Friday, July 24, 2009



Published: Friday, July 24, 2009 at 7:00 a.m.

SACRAMENTO — The California Senate on Friday approved a plan to close the state's $26 billion budget deficit, giving a glimmer of hope after weeks of fiscal gloom.

State Senate Minority Leader Dennis Hollingsworth, R-Temecula, left, ponders for a moment while talking with Sen. Bob Huff, R-Diamond Bar, during the debate over one of the state budget measures at the Capitol in Sacramento, Calif., Friday, July 24, 2009. Lawmakers worked overnight voting on a package of bills worked out between Gov. Arnold Schwarzenegger and Legislative leaders to resolve the state's $26.3 billion budget deficit. (AP Photo/Rich Pedroncelli)

The complex legislative package of 31 bills was still being debated in the Assembly as it struggled to secure enough votes on several measures.

Failure to pass any of them still could jeopardize the entire deal, potentially sinking California further into fiscal chaos.

Senators started their session Thursday evening and worked through the early-morning hours Friday to get enough votes to pass the more controversial measures, including three that took or borrowed billions of dollars from cities and counties.

Senate leader Darrell Steinberg, D-Sacramento, said lawmakers could take pride in dealing with difficult budgets during an unprecedented economic collapse.

"And California is still standing," he said moments after the final vote.

The compromise plan before the 80-member Assembly and 40-member state Senate was announced Monday by Gov. Arnold Schwarzenegger and the Democratic and Republican leaders of each house.

It eliminates nearly 60 percent of the deficit with spending cuts to core state services such as education, state parks and prisons.

The rest is reached by one-time raids on local government funding and accounting maneuvers, such as deferring state employee paychecks by one day for a savings on paper of $1.2 billion.

Both legislative houses quickly passed a key bill that enacts cuts to higher education, college grants, health programs, welfare, in-home supportive services and state prisons, but measures aimed at filling the rest of the deficit proved most difficult.

Some required two-thirds approval, so they needed support from a handful of Republicans, the minority party in each house.

Legislative leaders have acknowledged the solution is imperfect and cuts deeply into basic programs, including education, prisons, health care and welfare. But they say it is vital to address the state's cash-flow crisis.




Published: Friday, July 24, 2009 at 4:03 a.m.

Highlights of details of the agreement between Gov. Arnold Schwarzenegger and the four legislative leaders to close California's $26.3 billion budget deficit:


  • Cuts $6 billion from K-12 schools and community colleges over two years.
  • Cuts nearly $3 billion from the University of California and California State University systems. Although the federal stimulus program fills some of the gap, the depth of the cuts will mean higher student fees, fewer students and furloughs for employees.
  • Cuts $1.3 billion from Medi-Cal, the state's health-care program for the poor; most of the savings would be through a proposal to bill the federal government for more money. In February, the state eliminated adult dental and eye care for recipients, a move that is being challenged in court.
  • Saves $1.3 billion by retaining three unpaid furlough days a month for state workers, which is the equivalent of a 14 percent pay cut.
  • Includes $1.2 billion in unallocated cuts to the state Department of Corrections.
  • Cuts $528 million from CalWORKS, state's welfare-to-work program, partly by increasing sanctions for families that fail to meet work requirements. Schwarzenegger had proposed eliminating the program entirely.
  • Cuts $124 million from Healthy Families, a program that provides health insurance for 930,000 low-income children. Lawmakers hope nonprofit groups, foundations and other organizations can fill in some of the losses. The program already has stopped accepting new applicants, the first time it has done so in its 12-year history.
  • Cuts $226 million from state's in-home supportive services program for the frail and disabled. The governor initially proposed removing 90 percent of the 440,000 people enrolled in the program, but the budget compromise will eliminate care only for those who are more independent and able to do their own cooking and cleaning. It also includes Schwarzenegger's proposal to require fingerprinting of caregivers and most recipients, and would require caregivers to undergo background checks.
  • Cuts about $8 million from state parks, allowing the majority of state parks, beaches and attractions to stay open. Some parks are likely to close, based on popularity and use.


  • Borrows about $2 billion from local governments' property tax revenue, money that would have to be repaid with interest in three years. As a concession to angry city and county officials, the deal would prioritize repayment of the so-called Proposition 1A money after schools and bondholders are paid.
  • Takes $1 billion in redevelopment money from local governments.
  • Takes $1 billion in transportation funding from local governments.
  • Speeds up collection of 2010 personal income and corporate taxes to bring in revenue earlier than anticipated.
  • Sells off part of the State Compensation Insurance Fund, which the administration values at $1 billion. The fund is a quasi-governmental agency that is the state's largest writer of workers' compensation insurance.
  • Allows limited expansion of oil drilling off Santa Barbara County, which the governor's office says will generate $100 million in the current fiscal year.
  • Eliminates the Integrated Waste Management Board and the Board of Geologists and Geophysicists, which Schwarzenegger had targeted as wasteful and unnecessary.
  • Gives school districts option of cutting the school year by five days.
  • Defers state employee paychecks by one day for a savings on paper of $1.2 billion, which has been criticized by some as a gimmick. Instead of being issued on June 30, 2010, the paychecks would be issued on July 1, the start of the 2010-2011 fiscal year.
  • Gives governor authority to pursue the sale of the Orange County Fairgrounds and about 10 state-owned office buildings as a potential revenue source in future years. The California Public Utilities Commission Building in San Francisco and the Ronald Reagan State Office Building in Los Angeles are among those that will be considered for sale.
  • Rejects Schwarzenegger's proposal for a surcharge on homeowner insurance policies, which would have boosted funding for emergency services. The surcharge would have averaged about $48 a year per homeowner.

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