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Office of the Chancellor / Public Affairs
Monday, July 28, 2003
 

Washington Post/AP 7-28-03

California Senate Passes Compromise Budget After 27 Days of Deadlock

 

SACRAMENTO, Calif. -- Seeking to end California's 27-day budget deadlock, the state Senate approved a compromise spending plan Sunday that imposes nearly $13 billion in cuts but raises no new taxes.

The budget bill passed on a 27 to 10 vote, with only five Republicans supporting the plan. The nearly $100 billion proposal now goes to the Assembly, which is expected to embrace it early this week.

The proposed budget largely protects education funding for the next year. Public health and human service programs also are expected to be maintained at the same levels as last year.

Because lawmakers could not agree on imposing deeper cuts or raising taxes, tough decisions over closing a shortfall that could reach $8 billion by next summer have been put off at least a year.

"There's something in here for almost everybody to hate," said Senate President Pro Tem John Burton, a San Francisco Democrat who helped negotiate the deal with Republican Leader Jim Brulte of Rancho Cucamonga.

Gov. Gray Davis has indicated he is largely supportive of the plan.

"I commend the Senate for approving a budget that protects K-12 education," said Davis in a statement. "Compromise on this budget required difficult choices.

"However, the consequences of a late budget are more costly than ever before. I urge the members of the Assembly to quickly take up the budget bill and send it to my desk," he said.

California faces a $38.2 billion budget deficit by next July if deep cuts are not made or tax hikes approved. Already with the nation's worst credit rating among states, California saw its rating downgraded last week by one Wall Street firm because of the uncertainly over the budget crisis, coupled with the coming recall election aimed at Davis.

Although passage of a budget plan this week would ease some investors' fears about the state's solvency, a new budget is not likely to result in any improvement in the credit rating.

The agreement in the Senate comes only a few days after critics of the governor received notice from Secretary of State Kevin Shelley that a recall petition met the requirements for a historic election this October that could remove Davis from office.

The budget deadlock was brought on by a disagreement between Democrats and Republicans over tax increases and spending cuts. Democrats, who hold big majorities in both houses, wanted a half-cent sales tax to close the budget gap. Republicans, who have just enough seats to block a budget plan, have said the gap could be closed using existing revenues and deep cuts.

Leaders proposed a complex tax swap that allows the state to borrow nearly $11 billion to wipe out the existing deficit over the next five years.

While Brulte represented the budget as one that included no higher taxes, some fellow Republicans disagreed. State Sen. Tom McClintock, R-Thousand Oaks, said the budget actually included $5 billion in higher taxes, as it assumed the increase of the state's car tax back to 1998 levels and the elimination of the manufacturers tax credit.

"Mark my words: This budget solves nothing," said McClintock, who said he's likely to run for governor in the recall election. "The day that it is signed will be the first day of the budget crisis of 2004."