Saturday, 25 May 2024

Schwarzenegger signs long-awaited state budget

SACRAMENTO – Based off of his “four-legged stool” blueprint, Gov. Arnold Schwarzenegger signed an historic budget package on Friday that aims to solve California’s $42 billion deficit.

Schwarzenegger's office said that the bipartisan budget package takes the necessary steps to reduce spending, bring in new revenue, improve the business climate and create jobs, and make government more efficient.

First District Assemblymember Wesley Chesbro (D-Arcata) voted for the package, which he called “a compromise of deep cuts and revenue increases that required both sides of the aisle to make concessions.”

Said Chesbro, “The cuts we made are the most severe in the history of California budgets. All Californians will be asked to make sacrifices, either in the form of service cuts or paying a little more in taxes to return our state to solvency. If we had not acted on this solution now – if we had waited any longer – the pain for all Californians would have been worse.”

Chesbro said he doesn't like taxes, or cutting spending on education and other vital programs. “But the Legislature had to act now,” he said, explaining that failure to act would have jeopardized California’s eligibility for federal economic stimulus funds. Thousands more Californians employed in the public and private sector would have lost their jobs as one project after another was shut down, he added.

On Friday Schwarzenegger used his line item veto authority to cut $958 million from the 2009-10 budget's general fund.

Those line item cuts include at least a 10-percent reduction to most of the constitutional offices; replacing general fund appropriations with federal funds that the state otherwise would not receive for higher education; and, finding additional savings within the California Department of Corrections and Rehabilitation.

Other features of the budget include a strengthening of the rainy-day fund, opening up of primary elections and elimination of legislative pay raises during deficit years.

“We have achieved a great victory for California today,” Schwarzenegger said. “By staying focused on what was best for the people of our state and not the special interests, we were able to come together and solve our $42 billion deficit and also find meaningful and lasting solutions to our broken budget system.”

Despite having to make some tough decision, the state is “back on the best path forward,” said Schwarzenegger. “We will continue to work with our most important partners – the people of our great state – to ensure we never again face the kind of catastrophic budget scenario we experienced this year.”

The budget includes $14.9 billion in spending reductions, Schwarzenegger's office reported.

The reduction from most constitutional officers’ budgets, which resulted from the line item veto, will achieve $47 million in savings, according to the governor.

He added that the cut to the constitutional officers' budgets reflects equity among all executive branch agencies for the state employee compensation reductions within the budget through furloughs, elimination of positions, overtime reform and reducing paid state holidays. The constitutional officers will have the flexibility to implement the savings within their own offices.

Higher education will receive federal funding to replace general fund monies in the amount of $255 million each to the University of California and California State University systems. Additional savings of $400 million will come from California Department of Corrections and Rehabilitation through continued reforms and other cost saving measures that will not jeopardize public safety.

The budget includes temporary revenue increases totaling $12.5 billion through a one-cent increase in the state sales tax, an increase in the vehicle license fee to one percent and an increase in the personal income tax that federal stimulus funding will likely help offset. The vehicle license fee will also include an additional ongoing 0.15 percent increase that will be dedicated to local law enforcement programs. Additionally, the state will bring in revenue through modernizing the state lottery and bringing in $5 billion in 2009-10 that will offset the need for additional tax increases or program cuts.

Chesbro said the budget package he voted for will have a far less negative impact on the First Assembly District than what the governor had originally proposed.

He said the Legislature saved the rural sheriffs program and greatly reduced the impacts of deferred payments to county services. They also saved the California Conservation Corps., minimized cuts to education spending and made sure schools will be repaid in the future. Schools also received greater flexibility in how they spend state funds, and cuts to health and human services were limited.

Without the budget solution, Chesbro said veterans would have been among those to suffer first and most severely. “The state was in real jeopardy of losing federal funds needed to care for those who served in the armed forces and fought for our freedom.”

Chesbro said the budget sought to keep the state's workforce intact. The vast services those workers provide includes everything from ensuring environmental protections, to building transportation projects, to helping people file unemployment claims, to fighting wildfires.

The governor said he fought hard to include needed economic stimulus to help create jobs and boost the state's economy at the same time as the budget asks Californians to pay more in taxes while reducing their services.

The budget includes incentives and gives a competitive edge to companies that are creating jobs for Californians and to encourage companies to expand in and relocate to California. Also, a “new hire” tax incentive will target small businesses that create new California jobs in the coming two years – when we need them most, officials reported.

The package also provides for more public-private partnerships and design build authority to create more jobs and build projects quicker and more cost-effectively for the taxpayer. As well as, incentives to lure television and movie production back to California.

Other budget highlights include flexibility for categorical education funding allow local schools and districts to use it as they see best fit to serve children and keep more money in the classroom. And the state will move forward this year to reorganize its IT functions to save an estimated $1.5 billion over the first five years and creates a new streamlined, cabinet-level office for the state’s energy-related functions helping California focus on energy stability and eliminating redundancy.

Schwarzenegger's office reported that one item of importance to the governor – that was highlighted among his campaign promises – was that the rainy-day fund, or the budget stabilization account, will be increased and reformed making budget spending more predictable and stable.

Additionally, through the budget package, Californians will have the opportunity to enact true reforms for the state including open primaries to provide more moderate candidates and eliminating pay raises for elected officials when California is spending more money than it is taking in.

The structural changes to put California back on track will go before voters. Schwarzenegger said he intends to form a partnership with the people to pass these ballot initiatives.


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