Schwarzenegger, Democrats compromise on Calif. recovery

Legislature OKs putting bond measure, spending limits on March ballot

December 13, 2003|By Dan Morain and Carl Ingram | Dan Morain and Carl Ingram,LOS ANGELES TIMES

SACRAMENTO, Calif. - Gov. Arnold Schwarzenegger's $15 billion budget plan headed for the March ballot yesterday after an alliance with legislative Democrats allowed the governor to break a partisan deadlock and revive a proposal that had once appeared all but dead.

Schwarzenegger claimed victory late in the afternoon when the California Senate gave final approval for placing the plan before voters, although most Republicans opposed the bond.

"I am a happy governor because today is a new day for California," Schwarzenegger said as he signed the bills. "There is now order in our fiscal house."

Winning the Legislature's approval for the bond was a major test for Schwarzenegger, who came to the job with no real political experience after voters ousted Gray Davis in an unprecedented recall.

"It has been impressive that he stuck to it," Democratic political consultant Kam Kuwata said. `'He brought people from both spectrums together. It is reflective on his dogged determination."

The legislative compromise that Schwarzenegger brokered could begin to repair the state's shaky finances, which have been followed closely in financial markets because of the state's need to issue bonds to cover its budget shortfall.

The state Assembly had unanimously endorsed the package the day before, but the Senate 27 to 12 to approve the bond measure, exactly the two-thirds majority needed in the 40-member chamber.

All the Senate's 25 Democrats backed Schwarzenegger's plan, joined by only Senate Republican leader Jim Brulte and Richard Ackerman, who is expected to replace Brulte as party leader next year. Twelve Republicans voted no, with one abstaining.

Senators were more supportive of the companion measure, that would place a constitutional amendment on the ballot to make it easier to cut state spending in bad economic times and establish new spending restraints, including a reserve fund. That measure was approved 35 to 5, with all five votes against it coming from Republicans.

Neither measure will take effect unless voters approve both.

Schwarzenegger's initial plan would have authorized up to $17 billion in debt, a sum that included payments to investment houses and others to prepare the bonds. The debt would have been repaid over as many as 30 years, at a cost with interest of more than $32 billion.

The compromise measure approved yesterday would authorize the sale of $15 billion in deficit bonds to be repaid over about 9 years, in part with money from a quarter percentage point of existing state sales taxes.

The spending limit measure, while less strict that the governor initially proposed, would require that the state have balanced budgets. It also would require that the state's general fund carry an emergency reserve of 3 percent or $8 billion, whichever is greater.

The proposal would also limit the power of the governor and legislature to borrow to balance the budget, and would give the governor more power to call the legislature into session to impose cuts.

Critics contend that the measure is loosely written and would lead to few notable changes. While some language in the bill seems to restrict borrowing, the state could continue its practice of borrowing from special funds to keep government afloat, and could delay making payments, according to an Assembly Republican analysis. Additionally, lawmakers by a majority vote could use money in the emergency reserves to pay for general costs.

The Los Angeles Times is a Tribune Publishing newspaper.

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