Details Emerge On No-Tax California Budget Pact
SACRAMENTO (AP) — After a record-long impasse, California legislators are set to vote this week on a no-new-taxes budget that relies on a combination of spending cuts and optimistic financial projections to close a $19 billion deficit.
Details of the agreement between Gov. Arnold Schwarzenegger and legislative leaders began emerging Saturday ahead of a vote by rank-and-file lawmakers planned for Thursday. If approved, it would end a budget stalemate that has already stretched for 94 days.
State Assembly Speaker John Perez is calling the budget agreement hammered out by Schwarzenegger and legislative leaders a “solid — but sober – deal for California.”
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The state would cut about $7.5 billion in spending as part of the deal, down from the $12 billion Schwarzenegger proposed earlier this year.
Republicans agreed to a two-year delay of a corporate tax break that had been set to take effect Jan. 1, saving the state $1.4 billion this fiscal year.
To make up the shortfall, the agreement counts on an improving economy and the federal government to provide more money than previously projected.
Senate President Pro Tem Darrell Steinberg, D-Sacramento, said last week that the leaders turned to some “creative” bookkeeping after Republicans refused to raise taxes and Democrats rejected deeper budget cuts.
The pact he and the others reached Friday night assumes about $5 billion will come from the federal government, up from the $3.4 billion the governor had projected, said multiple sources close to the negotiations. It uses the Legislative Analyst’s Office optimistic forecast of an additional $1.4 billion flowing to the state from higher-than-projected revenues. And it counts on as much as $1.2 billion from selling 11 state properties, then leasing them back.
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Details of the budget pact won’t be formally released for several days, ahead of committee hearings scheduled for Wednesday.
The leaders had been under increasing pressure to pass a budget this week. Controller John Chiang has said he might have to issue IOUs for just the third time since the Great Depression if the week passed with no budget. Treasurer Bill Lockyer warned an estimated $7 billion in planned public works projects could be in danger if a deal is not reached soon.
This is the longest the state has ever gone beyond the July 1 start of its fiscal year without a budget. Legislative leaders have been struggling for ways to bridge a $19 billion gap, which represents more than 22 percent of the state’s $84.5 billion budget last year.
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