Budget is on gov.’s desk at last

The Legislature voted Friday to send Gov. Arnold Schwarzenegger the final measures needed to resolve the budget deadlock that had dragged on a record 81 days past the start of the fiscal year.

The spending plan, with $104.3 billion in the general fund, allots more to education and social services than last year, but not enough to avoid cutbacks in schools, healthcare facilities and payments to the disabled, elderly and blind. It includes no new taxes; Republicans rejected assertions from Democrats and Schwarzenegger that the state needs to raise more revenue to ensure long-term fiscal stability.

“It’s not a good budget,” said Senate President Pro Tem Don Perata (D-Oakland). “What was possible today was to make sure that thousands of people would not continue to be hurt” for lack of state payments to hospitals, nursing homes and other social services.

Both the state Senate and Assembly approved the final measures without debate, highlighting the degree to which the year’s protracted wrangling has exhausted legislators. They had passed most of the spending plan Tuesday, but Schwarzenegger said he would veto it unless lawmakers altered it.

Legislators agreed to place new restrictions on tapping the state’s rainy day fund except when California does not have enough money to maintain its spending plan. They also agreed to Schwarzenegger’s demand that they eliminate a proposal to raise $1.6 billion by increasing Californians’ withholding taxes -- a measure that legislative officials said was first proposed by the governor’s own fiscal experts.

To replace that revenue, the new budget would double the penalty for companies that are late in paying $1 million or more in state taxes.

“Nobody is proud to have had a record-setting budget,” said Assembly Republican Leader Mike Villines ofClovis. “We cannot be late like this ever again.”

He said the delay could have been averted if Democrats had accepted earlier on that GOP members would not support any tax increases.

Schwarzenegger plans to sign the budget early next week, once he has had a chance to review thousands of spending items and decide which ones to remove. His line-item deletions are expected to bolster the $826-million reserve specified in the budget.

At a news conference Friday, Schwarzenegger said he expected the Legislature to call a special election sometime next year, probably around June, to increase the state’s rainy day fund to 12.5% of its budget and allow the state to borrow against its lottery. He said he was disappointed that lawmakers had not solved the state’s built-in budget gap, which each year leaves the state with insufficient revenue to pay for its increasingly costly services.

Lawmakers already face a projected $1.5-billion shortfall for the next fiscal year, which begins in July.

The state’s budgets have become more difficult to pass in recent years as the ideological split in the Legislature widens while California continues to require two-thirds of its members to support spending plans. Democratic leaders would like to allow a budget to pass by a simple majority, as 47 other states do, while Schwarzenegger wants to remake the Legislature’s political districts to encourage moderation.

“It’s a systemic problem that compromise is punished and getting stuck in your ideological quarters is rewarded,” the governor said.

Schwarzenegger said he wanted to come up with his own measure to punish legislators whenever there is a late budget.

“The one thing I would recommend very strongly to look at right away is to create consequences so that if the Legislature is late one day there are consequences,” he said. “Because right now there are no consequences. Even after two months they’re very relaxed about it.”

Schwarzenegger did not offer any examples such consequences. Currently, legislators are not paid after the July 1 budget deadline, but get their salary back once a budget is enacted. Legislators dismissed the governor’s comments. Perata suggested that Schwarzenegger was “embarrassed he couldn’t get at least one Republican vote” for his own budget plan.

Senate Republican Leader Dave Cogdill of Modesto said it would be a mistake to sacrifice the chance for a “quality budget” by putting too much stress on punctuality.

“To put all kinds of pressure on legislators and people who have to spend the state’s money doesn’t make a lot of sense to me,” Cogdill said.

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jordan.rau@latimes.com