SACRAMENTO — Legislative leaders announced Sunday that they had reached a deal on a no-new-taxes state spending plan, bringing the longest budget impasse in modern California history nearly to an end.
Their proposal would increase spending for education and healthcare, though not enough to avoid cutbacks in services. It would borrow against the state lottery. And it relies heavily on maneuvers that would push the state's financial problems into the future at a time when economists have little hope that revenue is on the rebound.
That plan would require hundreds of thousands of businesses and individuals to hand over more of their taxes sooner, so the state could use the cash infusion to pay its bills. The payments made now would not be available for next year's budget.
Votes on the plan are scheduled for today in the Assembly and Senate.
Gov. Arnold Schwarzenegger, who appears to have been left out of the final deal-making, is not yet on board, and administration officials suggested he could demand changes. Nevertheless, legislative leaders said they expected the governor to approve the package.
"We will very quickly send the budget down to the governor, and we will expect his signature," said Assembly Speaker Karen Bass (D-Los Angeles) at a Sunday news conference with Senate President Pro Tem Don Perata (D-Oakland) and Republican leaders.
Once the governor signs a budget, the state can resume paying its bills.
The deal came days after Democrats in the Senate abandoned their months-long crusade to close the $15.2-billion budget gap with the help of increased taxes. They argued that balancing the budget any other way would be fiscally irresponsible and bleed state services.
Schwarzenegger supported that argument, but his fellow Republicans in the Legislature would not go along with a tax hike. The budget needs a two-thirds vote to pass, requiring at least eight Republicans.
"This won't make my highlights reel," Perata said Sunday, after he and other leaders put the finishing touches on the deal behind closed doors. But on the 76th day of the fiscal year, he said, "it was time to end this."
Schwarzenegger spokesman Aaron McLear said the lawmakers' agreement, which includes a provision to boost the state's rainy-day fund, may not meet the governor's demand for restraints on spending when state coffers are flush.
"We are analyzing their proposal but have concerns that budget reform may not be strong enough," he said.
