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California leaders reach 'framework' of budget deal

Two all-day sessions produce the breakthrough, but specifics on closing the $19.1-billion deficit are not revealed. 'We will continue to work throughout the weekend to iron out the details,' the Assembly speaker says.

September 24, 2010|By Shane Goldmacher, Los Angeles Times

Reporting from Santa Monica — California's leaders declared a breakthrough in long-stalled budget talks Thursday, as the state approached a dubious milestone: breaking its own record for the longest budget impasse in modern history.

After two all-day negotiating sessions in Gov. Arnold Schwarzenegger's private Santa Monica office, the governor's spokesman said they had reached "a framework of an agreement" on eliminating the state's $19.1-billion deficit.?? Top legislators concurred.

Proclamations of such accord have proved premature in the past, but the negotiators said they could strike a final deal as early as Monday.

"We will continue to work throughout the weekend to iron out the details," Assembly Speaker John A. Pérez (D- Los Angeles) said in a statement.

But the legislative leaders, who had traveled to Southern California for a rare budget summit outside the state Capitol because Schwarzenegger has a severe cold, left the talks in SUVs and cars without providing details about what was in their framework.

The Democrats had arrived in Santa Monica bearing matzo-ball soup for the governor Wednesday, 84 days into the fiscal year. On Friday, California reaches a new record for a late budget. The previous record was set Sept. 23, 2008.

Both Democrats and Republicans have said any new budget is unlikely to raise broad taxes such as sales or income taxes. But the spending plan, once completed, is expected to cut into numerous government services to close the deficit.

Schwarzenegger has vowed not to sign a budget unless it reins in public pensions, and one person with knowledge of the talks said that remained a point of contention. The governor also said there would be no spending plan without some controls on other state spending, and the source said that demand would be met with a future ballot measure.

The source spoke on the condition of anonymity because of the delicate nature of the talks.

Eliminating this year's deficit — equal to more than $500 for every man, woman and child in the state — has proved especially intractable. Lawmakers have been at loggerheads for months over what programs to cut or what taxes to raise to close the shortfall. California is one of a handful of states that require a two-thirds vote to pass a budget or approve new or higher taxes.

As Schwarzenegger and lawmakers began meeting Thursday, how much to spend on K-12 education and how to repay schools what they are owed from past years were among the key sticking points. It is unclear how those issues are being resolved.

Republicans were amenable — for a price — to the suspension of a corporate tax break allowing businesses to deduct losses in one year from taxes paid in another, according to two people close to the negotiations. The sources, who also spoke on the condition of anonymity, said those discussions were ongoing.

As the summer budget impasse has crept into the fall, a growing number of California's bills are going unpaid — a projected $6 billion through September, according to the state controller.

"It's horribly frustrating and devastating," said Jeremy Tobias, executive director of the Community Action Partnership of Kern, which provides child care services in the Central Valley.

His organization is owed more than $900,000 by the state, he said. As a result, services for more than 3,000 children have been reduced or eliminated. Staff has been laid off or had hours reduced, he said.

"We're expected to carry the state during this period," Tobias said, "and we're just not in a financial position to be able to do that."

shane.goldmacher@latimes.com

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