State

Election's about red ink

Even as California voters decide the fate today of measures to help ease the state's fiscal mess, lawmakers are bracing for a new fight over billions in red ink that threatens public services.

Senate and Republican leaders are poised to announce that a joint budget committee will convene Thursday to tackle worsening fiscal woes sparked largely by recession and plunging revenues.

Leaders of both parties expressed hope Monday for a fast solution to the state's fiscal headache, but behind the scenes, they remain deeply split over how to bridge the gap.

Gov. Schwarzenegger, through a spokesman, said time is of the essence.

"The short answer is, immediately," Aaron McLear, Schwarzenegger's spokesman, said when asked how soon agreement must be reached.

No legal deadline exists for reaching agreement, but it is vital that the budget be fixed by July 1, shortly before a projected cash-flow shortage will require short-term borrowing, officials said.

"It's got to be a balanced budget, it's got to be a real budget, and it's got to be a budget the credit market can believe in," said Tom Dresslar, spokesman for Treasurer Bill Lockyer.

Passage of the most immediate money-raising propositions on today's ballot, 1C, 1D and 1E, would generate about $6 billion to help balance next year's budget, but not nearly enough to erase the red ink.

Schwarzenegger last week released two dire budget plans: The most optimistic projects a $15.4 billion gap, which widens to $21.3 billion if voters reject today's ballot measures.

Assemblywoman Noreen Evans, a Santa Rosa Democrat who is chairwoman of the Assembly Budget Committee, said the joint conference committee will meet Thursday to begin tackling the fiscal mess.

Evans said the bipartisan committee of both legislative houses might meet Friday, too, and that it expects to meet six or seven days weekly for about three weeks.

"I really would hope that we wouldn't have any bitter fights," Evans said of negotiations. "I don't think that helps anybody." But neither Democratic nor Republican legislative leaders were willing Monday to accept either of Schwarzenegger's plans.

The Republican governor's proposals include up to $9 billion in cuts, as much as $5.4 billion of which could come from school spending.

Schwarzenegger also would lay off 5,000 state workers and borrow $7.5 billion from cash-strapped local governments and a rocky investment market.

Neither of Schwarzenegger's plans includes tax increases. But the governor would collect an extra $2.8 million in fees from residents of the state's veterans homes and, if the ballot measures fail, he wants higher fees at state parks and an insurance surcharge of $48 per homeowner.

Schwarzenegger would allow an oil company to drill on Tranquillon Ridge, off Santa Barbara, to raise $100 million.

His worst-case budget calls for remanding about 8,000 low-level immigrant prisoners to the federal government.

He proposes to sell major state assets, including Cal Expo in Sacramento and San Quentin State Prison.

Assemblyman Sam Blakeslee of San Luis Obispo, who will take over as Assembly GOP leader June 1, said he cannot accept more tax hikes in the wake of a budget, signed in February, that raised taxes by $12.5 billion.

"There's no appetite to go down that road again," he said.

Senate Republican leader Dennis Hollingsworth of Murrieta suggested that Democrats would be foolish to revive a maneuver, vetoed by Schwarzenegger in December, that would raise revenues with a simple-majority vote by eliminating some taxes and replacing them with other taxes or fees.

"They'd get the pants sued off of them," Hollingsworth said.

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