Governor, Democrats Close to Deal on Spending Limit, Bonds
SACRAMENTO — Gov. Arnold Schwarzenegger appeared close to closing a budget deal with Democratic legislative leaders Wednesday but faced skepticism within his own Republican ranks. The deal would include floating $15 billion in bonds to balance this year's budget and setting a spending limit that would prohibit borrowing in the future to overcome revenue shortfalls.
The development came on the same day that several thousand demonstrators descended on the Capitol to protest Schwarzenegger's proposed budget cuts and the loss of revenue for local governments caused by his elimination of the $4-billion car tax increase.
Democratic leaders scheduled sessions on the bond and spending limit proposals in the Assembly today and in the Senate on Friday.
Schwarzenegger spokeswoman Margita Thompson said: "We're still working. The governor is optimistic. People are at the table and seem engaged on all fronts in trying to get the issues before the voters in March, which is in the state's best interests."
But the plan, a compromise struck between Schwarzenegger and Assembly Speaker Herb Wesson (D-Culver City), faced resistance from lawmakers within the Republican governor's own party.
Senate Budget Committee Vice Chairman Dick Ackerman (R-Irvine) said there was little to like in the proposal, which the governor had yet to discuss with Senate Republicans by Wednesday evening.
"I don't think it looks very good," Ackerman said. "At this point in time, after talking to our leadership, I'm not convinced there is a deal. He hasn't asked us on this one yet. He may not be to the point where he wants to talk to us."
The measure would not strictly cap state spending with a formula tied to population growth and per capita income, as Schwarzenegger had proposed. Instead, it would require the Legislature to spend no more money than the state took in as revenue. How revenue would be determined remained under negotiation Wednesday.
"It makes it clean, it makes it simple, and you will always be able to count on 'X' amount of dough," Wesson said.
Building a Reserve
The plan would also put at least 1% of revenue each year into a reserve that could be tapped in tough economic times. The $15-billion bond issue would be paid off in 15 years, half the time the governor originally proposed.
Staffs for legislative leaders and the governor were expected to work late into Wednesday night, putting the proposals into bill form.
