that has overextended itself with a bunch of credit cards and then gets another credit card to pay off the old credit cards. So that is, of course, a no-no and they call themselves fiscally conservative and fiscally responsible. I don't call it that. I think this is just a quick fix, it kicks the can down the alley, it doesn't work, it doesn't fix anything.

So this is why I said, while you guys are arguing and while you're stuck in the ideology, one way to the right and one way to the left, let me propose a budget here that is in the middle, that is a combination of cuts - $10 billion in cuts in programs - and $5 billion in additional revenues.

And I have said this many times. I don't like tax increases. I don't like it and I always said to people I will do everything I can not to have tax increases. But in order to make this work and in order to have a compromise, one has to step over it's ideological lines in order to come up with a compromise. We all know this is the way it works when you have partnerships. That's the way it works in a marriage, that's the way it works in any relationship. You've got to compromise. And this is why I am proposing here.

And also on top of that, in return, to get a budget reform once and for all so that we put a rainy day fund aside of $12.5 billion. And also, as the Governor, to have the authority to do mid-year cuts, which every city in this state can tell you is the most important thing. As you see the economy going down, as you see the revenues going down, you have to be able to go in and make cuts so you live within your means.

Those are the kind of things that I've tried to accomplish and this is why I urge the legislators to put my budget up for a vote. I think the time is over to argue and to fight. We are standing here in front of a hospital because this hospital is suffering because of our budget stalemate. Other hospitals, rural hospitals, are suffering. We have already put, for 12 hospitals we are funding right now with emergency funds and that fund is running out. I think it is important for the legislators to recognize the fact that there will be a lot of damage that will be caused because of this stalemate in the budget. Hospitals will be closing down, hours will be reduced, less patients will be treated. All of those kind of things are going to happen.

And not only with hospitals on the medical side but also in law enforcement, public safety. They will be suffering, they will be getting less money as we go on. Schools will not get their money and it will have a rippling effect, it will be terrible for our state if they don't solve this problem and pass a budget right now.

So this is why I say to them, pass my budget. Put it up for a vote. Thank you very much, all of you, for being here today. Thank you very much. (Applause)

And now, if there are any questions from the media - we also want to thank you all for being here.

QUESTION/ANSWER:

QUESTION: You've been pressing the legislature to get a budget done. And yet there are a number of lawmakers, as you know, that are in Minnesota politicking today at the convention, just like the Democrats were last week. What do you say about all those legislators that are playing hooky today?

GOVERNOR: Well, I think it is very important for the California people to know that while the state is two and a half months late on the budget and while there are severe consequences because of that to education and health care and hospitals and law enforcement and firefighting and all of those things, there are absolutely no consequences to the legislators. Absolutely none. They go on vacation, they go on recess, they go home on the weekends and have their two days off, because God forbid they have to work through the weekend and they go to the various different conventions and do their things and business as usual. As a matter of fact, they are even collecting per diem every day when they go to the Capitol of $1,000 a week, tax-free. So think about that. And you guys have to suffer here.

So I think it is unfair and this is my opinion: I think that they should stay in the Capitol, they should not go anywhere until he budget is done. But I have recommended that already months ago. (Applause)

Please.

QUESTION: Could you speak about your opposition to some sort of continuing resolution to keep these kind of critical payments going even while there's - why is that a problem?

GOVERNOR: I think it is very important that they pass a budget, not again find a temporary solution. We have seen temporary solutions all the way since 2003. They said don't worry about it, next year we will have solved this problem, next year we will solve this problem. And we didn't get budget reform and we never got a budget on time. For the last 20 years there were only four budgets on time.

There is something terribly wrong with our budget system and this is why I think we should force the legislators to pass this budget. This is the important thing. Then everyone will get paid and everyone will be rehired again in state offices and all those things. That's what we need to do.

QUESTION: Does that mean you will veto a continuing resolution if one reaches your desk?

GOVERNOR: It cannot reach my desk because I have to request it. So therefore - no, I'm requesting a budget that comes to my desk that is a reasonable budget with budget reform. That's what I will sign and that's what I'm waiting for.

QUESTION: Can you see this going past the November election?

GOVERNOR: I will take this as long as it takes, because this is the year where we have to finally say - the people of California have to finally say - look, you have done this now for decades. You have borrowed, you have increased taxes, you have promised us to fix the system once and for all and you didn't. The legislators should this time fix the problem. We have a good opportunity this time, rather than to get stuck in ideology. It is very, very easy to do this problem. You just have to see the $15 billion deficit. Everyone has to give and then we can have a budget.

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