Tuesday, September 23, 2008


“The governor, however, proclaimed the budget a victory.”

the new york times

FOR REAL MASOCHISTS: The California State Budget…includes veto messages!


September 24, 2008 -- LOS ANGELES — Gov. Arnold Schwarzenegger on Tuesday signed California’s budget, a document that was 85 days late and among state lawmakers, perhaps the most universally despised budget in the nation.

State Controller John Chiang used the occasion to move quickly to dispense with some 80,000 in claims that have gone unpaid since the state began its fiscal year on July 1.

“This record-setting budget stalemate has been an enormous burden on so many small businesses and health care providers who care for our most vulnerable Californians: the sick, elderly, disabled and children,” Mr. Chiang said in a statement. “I will quickly pay all backlogged claims, and I am asking state agencies for their assistance to ensure that we get payments into the hands of those who most desperately need them as quickly as possible.”

The $143 billion spending plan, which the governor signed without the usual public ceremony, was the subject of heated debate and intense last-minute haggling among Democrats, who control the Legislature, Republicans and the governor, a Republican who was at odds with lawmakers from both parties over how to close a $15 billion gap.

The budget, $68 million larger than last year’s, sets $1.7 billion in reserves should state revenues come in below estimates, highly likely in California’s, and the country’s, volatile economy.

Mr. Schwarzenegger also vetoed $510 million in line items, including $944,000 from the Department of Fair Employment and Housing, a cut that means the loss of nine enforcement jobs; $8 million from the state’s Alcohol and Drug Program’s program for preventing crystal meth trafficking; and $2 million from a California Conservation Corps work training program.

The budget relies heavily on accounting maneuvers — moving tax receipts from one year to a next — as well as a plan to borrow $5 billion against future lottery earnings, which requires the approval of voters in a ballot measure in a special election next year. If the lottery plan is defeated, midyear cuts and other measures to rein in spending are likely.

The government will also increase the penalty on corporations that understate their tax liability by at least $1 million, to add a 20 percent penalty in addition to a 10 percent interest rate on underreported taxes. But the spending plan contains no substantive changes to the state’s expenses or its revenue-raising structure, which might have staved off another hole next year.

“We have always said this really does just kick the can down the road,” said Alicia Trost, a spokeswoman for Don Perata, the Senate president pro tem, a Democrat. “The only thing good is that we fully fund education, we prevent borrowing, and we avoid the most onerous cuts to the neediest communities.”

The governor, however, proclaimed the budget a victory — one he squeezed from the Legislature after rejecting an earlier plan and after Democrats and Republicans could not agree on a sales tax increase.

He said he was particularly pleased by the budget’s proposed increase in the size of California’s rainy day fund, to 12.5 percent of the state’s general fund expenditures from 5 percent. That provision, too, requires a nod from voters in the special election.

Mr. Chiang’s office may begin writing checks as early as Friday, a spokeswoman said, beginning with $3.6 billion in Medicaid payments to hospitals, nursing homes and other health care providers that had been held up under the standoff. Further payments to vendors and other state creditors will follow.

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