GOVERNOR TO ROLL OUT HIS BUDGET SPENDING INCREASE EXPECTED FOR EDUCATION, INFRASTRUCTURE.

Byline: Harrison Sheppard Sacramento Bureau

SACRAMENTO - Helped by an improving economy, Gov. Arnold Schwarzenegger is expected today to unveil a 2006-07 budget that boosts spending for education, infrastructure and children's health insurance, but only nibbles at the state's massive structural deficit.

State spending is forecast at nearly $100 billion, allowing the governor to start addressing some long-neglected needs in what he considers a rebuilding year for California.

``We're fortunate to have a growing economy that is producing revenues that are above projections from as recently as six months ago,'' said H.D. Palmer, spokesman for the governor's Department of Finance. ``The governor is going to put forward a budget plan that reflects his priorities - an investment in education, health care and transportation - while at the same time he will continue to show progress in reducing the state's operating deficit.''

Schwarzenegger is expected to announce a $4.3 billion hike in education spending, including $1.7 billion to partially repay money borrowed in the past. He is also adding enough money to the higher education system to postpone planned increases in student fees, and include additional funds for infrastructure to fund the launch of his Strategic Growth Plan, which ultimately projects spending of $222 billion over 10 years.

With a swollen lip suffered during a weekend motorcycle collision that required 15 stitches, the governor appeared Monday at a North Hollywood health center to announce that he will add $72 million to help fund health insurance for children through the Medi-Cal and Healthy Families programs. That is part of an overall increase in the health and human services budget of $1.2 billion.

``Right now, more than 400,000 children in California eligible for state health care programs are not enrolled,'' Schwarzenegger said in a visit to the Northeast Valley Health Corporation Woman, Infant, Child Center.

``That is unacceptable. It hurts all of us when a child doesn't get a flu shot, an eye exam or a dental checkup simply because someone didn't know about the help out there for them.''

Still, Democrats are concerned that funding the governor's priorities may mean cuts in other areas, particularly because the governor is opposed to raising taxes.

``The big question about the governor's budget is how he's going to pay for everything that he's proposing,'' said Assemblyman John Laird, D-Santa Cruz, chairman of the Budget Committee. ``From the things that he has dribbled out, he's nearing $2 billion over what existing levels would provide.

``I do have the apprehension that he's falling into the same trap that (Gov.) Gray Davis did, which is as revenues increase, don't fix the structural problem - just put more money into ongoing programs.''

State Legislative Analyst Elizabeth Hill has projected that the state will spend about $95 billion in fiscal 2006-07, which begins July 1, while generating only $91 billion in revenue. But it will also likely finish the current year with $5.2 billion in reserve, helping it to cover that deficit.

But those projections do not take into account the governor's plans to add $1.7 billion to education for money borrowed in the past and several lawsuits with financial implications that include the state making unexpected payments or not being able to borrow expected funds.

Jean Ross, director of the California Budget Project, a group which advocates for budget policies that help the poor, said the budget for health and human service programs has not kept up with inflation in recent years.

``We're concerned about the fact that the basic inflationary increase in program costs in most of the state's core programs for families, seniors and children haven't been funded,'' Ross said.

Harrison Sheppard, [phone]

harrison.sheppard(at)dailynews.com

Gov. Arnold Schwarzenegger will release his 2006-07 budget during a live broadcast at 1 p.m. today on The California Channel and on the Internet at www.governor.ca.gov or www.calchannel.com.