Tags: obama | california | funds

Obama Threatens to Yank Calif. Stimulus Funds

By Jim Meyers   |   Friday, 08 May 2009 11:43 AM

The Obama administration is threatening to rescind nearly $7 billion in federal stimulus money earmarked for California if the state does not restore wage cuts to unionized home healthcare workers.

The cuts were approved in February as part of the budget approved by Gov. Arnold Schwarzenegger and state lawmakers.

Federal health officials have advised Schwarzenegger's office that the cuts violate provisions of the American Recovery and Reinvestment Act, the Los Angeles Times reports.

The cuts involve workers who care for around 440,000 low-income disabled and elderly Californians. They would see their wages reduced from a maximum of $12.10 an hour to a maximum of $10.10.

The Service Employees International Union, which represents the workers, said in a statement that it had asked the Obama administration to intervene.

The cuts were pushed by Republican legislators as the state sought to close a $42 billion budget shortfall, while Democrats argued that the healthcare program is a cheaper alternative to nursing home care.

Reversing the reduction requires a two-thirds vote of the Legislature and would therefore require GOP support, the Times observed.

Schwarzenegger has asked Health and Human Services Secretary Kathleen Sebelius to reconsider.

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