The feeling was nearly universal. From education to transportation officials, people got what they expected in Gov. Arnold Schwarzenegger's proposed budget last week: bad news.

There was plenty for state and local groups to complain about in the $111 billion spending plan that the governor said even he didn't like. If enacted, the budget would increase overall spending an average of about 4.2 percent, but it also would slow spending in nearly all areas of government.

Local education, transportation and health-care officials said upon brief reflection on the massive plan that North County would not be spared. The plan must be approved by the Legislature and likely will be changed dramatically in the process.

Across the region, cash-strapped school districts likely will look to cut programs, community clinics will have to tighten their services, and road construction projects will have to rely heavily on local revenues to keep going, officials said.

Various agencies that rely on state funding are still reeling from drastic reductions in funding implemented under previous budget years. Some officials said that if the governor's figures hold, they will look to implement further cuts in services.

"They are coming. Cuts are in the works," said Irma Cota, chief executive officer of North County Health Services, a network of community clinics based in San Marcos and serving predominantly low-income and uninsured patients. The clinic was forced to cut Sunday hours in July, Cota said.

The governor's budget would increase state spending from $105 billion last year to $111 billion in the coming fiscal year. And the state expects to collect about $5 billion more in revenue than it did last year, but that's not enough to keep up with the increase in the cost of many programs, according to officials.

To bridge an estimated $9 billion deficit, the governor's plan takes about $3 billion from education and transportation accounts and borrows another $3 billion from bonds approved by voters last year.

Educators say increase is not enough

Schwarzenegger blamed the shortfall on "automatic" spending increases in the budget, and pledged to hold the line while he and the Legislature work out more permanent fixes.

"We must live within our means," the governor said Monday upon releasing his budget plan for the year that begins July 1.

What that means for local leaders is yet another year in which they will have to make do with less money than they expected.

Education is one of the areas the governor will look to take money from to fund other programs. The governor's proposal would increase overall spending on education, about $1.8 billion, from $59.3 billion last year to $61.1 billion this year.

But local school superintendents said that's about half of what they were expecting and it's not enough to cover the rising costs.

Last year, the governor brokered a deal with educators to suspend payment of some money they were entitled to under Proposition 98, a voter-approved initiative that guarantees schools about 40 percent of the state's general fund money, which is the state's main pool of money.

Educators agreed to the deal on the condition that they would be repaid this year. When Schwarzenegger said he was backing away from the deal last week, school officials began to cry foul.

"A deal's a deal, and you would hope that people live up to those deals," said Peggy Lynch, superintendent of San Dieguito Union High School District, which operates 10 schools from south Carlsbad to Carmel Valley.

If the governor's budget were passed, local school leaders said they might be forced to increase class sizes, cut educational programs, limit busing or even let go employees.

Colleges see increases in funding

Local colleges and universities appeared to fare better under the governor's plan, but they were not spared.

The plan would increase spending on the California State University system, which includes Cal State San Marcos, by about 4.4 percent, or about 211.7 million. However, much of the increase comes from revenue generated by an increase in tuition of 8 percent for undergraduates and 10 percent for graduate students.

Spending on the California Community College system increases under the governor's plan about 5 percent, or $373.4 million, to $7.9 billion.

"The rise in the budget is a good recognition by the state that the community colleges need more growth money because as fees at the UC and CSU schools go up, it will mean more students coming to community colleges," said Darrell McMullen, a member of the governing board at Palomar College in San Marcos.

"However, more students means more teachers and staff and other costs, so there will be no extra money in our budget after all of that is taken into account," he added.

Clinics worry about shortfalls

Programs for the poor, the uninsured and the unemployed would get some of the most severe reductions and some cuts.

One of the ways the governor has proposed to save money is cutting CalWorks, the state's welfare-to-work program, and suspending cost-of-living increases. That would save the state $449 million, according to budget documents.

Schwarzenegger also proposes to save $259 million by suspending cost-of-living adjustments for Supplemental Security Income, which bolsters income for needy individuals who are aged, blind or disabled.

In brief, the governor would freeze cost-of-living increases for most welfare recipients, transfer onto counties some of the cost increases for in-home health care and reduce subsidies to families enrolled in the state's welfare-to-work program.

Cota, of North County Health Services, said there are aspects of the governor's budget that she likes, such as improving the Medi-Cal enrollment process by adding staff, streamlining the application process and expanding access to other primary care programs.

However, she said she worried about the governor's proposal to ask some recipients of Medi-Cal, the state's insurance program, to pay premiums of $5 a month per child and $10 a month per adult. Those payments could discourage some patients from enrolling or from seeking medical help, she said.

That also creates more administrative costs for the clinic, Cota said.

"It's a hardship (for patients). It creates more bureaucracy for the clinic," Cota said. "And if they don't have the money to pay, then what do you do?"

Cota said Wednesday that she began a review of the clinic's programs and other cost-cutting measures, but said she hopes to avoid further reductions in the clinic's hours or letting go of staff.

State officials said reducing payments for health and other programs is necessary to keep the state from going deeper into debt.

Health and Human Services Secretary Kim Belshe defended the governor's proposals in a media conference last week, saying that those reductions would have been more drastic had the governor decided to keep his promise to fully fund education.

Full effects unknown

County of San Diego leaders, who administer many of the programs slated for cuts, said they will not know the full effect of the governor's budget until later this year. They said they saw Schwarzenegger's proposal as a "mixed bag."

On one hand, the deal reached last year between the governor and local governments means that the new budget didn't cut any more of the county's "discretionary" money beyond the $27.5 million that it cut last year, county leaders said.

Walt Ekard, the county's chief administrative officer, said the county has already planned to absorb that funding shortfall.

"There's no sense of panic or anything like that," he said.

On the other hand, Ekard and others said, Schwarzenegger has proposed cutting "categorical" programs —— the $3.4 billion worth of health and social service programs the county runs locally for the state.

Don Steuer, chief financial officer for San Diego County, said that could mean cuts to local programs. But he said that the county won't know specifically what until as late as October if Schwarzenegger's proposed budget is approved.

"We're most concerned about health and human services," Steuer said. "The state could make cuts in categorical things that could reach out and bite us."

Road construction could slow

Likewise, transportation officials said they don't know how much of the governor's plan will survive after scrutiny from the Legislature.

Gary Gallegos, executive director of the San Diego Association of Governments, the region's transportation planning agency, said he and others hope to convince lawmakers and Schwarzenegger to backtrack from the governor's plan to take money from their pot.

Schwarzenegger proposed borrowing more than $1.3 billion in gas-tax money for other programs. That would mean there will be virtually no state money geared for local road projects, Gallegos said.

Many of the county's largest road construction projects are paid for with money from federal, state and local sources, he said.

"One of the challenges is that the governor is running out of places to cut," Gallegos said. "It doesn't surprise us, it frustrates us" that the governor proposed borrowing from the transportation fund.

The governor's budget offers a moderate increase in transportation funding from $18.8 billion last year to $18.9 billion this year. San Diego County road projects would have to rely largely on the half-cent tax extension that voters approved last year, Gallegos said.

Moreover, state officials said that the governor's much-touted $1.2 billion tribal gambling bond, which was earmarked for transportation projects, is unlikely to be available this year. That's because the bond sale is being held up by a lawsuit filed by racetrack and card club operators.

Once the lawsuit is resolved, Gallegos said, he expects some of that money will be set aside for transportation projects.

While Schwarzenegger looks to shore up the state's budget problems by loosening formulas for spending, some advocates worry that the fixes he offers may be just as problematic in future budget crises.

Raiding the gas-tax and education funds and promising to lock them up later can put future governors in a bind when trying to balance the state's increasingly rigid budget, said Jean Ross, executive director of the California Budget Project, a group that advocates for the state's low- and middle-income residents.

"The danger with locking down greater shares of the budget," she said, "is you make it that much harder in the future when the state faces a shortfall to bring the budget in balance."

The Associated Press and staff writers Gig Conaughton, Edward Graham and Bruce Kauffman contributed to this report.

Contact staff writer Edward Sifuentes at (760) 740-5426 or esifuentes@nctimes.com.