Late Friday night, leaders of the state Senate and Assembly
from both parties stood together outside the governor’s office after an
intensive five-hour meeting that signaled an end to the state’s record-long
budget stalemate that has lasted 94 days.
“Legislative leaders and the governor have finally reached
an agreement on a no-tax budget that protects California jobs,” Assembly
Minority Leader Martin Garrick, a Republican, said in a statement.
This year marks the longest the state has ever gone beyond
the July 1 start of its fiscal year without an approved spending plan. The $19
billion gap is more than 22 percent of the state’s $84.5 billion budget last
year.
The impasse prompted the governor to call for a second round
of three-day-a-month furloughs, which has resulted in about a 14 percent pay
cut for tens of thousands of state workers. The California Supreme Court is
expected to issue a decision Monday on whether the governor has the authority
to furlough.
“Everyone has worked very, very hard,” Democratic Senate
President Pro Tem Darrell Steinberg said. “These are very difficult
circumstances in difficult times, not a lot of celebrating, but we all stepped
up and did the work we had to do.” Republicans stood steadfast against tax
increases and Garrick indicated they got what they wanted.
Legislative staff will work on drafting budget language in
the coming days. Steinberg said all the information would be released during a
public hearing Wednesday. A vote on the compromise plan was expected Thursday.
It’s unclear how the budget will reflect on Schwarzenegger,
who leaves office next year at the end of his term.
Throughout the impasse, pension reform has remained one of
the biggest sticking points. Schwarzenegger wants the Legislature to roll back
public employee benefits, while Democratic lawmakers say the administration
should work to reach an agreement with unions through collective bargaining.
He also demanded a stronger rainy day fund as well as
spending and tax reforms. Schwarzenegger spokesman Aaron McLear declined to give
details but noted the governor has been clear in his demands all along.
“He will not sign a budget that increases taxes,” McLear
said. “He still feels exactly the same way.” The leaders have disagreed on how
to raise money, with Republicans refusing to make concessions on taxes or
increased fees, and Democrats calling for a delay of corporate tax breaks
approved last year. Although no details were given, a better-than-bleak
economic picture was expected to help shrink the budget gap, along with proceeds
from the sale of state office buildings.
A budget vote next week would bring much relief to the
state, which has the lowest credit rating in the US While California has so far
been able to pay most of its bills, officials warned that a prolonged impasse would
have brought more financial pain to the most populous state in the US
Controller John Chiang has repeatedly warned that he may have to issue IOUs for
just the third time since the Great Depression of the 1930s if next week passes
with no budget.
Without a budget, the state has already stopped paying some
employees and vendors.
Chiang said he already owes thousands of state contractors
nearly $3 billion.
