Schwarzenegger to sign budget 85 days late | SierraSun.com

Schwarzenegger to sign budget 85 days late

JUDY LIN
Associated Press Writer
AP Photo/Rich PedroncelliCalifornia Gov. Arnold Schwarzenegger and the state Legislature have come to an agreement on California's budget.
AP | AP

SACRAMENTO (AP) _ Gov. Arnold Schwarzenegger on Tuesday will sign the state’s $143 billion spending plan after the longest budget deadlock in state history, freeing up billions in payments to medical clinics, nursing homes, daycare centers and contract vendors.

His signature comes on the 85th day after the start of the fiscal year but won’t actually finish the budget battle. That will be up to voters, who will be asked to tie up the budget agreement’s loose ends during a special election next year.

Schwarzenegger is scheduled to sign the budget bills in his office and use the record-long stalemate to promote an unrelated redistricting initiative on the November ballot. He also is expected to issue line-item vetoes to trim millions from the final spending plan.

The governor has said there is little to celebrate about a budget that failed to fix the state’s ongoing structural imbalance. Lawmakers met the governor’s demands for a stronger rainy day fund and authority to make spending cuts during the year, but they did not address the state’s imbalance between revenue and spending.

California voters will have to approve the changes to the rainy day fund, as well as a plan to borrow $10 billion from future lottery revenue to help stabilize the next two state budgets. Schwarzenegger said a special election is likely to be scheduled for June.

The impasse dragged on this year because lawmakers dug into a partisan standoff to close the $15.2 billion deficit.

Republicans opposed any tax increase, while Democrats sought to combine budget cuts with higher taxes on corporations and the wealthiest Californians.

Schwarzenegger offered what he considered a compromise proposal involving a temporary 1 cent increase in the state sales tax that would drop after three years. That plan failed to gain support from Republicans, which meant it would not be able to generate the required two-thirds vote in the Assembly or Senate.

The final version approved by the Legislature last week includes $7.1 billion in spending cuts, which advocates say will trigger deep cuts to health care programs. Critics also said the plan relies on accounting tricks to inflate revenue and makes permanent some tax breaks that will lead to larger deficits.

Assembly Speaker Karen Bass, D-Los Angeles, reiterated her call to have a commission review the state’s tax structure, while Republican leaders pledged to fend off tax increases in the next fiscal year that will start July 1.

Those negotiations are expected to be just as frustrating as this year’s, as the state’s economy continues its tailspin. Lower tax revenue and automatic spending increases are expected to produce a deficit of at least $1 billion in the 2009-10 fiscal year.

That shortfall will grow significantly if voters reject the lottery proposal, which is expected to add $5 billion annually for the next two years.

After signing the budget, Schwarzenegger is scheduled to participate in a rally for Proposition 11, the Nov. 4 ballot initiative that would take authority to draw legislative districts away from state lawmakers.

Schwarzenegger says the current system creates a conflict-of-interest that prevents truly competitive races for Assembly and Senate seats. When districts are weighted strongly for Democrats or Republicans, only the most partisan candidates win and head to Sacramento. That dynamic makes compromise extremely difficult, Schwarzenegger has said, pointing to this year’s protracted budget deadlock as an example.

Proposition 11 would give the power to draw legislative districts to an independent citizen’s commission. It has support from a variety of groups, including AARP, the League of Women Voters, California Common Cause and the California Chamber of Commerce.

An earlier Schwarzenegger redistricting effort, which would have given the responsibility to a three-judge panel, was rejected during the 2005 special election.