SACRAMENTO — Gov. Arnold Schwarzenegger attempted to forge a path out of the state's financial mess Wednesday by offering concessions to both Democrats, who are demanding that schools and other services not be cut, and Republicans disdainful of new taxes.
Both sides immediately declared that they wanted little to do with the governor's budget proposal, suggesting that Sacramento is in for another long, unproductive summer.
The $144.4-billion spending plan would restore $1.8 billion for schools while making deep cuts in welfare and healthcare for the infirm, legal immigrants and impoverished parents.
It would steer an $828-million windfall of gas tax revenue -- the result of soaring prices at the pump -- away from public transportation programs and into patching California's $15.2-billion budget gap.
The challenge that the governor and lawmakers face is daunting. The state has dropped $6 billion further into the red since January, when California was already struggling financially.
The centerpiece of Schwarzenegger's budget is a novel plan to ask voters for permission to borrow $15 billion from Wall Street against future earnings of the state lottery, and to temporarily raise the state portion of sales taxes -- now 6.25% -- by 1 percentage point if voters reject the proposal in November.
"As the deficit grew these past few months, I knew that we could not solve this crisis by cuts alone," the governor said in presenting his proposals. "We had to get creative."
But state Senate leader Don Perata (D-Oakland) called the revised budget "beneath a governor of this great state. It's telling our citizens: This is it. Our best years are behind us."
Assembly Republican Leader Mike Villines of Clovis called the sales tax idea -- a linchpin of the governor's plan -- "a deal-killer."
The lottery proposal, which involves updating the lottery with new games and promotions that the state's financial advisors say would boost ticket sales and generate billions of dollars in new revenue, is pitched by the governor as a painless way to generate cash.
But lawmakers were skeptical. Some Republicans and Democrats called it accounting gimmickry.
Schwarzenegger said he was undeterred by the torrent of negative reaction.
"I always look at what is the end result," he said at a meeting with The Times editorial board Wednesday, hours after unveiling his plan. "What are we signing is what is important. Not what happens on the way to get the budget.
