Schwarzenegger vows to veto Calif. budget |

Schwarzenegger vows to veto Calif. budget

Associated Press Writer

SACRAMENTO” Gov. Arnold Schwarzenegger, frustrated by a budget plan he intends to veto, says California’s political leadership has been operating in the same state of denial as Wall Street speculators who are now watching their financial empires crash around them.

Five years into his term as governor, he acknowledged Tuesday that he has had little success in changing that culture, despite his promises for radical reform.

“This is one area I have to say that we have failed the people of California. We have not yet fixed the budget system,” Schwarzenegger said, maintaining that he still intends to meet his key objective before he leaves office in 2010.

Schwarzenegger announced Tuesday that he intends to veto the patchwork budget plan the Legislature passed in the early hours Tuesday and will send to his desk Wednesday.

He presided over the longest state budget stalemate in history as he and lawmakers tangled over resolving one of California’s largest budget deficits, at $15.2 billion. If he follows through on the vow he made Tuesday, he will become the first California governor known to have vetoed the state’s main spending bill.

And if lawmakers override that veto, it will be the first time they have taken such action since 1979, when Schwarzenegger was transitioning from bodybuilding to acting, scoring roles in “The Villain” and “Scavenger Hunt.”

The governor’s public approval rating has plunged to 38 percent amid the budget debacle, the lowest since he launched a failed special election in 2005. Adding to his headaches is an attempt by the state prison guards union to recall him from office.

Despite months of work, the Republican governor failed to reach a deal with lawmakers over a state spending plan. Instead, they chose to go around him, devising a spending plan they admitted pushes many of this year’s problems off until next year and fully satisfying no one.

Schwarzenegger said he could not sign a budget bill that failed to meet his reform demands and does little to solve California’s persistent fiscal problems ” alluding to the recall of Gov. Gray Davis that swept him into office in 2003.

“The people were sick and tired of a system that uses taxpayers as an ATM machine or to continuously borrow from the future,” he said during his Tuesday news conference.

State lawmakers immediately pledged to overturn the governor’s expected veto.

The bill was expected to be delivered to the governor’s desk Wednesday morning, and the Assembly and Senate were likely to convene Thursday.

This year’s record stalemate forced the state to delay billions of dollars in payments to schools, medical clinics, daycare centers and state vendors. Lawmakers finally cobbled together a patchwork spending plan on the 78th day after the start of the fiscal year, passing a $143 billion budget shortly after 2 a.m. Tuesday.

The budget deal generated just enough Republican support to reach the two-thirds threshold needed for approval. Its main feature requires Californians to pay their income taxes sooner, a maneuver designed to help close a $15.2 billion deficit without borrowing or imposing new taxes.

District 3 Assemblyman Rick Keene said the budget isn’t perfect but that “it does meet many of our goals.”

“We managed to get a budget that doesn’t raise taxes, doesn’t raid local governments, cuts excessive spending, fully funds education and public safety, and delivers a partial step toward budget reform,” Keene said. “Even though it’s not the budget we would draft, it reflects significant progress and I couldn’t tell my local schools and hospitals that I am willing to let them run out of money just because I did not get 100 percent of what I wanted.”

Even lawmakers who voted for the plan agreed that it merely delayed until next year the toughest decisions about how to balance the state’s spending and expenses. Schwarzenegger said the current budget would require a major tax increase or massive cuts to education.

He had demanded that legislative leaders include a stronger rainy day account to help the state weather future fiscal crises and curbs on when and how that money could be spent. Lawmakers did not meet all of his demands, essentially challenging the governor to veto their plan.

Schwarzenegger also vowed to follow through on a threat he made during the impasse to veto any bills sent to him until a budget deal was struck. He said he will scrutinize all bills for unneeded expenditures or potentially negative effects on the economy.

“Hundreds of bills will be vetoed,” the governor said.

Top state officials say they are not aware of any instance in which a California governor has vetoed the entire state budget, going back to at least 1950.

The last time the Legislature overrode a gubernatorial veto was in July 1979, when both the Senate and Assembly rejected former Gov. Jerry Brown’s veto of a bill giving state employees a pay raise.

Brown, who attended a law enforcement ceremony with Schwarzenegger earlier Tuesday, also suffered an override after he vetoed a bill reinstating the death penalty.

He said the budget the Legislature passed does not solve the state’s financial crisis and only pushes the problems into next year.

“The budget is a mess,” said Brown, now California’s attorney general.

Assembly Speaker Karen Bass, D-Los Angeles, predicted lawmakers will quickly override Schwarzenegger’s veto.

“We will not let the people of California suffer,” she said in a statement.

She blamed the budget meltdown on Schwarzenegger because he was unable to persuade Republican legislators to support his proposal for a temporary sales tax increase. She also said he supported the budget lawmakers sent him Tuesday other than its failure to include the curbs on spending from the rainy day fund he wanted.

Lawmakers had agreed to his demand to raise the rainy day fund from 10 percent of the general fund budget to 12.5 percent.

The budget negotiations stalled amid three competing interests: Schwarzenegger insisted on long-term reforms such as the large rainy day fund and midyear authority to cut spending; Democrats wanted to raise taxes on corporations and the wealthy; and Republicans refused any tax increases and wanted to borrow money instead.

The compromise plan relies primarily on accelerated state income tax payments from working Californians and those who pay estimated taxes each quarter, such was corporations and wealthy individuals. It also closed several tax loopholes.

It makes $7.1 billion in spending cuts and calls for selling bonds based on future revenue of the state lottery. The lottery plan would raise $10 billion over the next two fiscal years, but requires voter approval.

The inability of elected leaders to solve California’s ongoing budget problems, in which spending continually races ahead of tax revenue, has inspired a potential movement to revamp state government, perhaps accomplishing what Schwarzenegger has so far been unable to do.

The Bay Area Council, representing the chief executives of Google, Yahoo, Chevron, Wells Fargo and other major San Francisco Bay area businesses, is actively pushing for a state constitutional convention. One goal is to implement a two-year budget cycle and remove the state’s two-thirds vote requirement to pass spending bills in the Legislature.

California, Arkansas and Rhode Island are the only states with such a high threshold for passing budgets.

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