California Governor Arnold Schwarzenegger has finally signed the US state’s 2007-2008 budget, nearly two months after the July 1 start of the fiscal year and making it the last state in the nation to do so this year. Included is spending of more than $145 billion but also $703 million in budget cuts made through the Governor’s veto authority, with the vast majority, at $527 million, coming from the state health and human services budget.

The biggest single cut, of $331.9 million, comes out of the Medi-Cal health insurance programme for the state’s neediest residents, and includes stripping out $6.3 million from the California Discount Prescription Drug Program Fund, which was to have been used to negotiate discounts from drugmakers for the state Medi-Cal programme.

In his veto statement, Gov Schwarzenegger says that while he is deleting funds intended for the Program, he is also directing the Department of Health Care Services to identify resources to move forward with its implementation, although critics believe that the Program is now likely to be delayed. In addition, he says: “I am deleting $96,000...intended to fund implementation costs for the California Rx Prescription Drug Website Program and am directing the Department of Health Care Services to delay implementation of the program for one year.”

The Governor has twice previously vetoed the Program, and the new Budget Act vetoes “show the mean-spiritedness of a governor who puts the concerns of his contributors and political extremists above the needs of the people of California,” said Senator Art Torres, chairman of the California Democratic Party. But, he adds: “it’s classic Schwarzenegger: he touts bipartisanship but rewards partisan and special interests where the rubber hits the road.”

In August 2006, when agreement was reached on the Program, Gov Schwarzenegger had said he was “very happy” about it, adding: “it’s very important that we help our vulnerable citizens. So many people out there cannot afford prescription drugs."

However, critics describe the budget veto as a “reward” to the pharmaceutical industry. Arnoldwatch.org, a group which monitors “the hidden hand of special interests in the Schwarzenegger administration,” estimates that at August 22 this year, the Governor had received just under $5 million in campaign contributions from pharmaceutical and health care businesses.

– The Budget Act document points out that the $331.9 million decrease in the Medi-Cal estimates “is based on historical data showing that, over average over the last three fiscal years, Medi-Cal expenditures have fallen short of the estimate by more than $400 million.” The Act now signed by Gov Schwarzenegger includes the largest reserve, at $4.1 billion, of any budget in California’s history, it adds. By Lynne Taylor