Schwarzenegger to veto bills until budget passes |

Schwarzenegger to veto bills until budget passes

Associated Press Writer

SACRAMENTO — A frustrated Gov. Arnold Schwarzenegger turned up the pressure on lawmakers Wednesday, saying he will veto all bills sent to him until they pass a state budget.

The governor called a mid-afternoon news conference to express his dismay that Democratic and Republican lawmakers have not yet compromised on a spending plan. They remain at odds over how to close the state’s $15.2 billion deficit.

California is the only state with a fiscal year beginning July 1 that remains without a budget.

Schwarzenegger has warned that California faces a crash crisis and told reporters on Wednesday that passing a budget is the only issue the Legislature should focus on.

“Nothing in this building is more important than a responsible budget and to fix our broken budget system,” he said. “We do not have the luxury of stretching out this process any longer.”

Last week, Schwarzenegger signed an executive order eliminating more than 10,000 temporary, part-time and contract positions and cutting pay for thousands of state workers to minimum wage.

His order is being challenged by the state controller and California’s largest state employees union but illustrates the level of tension in Sacramento over the lack of a budget compromise.

The administration has warned that California will have to start borrowing money in September to pay its bills. The dysfunctional credit market will force the state to pay hundreds of millions of dollars in fees and interest for those loans, administration officials have said.

State Controller John Chiang disagrees. His office issued a statement Wednesday saying California’s revenue flow actually improved in July and that the state has enough money to make its payments until sometime in October.

Nevertheless, Schwarzenegger is seeking to force lawmakers into intense negotiations by creating consequences for inaction ” both to state employees and now to lawmakers who want their legislation signed into law.

“We can solve this literally in one night,” the governor said at the news conference. “As soon as there are consequences, people will sit down and not leave the table.”

Senate Democrats would not respond to Schwarzenegger’s veto threat, said Lynda Gledhill, a spokeswoman for Senate President Pro Tem Don Perata, D-Oakland.

The three other legislative leaders did not immediately return a request for comment.

Bills that are not signed within 12 days of being received by the governor’s office automatically become law. Because of that, Schwarzenegger said he would use his veto power.

It’s not clear what fate awaits the 13 bills already on Schwarzenegger’s desk.

Lawmakers are well past their constitutionally mandated June 15 deadline to pass a budget and appear to remain far apart.

Leaders of both parties in recent days said they were at an impasse over how to close the deficit. Democrats have proposed raising taxes on the wealthy and corporations by $8.2 billion and implementing some spending cuts.

Republicans say they won’t go along with any budget that fails to include long-term reform measures such as a spending cap and creating a rainy day fund the state could draw on during lean years. Some GOP lawmakers want to mandate a state hiring freeze.

Amid those disagreements, lawmakers have failed to embrace the biggest ideas put forward by Schwarzenegger.

His revised budget from last May proposed raising $15 billion over three years by selling bonds to Wall Street investment firms based on the future value of a juiced-up state lottery. Lawmakers have said the lottery plan might be considered for future years but not to close the current deficit.

Over the weekend, Schwarzenegger floated a temporary, 1 percent sales tax increase that would be rolled back after three years. Republican lawmakers rejected it once it became public.

His frustration was evident on Wednesday, as he said everyone would have to be willing to compromise.

“Let’s put everything on the table. Let’s look at everything … without the Kabuki and without the song and dance,” he said.

At the same time, Schwarzenegger is eager to put the budget debate behind him so he can focus on other policy priorities. Once a budget is passed, he wants lawmakers to put a $9.3 billion water bond on the November ballot, but time is running short.

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