Finally, Schwarzenegger signs California budget

[DEDixon 39]

Finally, Schwarzenegger signs California budget

John Wildermuth, Chronicle Staff Writer

Friday, February 20, 2009

Governor Arnold Schwarzenegger speaks during a press conf...

(02-20) 18:29 PST Sacramento - --

A relieved Gov. Arnold Schwarzenegger signed a long-awaited budget package Friday, closing a $41 billion hole in California's finances and easing the state's cash crunch.

"It's a budget where everyone will have to make certain sacrifices," the governor said after he signed the budget in a brief ceremony in his Capitol office.

Schwarzenegger also made nearly $1 billion in line-item trims before signing the budget. They included 10 percent cuts for the personnel budgets of most statewide elected officials, a $400 million trim in prison spending and reductions of $255 million each for the UC and CSU systems.

The cuts in higher-education funding will be replaced entirely with money from the estimated $7.9 billion in federal stimulus money the state expects to receive, the governor said Friday.

"We need to do these things in order to be fiscally responsible because government has to live within its means," Schwarzenegger said. "That's the important message of this budget."

But many Democrats and Republicans aren't convinced the budget agreement is anything more than a temporary fix to a growing fiscal problem.

Anti-tax conservatives, most of them Republicans, argue that the $12.5 billion in new taxes will kill jobs in the state and deepen the recession, while liberals complain that the budget cuts too deeply into education, health and other needed programs.

"This is a devastating budget in every way and it doesn't solve the problem," said Democratic Lt. Gov. John Garamendi, an announced candidate to replace Schwarzenegger, who is termed out next year."We're going right back at this in two months when the May (budget) revise comes out and there'll be a huge hole in the budget again."

Garamendi also had concerns closer to home: Schwarzenegger used the line item veto to slash his office's budget by 63 percent, according to Garmendi's calculations.

"We had to look at what was necessary in government and the lieutenant governor's duties had a lower priority," state Finance Director Mike Genest said.

While the new budget shows a $3.1 billion surplus, there's no guarantee that money will still be there when the spending plan takes effect July 1. With the economy showing no sign of improving any time soon, current revenue estimates could change dramatically in the months ahead, and probably not for the better.

The state also faces a May 19 special election to seek voter approval of a half-dozen financial measures that are keeping the budget in its precarious balance. If voters don't back plans for borrowing, money transfers and a spending cap, the governor and Legislature could be sent back to the fiscal drawing board.

A "no" vote on a measure to borrow money against future state lottery revenues, for example, "blows a $5 billion hole in the budget" that will have to be made up somewhere else, Genest said.

State officials scrambled Friday to put together details of the spending package that lawmakers approved early Thursday.

While the governor ordered $400 million in trims to the prison budget, no one was sure exactly how that will be done.

"It's going to take a few more months to work it out," Genest admitted. "We have every confidence we can squeeze $400 million out, if we're careful how we target it, without endangering public safety."

While the governor used federal money to backfill his line-item vetoes, he left other cuts to higher education intact.

The new budget slashes $115.5 million from UC over two years, although $50 millioncould be restored with an additional payout from the federal stimulus money.

California State University faces $213 million in cuts over two years, of which $50 million could also be restored from an additional federal payout.

The federal stimulus money also will keep the state from having to borrow as much as it planned.

"We're very confident we can use the stimulus to replace $6 billion in (revenue anticipation warrant) borrowing," which would have been a very expensive prospect for the state, Genest said.

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Thanks you Republicans!!!! Thanks for holding out for a lower tax increase and larger cuts!

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... and reductions of $255 million each for the UC and CSU systems.

The cuts in higher-education funding will be replaced entirely with money from the estimated $7.9 billion in federal stimulus money the state expects to receive, the governor said Friday.

That doesn't sound very stimulating.

[DEDixon 39]

... and reductions of $255 million each for the UC and CSU systems.

The cuts in higher-education funding will be replaced entirely with money from the estimated $7.9 billion in federal stimulus money the state expects to receive, the governor said Friday.

That doesn't sound very stimulating.

stimulating....

[Jasman0717 9]

Republicans don't believe this will help and think that in a few months the state will be in worse condition that it is now.