California legislators soften stance on budget veto override

Tough talk from lawmakers about quickly overriding Schwarzenegger's expected veto subsided as Republicans expressed reluctance to vote for borrowing from taxpayers -- a provision of the budget Democrats passed without them.

The borrowing, in the form of a 10% increase in state tax withholding to be refunded later without interest, would require Republican votes to take effect if the governor vetoes the budget. The extra withholding would generate cash by accelerating the collection of taxes that normally would not be paid until the next fiscal year.

"It is not clear whether members of our caucus would vote for that," said Assembly Budget Committee Vice Chairman Roger Niello (R-Fair Oaks).

Legislative leaders shifted their efforts Wednesday from gearing up for an override to avoiding one altogether. Several Capitol sources involved in the confidential negotiations said lawmakers told the governor they would change the part of the budget that prompted his veto threat: restrictions on the state's rainy day fund. The governor had objected that the fund was too easy to raid.

Schwarzenegger told the legislators that the opportunity to get his signature by meeting his demand for tighter reins on the fund had passed.

Schwarzenegger spokesman Aaron McLear would confirm only that lawmakers offered to meet the governor's conditions.

"The legislators today offered that deal," he said. "The governor is taking that under advisement."

Schwarzenegger has now shifted his focus to the borrowing from taxpayers. In the private talks and at public media events, he is demanding that lawmakers remove the provision from the budget and replace it with something else. He has been vague about what exactly he wants. For example, he has not renewed calls for a sales-tax hike -- which he had earlier advocated -- or deeper cuts in state services.

"This has been a moving target," said Senate Leader Don Perata (D-Oakland).

Legislative staff and legal experts are scurrying to figure out what options they have. No Legislature in the modern history of California has overridden a budget veto.

"These are historic and uncharted waters," Niello said. "There are so many different scenarios. It is impossible to guess" how each one would go.