Carolyn Lochhead, Chronicle Washington Bureau

Saturday, January 9, 2010

(01-09) 04:00 PST Washington – — Gov. Arnold Schwarzenegger’s demand Friday that the federal government plug a $6.9 billion hole in the state budget, two days after he charged that the federal health care bill is unfair to the state, struck a nerve with California’s Washington delegation.

Schwarzenegger is demanding that the administration fix what he calls flawed federal formulas and unfunded federal mandates that short-change the state on Medicaid, foster care, special education and the incarceration of illegal immigrants.

With his demand for federal money to patch nearly one-third of the state’s $20 billion budget deficit, the governor “found a soft, sensitive spot” among the state’s leaders in Washington, said Joe Mathews, a senior fellow in Los Angeles for the New America Foundation, a center-left think tank.

The office of Democratic Sen. Dianne Feinstein said the governor’s budget assumes, for example, that California would get 92 percent of all federal funds for jailing illegal immigrants and that the program will be fully funded, a highly unlikely outcome.

At the same time, Democratic Sen. Barbara Boxer held a conference call with reporters Friday to dispute Schwarzenegger’s claim that the state gets just 78 cents of every dollar it sends to Washington.

That ratio has tilted sharply in California’s favor, Boxer’s staff said, based on the state’s $85 billion share of the $878 billion federal stimulus and the plunge in state tax payments. Last year, Californians got at least $1.45 in federal money for every $1 they sent to Washington, Boxer said.

Boxer said the remaining $37 billion state share of stimulus money is headed California’s way this year to pay for everything from sewers to transportation.

But she rejected the governor’s $6.9 billion demand.

“If you’re talking about a straight check to the governor, I don’t think we’re going to do that,” Boxer said.

With mid-term elections this year, California’s budget and unemployment problems pose a double-whammy for the Obama administration and the state’s representatives. Another fiscal contraction in the nation’s biggest state economy will be a drag on the national economy just as last year’s federal stimulus peters out.

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