Reporting from Sacramento—Gov. Arnold Schwarzenegger and legislative leaders will begin working today to line up votes for the budget agreement they reached Monday evening to close a $26.3-billion deficit and allow the state to begin paying all of its bills again.
As they do, new details of the deal -- aimed at ending months of partisan wrangling and a cash crisis that threatens to push California into insolvency -- are expected to emerge. All of the legislative leaders have scheduled caucus meetings to brief the rank-and-file on the plan.
Legislative staff and the administration will be scrambling to put the package into bill form so lawmakers can vote on it as soon as Thursday. Local governments and interest groups that would be hit hard by its provisions are expected to be lobbying lawmakers to oppose it.
Some groups already have begun preparing lawsuits to challenge the agreement if it passes.
The plan has not been formally released. But as outlined by lawmakers and their staffs, it does not include any broad-based tax increases, relying instead on deep cuts in government services, borrowing and accounting maneuvers to wipe out the deficit.
The proposal would reshape some aspects of government in California, significantly scaling back many services that have been offered to residents -- particularly the elderly and the poor -- for years.
Tens of thousands of seniors and children would lose access to healthcare, local governments would sacrifice several billion dollars in state assistance this year and thousands of convicted criminals could serve less time in state prison. Welfare checks would go to fewer residents, state workers would be forced to continue to take unpaid days off and new drilling for oil would be permitted off the Santa Barbara coast.
"We've accomplished a lot in this budget," said Gov. Arnold Schwarzenegger, as he emerged from his office with legislative leaders Monday evening to announce the deal, after an all-day negotiating session of the "big five" -- the governor and legislative leaders.
"It was like a suspense movie, but . . . we have accomplished a lot," Schwarzenegger said. "This is a budget that will have no tax increases, a budget that is cutting spending. . . . We're also very happy that in this budget we make government more efficient."
Democrats, who initially sought tax increases, said they had managed to ward off cuts proposed earlier by Republicans that would have been catastrophic to the state's social safety net.
"We have cut in many areas that matter to real people, but I think we have done so responsibly," said Senate leader Darrell Steinberg (D-Sacramento). "This is a sober time."
But concern that it could unravel as interest groups catch wind of its contents and pressure the rank-and-file to reject it was evident in legislative staffers' reluctance to share some details.
No one involved in the negotiations would explain how $1.2 billion would be cut from the state prison system. Law enforcement advocacy groups said that level of reduced spending could require the release of as many as 20,000 prisoners before their sentences are complete.
It is also unclear how long the proposal would keep the state's budget balanced. The plan is full of expense deferrals, one-time measures and assumptions that invite a deficit to reemerge.
The governor and lawmakers assumed the privatization of the State Compensation Insurance Fund would generate $1 billion, for example, but few, if any, experts believe such a sale is possible this year. And the plan would save $1.2 billion by waiting until a new fiscal year begins before sending out one scheduled batch of paychecks to state workers, a clear accounting scheme.
Further, finance officials say the continued plunge of tax revenues could bring on another shortfall before year's end.
"There will be more work to be done," said Assembly GOP Leader Sam Blakeslee (R-San Luis Obispo). "The recession is not over."
The budget package, according to those who worked on it, is expected to hit local governments hard. It would raid municipal funds for $1.9 billion, mostly county money. The funds must be repaid with interest in three years.
Cities and counties would lose another $1 billion in transportation money, and the state is seeking at least $1.7 billion -- and possibly billions more -- from local redevelopment agencies. Lawmakers will also be given the option to greenlight a controversial plan that would give some local redevelopment agencies broad new discretion to tear down and rebuild neighborhoods under their jurisdiction for decades to come, regardless of whether those areas are blighted.