U.S. News

Long-awaited California budget signed into law

SACRAMENTO, California (Reuters) - California ended its longest-ever delay over a state budget on Tuesday when Gov. Arnold Schwarzenegger signed a $103.4 billion general fund spending plan for the fiscal year that began on July 1 into law.

His signature brought the 85-day political drama over the budget to a close and opened the way for the state to begin writing checks for vendors, service providers and local agencies that had to do without state financial assistance for nearly three months.

There was little fanfare attending the Republican governor’s signing of the budget, which closed a $15.2 billion shortfall and was hammered out only after he had threatened to veto the Legislature’s bipartisan spending plan.

To get a final agreement, lawmakers gave in to his demand for a rainy-day fund that would be difficult for them to tap.

The final agreement denied Democrats who control the Legislature the tax increases they had sought and blocked Republican demands for deeper spending cuts than initially planned.

The two sides agreed with a proposal by Schwarzenegger to let the state sell debt backed by the state lottery system’s future revenues, but the plan must be endorsed by voters.


Schwarzenegger, speaking on the east steps of the state Capitol building, said he was pleased the long budget impasse was finally over, but that it was hardly reason to celebrate.

“Why I didn’t feel like celebrating in the (Capitol) rotunda is because it is inexcusable to have a budget that is three months late,” he said.

Another reason for not celebrating is that the budget did not tackle the root causes of California’s recurring budget shortfalls, said Assemblyman Roger Niello, vice chair of the chamber’s budget committee.

“By signing the compromise budget into law today, Gov. Schwarzenegger has finally drawn to a close this painful chapter in our state’s budget history,” Niello said. “But we should not fool ourselves into thinking that we have solved all of our long-term budget problems with the signing.

“This budget leaves many important issues unresolved,” Niello added. “California will again face a multibillion-dollar deficit unless we make the tough choices to bring revenue in line with spending.”

Reporting by Jenny O’Mara in Sacramento, California; Writing by Jim Christie in San Francisco; Editing by Jan Paschal