State

Budget patches inching through

and Jim Sanders

jsanders@sacbee.com

Piece by painful piece, legislators Thursday were stitching together a multibillion-dollar patch for the state budget consisting of deep cuts in nearly every government program, tricky accounting maneuvers, and big and small reforms in the way California does business.

About the only thing the package that grew to 31 bills didn't have was a tax increase.

"It's certainly our intention to get the job done today and tonight," said Senate President Pro Tem Darrell Steinberg, D-Sacramento. "I'm confident we will have the requisite votes on all of the important items of the budget."

The evening got off to a contentious start in the Senate with the first bill, which contained billions of dollars in spending cuts. It initially fell short of the two-thirds approval it needed when most Republicans and some Democrats voted "no" or refused to vote.

GOP senators were opposed because of cuts in prison spending, while Democrats didn't like cuts in social services.

After a clearly irritated Steinberg alternately cajoled and twisted the arms of recalcitrant lawmakers, the measure passed, 27-13.

Other bills that mainly contained language allowing the spending cuts to take effect were passed by blocs of Democrats and Republicans.

But other issues, including a proposal to pull in $100 million by allowing new oil drilling off the Santa Barbara coast and siphoning off more than $5 billion from local governments, promised to push the Legislature into the wee hours of this morning.

Thursday's effort came 23 days into the fiscal year. But unlike most years, California already has a budget in place. That was passed in February, complete with more than $12 billion in temporary tax increases.

Since then, however, a recession-wracked global economy has hammered state revenues, while some program costs have increased.

State voters deepened the deficit in May when they rejected $5.8 billion worth of proposed borrowing from the state lottery and two other special funds.

To close the gap, legislative leaders of both parties and Gov. Schwarzenegger put together a fragile plan that includes $15.3 billion in spending cuts; about $8 billion in borrowing, redirecting revenues from local governments and accounting maneuvers; and a $921 million reserve.

Won't cover entire gap

The overall $24 billion plan is less than the $26.3 billion gap lawmakers and the governor had said they were trying to bridge, largely because the final deal reduced the size of the state's reserve.

The package would reduce the state's general fund budget to about $84.1 billion, a staggering 18 percent less than the budget two years ago.

"This has been a grueling process, and as I've said over the last couple of days, while I feel some relief that it's about to be over, it's a very sober time," Steinberg said.

Two issues were the most contentious. Environmental groups were irate about the proposal to raise $100 million by allowing offshore oil drilling off the Santa Barbara coast. Local officials have threatened to sue over plans to redirect $5.2 billion from cities, counties and redevelopment agencies.

The package would cut $5.7 billion from elementary and high schools and community colleges; $2.8 billion from state colleges and universities; $2 billion from health programs; $1.2 billion from social services; and $1.2 billion from the prison system.

State workers would continue to be furloughed three days a month, representing what amounts to a 15 percent pay cut.

It includes proposed solutions that range from accelerating the collection of income and corporation taxes to pushing the last state worker payday of the fiscal year from June 30, 2010, to July 1, 2010, the start of the next fiscal year.

Other pieces to the puzzle

Other elements of the package include:

The indefinite suspension of automatic cost-of-living increases for state colleges and universities, courts, the prison system and other state programs

Tightened eligibility rules for the state's welfare-to-work program and increased scrutiny of the In-Home Supportive Services program that provides aid to the elderly and infirm

A proposal to sell several state buildings, including those named after former Govs. Pat Brown and Ronald Reagan, as well as the Orange County Fairgrounds

Mergers and consolidations of some state agencies. The Bureau of Electronic Appliance Repair and the Bureau of Home Furnishings and Thermal Insulation, for example, would be merged into the Bureau of Electronic and Appliance Repair, Home Furnishings and Thermal Insulation.

The go-ahead for the state lottery and the State Compensation Insurance Fund to invest in bonds issued by the state treasurer to raise cash. But another bill would put part or all of SCIF up for sale.

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