Legislature OKs Budget Grudgingly

More than three weeks late and with little enthusiasm or debate, the Legislature on Thursday passed California’s spending plan for the new fiscal year.

The budget, hammered out two days earlier by Gov. Arnold Schwarzenegger and legislative leaders, cleared both the Senate and Assembly with votes to spare. Republicans and Democrats alike, however, offered only grudging support, calling it “highly compromised” and “nothing to be proud of.”

“This is a budget that, in effect, protects the values of Californians,” said Assembly Speaker Fabian Nunez (D-Los Angeles), “but it’s not a perfect budget.”

The governor is expected to sign the $117.5-billion plan next week -- the earliest state budget in five years despite a weeks-long standoff between Schwarzenegger and the Democrats who dominate both houses of the Legislature.

The main budget bill, SB 77, passed with more than the two-thirds majority needed, clearing the Senate 33-4 and the Assembly 65-13. All of the “no” votes came from Republicans.

One dissenter, Sen. Tom McClintock (R-Thousand Oaks), said the state’s borrowing and spending had jeopardized California’s future.

“We will have stripped our children of their ability to meet their generation’s needs as they struggle to pay the mountain of debt with which we have crippled them,” he said.

A second bill will delay a cost-of-living increase of up to $260 a year for low-income elderly and disabled people; it had slightly less support, with several Democrats demurring.

“They’re barely hanging on,” said Assemblyman Dave Jones (D-Sacramento), who voted against the measure. “These people are really in a desperate condition.”

The delay was part of the deal Democratic lawmakers struck with Schwarzenegger.

In addition to no new taxes, the spending plan includes increased tuition at state universities of as much as 10%, repayment of $1.2 billion owed to cities and counties, and expenditure of $1.3 billion in gasoline sales tax revenue for highway improvements. It leaves an estimated $4.7-billion hole in next year’s budget.

Though lawmakers missed the state Constitution’s June 15 deadline for passage of a budget as well as the July 1 start of the new fiscal year, the plan cleared the Legislature earlier than any since 2001 -- and with less acrimony.

And unlike the past couple of budgets, it limits borrowing.

“You don’t get the gimmicks that you’ve seen in the past,” said Assembly Republican Leader Kevin McCarthy of Bakersfield. “It’s more honest than any one that I’ve seen in the past.”

A surge in the state’s tax income revenue from an improved economy shrank the expected shortfall this year from $8.6 billion to $6 billion. Some lawmakers said that money and the special election scheduled for Nov. 8 spurred budget talks.

Both Schwarzenegger and legislative leaders have said they are eager to find common ground on issues that voters will decide in that election, which Schwarzenegger called last month.

“Clearly, getting the budget out of the way in time to do that was a motivating factor,” said Assemblyman Paul Koretz (D-West Hollywood).

The governor has backed three initiatives on the ballot. One would limit how much the state budget could increase each year and allow the governor to cut spending at his discretion whenever the budget fell out of balance midyear. Another would increase the time it takes for public school teachers to earn tenure and allow dismissal after successive poor performance reviews. The third would give the power to draw voting districts, now in the hands of lawmakers, to retired judges.

Also on the ballot is a measure detested by Democratic leaders that would require unions -- major donors to Democratic politicians -- to get permission from members each year to use their dues for political causes.

Nunez and Schwarzenegger have said they hope to build on the momentum of the budget deal to find a compromise on the spending cap, which polls show is unpopular with voters, as well as other issues. The Legislature has until July 21 to place such agreements, in the form of propositions, on the special election ballot.

On Thursday, Schwarzenegger said the new budget “puts California on the path toward rebuilding to make our state great once again.”

“However, California still has a broken budget system that spends more than the state takes in,” he said. “We must now use this same bipartisan spirit to work together to bring needed, fundamental reform to the system.”

Democrats eased passage of a deal three weeks ago when they abandoned a demand for $3 billion for public schools that they said the governor promised during budget negotiations last year.

Democrats vowed Thursday to continue trying to get that money, through a ballot measure if necessary, by raising income taxes on individuals who earn more than $143,421 a year and married couples who earn more than $286,843.

“I think that if we’re willing to harm those most vulnerable, increase hunger in the wealthiest state in the wealthiest nation in the world,” said Assemblywoman Jackie Goldberg (D-Los Angeles), “the least we can do is ask those who have fabulous wealth in this state to pay a little more so that we can improve our educational system and we cannot make these terrible cuts in human services.”

Republicans vowed to continue working to whittle away the fundamental gap between California’s revenue and expenditures.

“All we did ... is make a quarter of the progress that we need to make,” said Assemblyman Rick Keene (R-Chico), vice chairman of the Assembly Budget Committee. “Next year the choices are going to be tougher. Next year we still have to do the job we did not complete this year by getting our spending in line with our revenues.”

The budget votes did not go without a hitch. Assembly Democrats singled out one bill in the 14-bill budget package that would devote $6.5 million to Schwarzenegger’s plan to build hydrogen fueling stations around the state. They passed the bill by a simple majority vote, so it will take effect in January, rather than immediately with the other budget bills.

And in what has become an annual budget-vote tradition, Republicans were rebuffed in their attempts to amend four bills to require parental consent for minors to obtain abortions, ban use of state money for late-term abortions, ban the Medi-Cal program from buying or selling aborted human embryos and limit state funding for abortions to $3 million.

Times staff writer Robert Salladay contributed to this report.