Sep 19, 2008 5:13 pm US/Pacific
Lawmakers Approve Revised State Budget
SACRAMENTO (AP) ―
Lawmakers approved the revised $143 billion spending plan Friday, ending the longest budget impasse in California history.
The state Senate and Assembly on Friday passed a compromised spending plan that stretched 81 days past its due date. The $143 billion budget plan allows the state to resume payments to schools, medical clinics, daycare centers and state vendors that haven't been paid since July 1, the start of the fiscal year.
At a Capitol news conference Friday, Schwarzenegger said he was pleased the four legislative leaders agreed to the budget reforms he sought, but was disappointed he was unable to fix a structural deficit that allows California to keep spending more than it takes in.
He said he could sign the package as early as Monday, though there might not be much fanfare.
"There's nothing to really celebrate. As I said, great things were accomplished, but there are certain things that were not accomplished," he said.
The new plan Democrats and Republicans were expected to approve eliminates some of the borrowing gimmicks that lawmakers had included to help close a $15.2 billion hole, but leaves others intact.
It also strengthens the state's rainy day fund.
Schwarzenegger had criticized the budget lawmakers agreed to without him and passed early Tuesday for failing to meet his demands for a more robust rainy day fund. He said the budget relied on accounting gimmicks—such as collecting an extra 10 percent of workers' income tax in advance and repaying it later—that could lead to an even larger deficit next year.
He promised to veto it.
The four legislative leaders conceded they were uncertain whether they could muster the two-thirds vote of the state Legislature required to override his veto, and returned to his office to negotiate Thursday.
They agreed to take out the 10 percent tax gimmick and replace it with a larger fine against businesses that fail to report or underreport their tax liabilities. Lawmakers also agreed to ensure the state's rainy day fund could only be tapped when revenues fall below projected spending—the last remaining piece of the budget reforms Schwarzenegger sought.
The rainy day fund and a proposal to borrow $10 billion against anticipated lottery revenues to help stabilize future budgets will require voter approval, likely in a special election early next year.
The remainder of the budget approved Tuesday will stand, including $7.1 billion in spending cuts that advocates say will trigger deep cuts to health care in the future.
Education and social service groups criticized the majority Democratic Legislature for ceding to the governor's demands. They said the restriction on when money could be taken out of the rainy day fund would limit the state's ability to maintain programs in lean years.
"You could say it's full of gimmicks, it's full of sleight of hand," Rick Pratt, assistant executive director of the California School Boards Association, said of the budget package. "We're going to be back next year fighting the same battles."
The impasse dragged on because of an ideological feud over Republicans' steadfast opposition to any tax increases to bridge the $15.2 billion deficit. Besides cuts to services and programs, Democrats sought to raise taxes on corporations and the wealthiest Californians, while Schwarzenegger proposed a temporarily 1 cent increase in the state sales tax that would drop after three years.
The governor lamented the long delay in getting a spending plan, saying it had hurt ordinary citizens. He said he would like to see lawmakers face consequences when they to reach a deal by their constitutional deadline.
(© 2008 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)
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