After nonstop negotiations that stretched from Thursday afternoon through the night and only concluded Friday afternoon, both houses of the California Legislature agreed on a budget compromise that bridges the $26.5 billion deficit that forced the state to issue IOUs to vendors and significant cutbacks in programs.
Now, it’s up to Governor Arnold Schwarzenegger to go through the budget and use his line-item veto powers to finalize the plan, something both Senate and Assembly members expect will be complete no later than next week.
The Assembly Republican Caucus focused on a couple of issues they wanted to work out before voting, according to Assemblyman Cameron Smyth, emerging with a significant victory for local governments.
“In the seven-hour span since this morning, the Republicans were able to negotiate with the governor and get the Highway Users Tax gas taxes removed from the cuts, so there will be no gas tax taken from any city in California,” he said. “The Prop 1A component was included, which I felt was a good tradeoff because the HUT was a straight taking of money from local governments where Prop 1A is a loan. The state will assist with financing and paying interest on the loans and it has priority payback protection in the statute.”
Smyth said gas tax wasn’t the only successful negotiation.
“Along with the HUT elimination, we did achieve another close to $500 million in cuts from the budget which we have passed up to the governor, which he will do with a line item veto.”
The early release of prisoners is a threat Smyth and other legislators seem to think has been avoided.
“There are no specifics to the $1.2 billion cut to corrections, but our caucus will come back with a plan in August that will account for the cuts and not include any early release,” he said.
The Senate came to an agreement first, voting at 6:30 a.m. on a package of 31 bills that affect everything from schools to cities to social and health programs and corrections. After voting Friday morning, the Senate adjourned for the summer. They are scheduled to return to Sacramento on August 17.
In addition to the reserve, the package includes $15.6 billion in cuts to all parts of government, $3.9 billion in “revenue solutions” (steps to increase money coming in), $3.1 billion in borrowing from local governments, $500 million in fund shifts and $1.2 billion in deferrals.
“The bipartisan solution was the product of several months of negotiations and public hearings on how to address the historic downturn in the economy by responsibly cutting all areas of government while keeping the state’s social service safety net intact,” according to a statement issued by the office of Senate President Darrell Steinberg.