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State Senate President Pro Tem Darrell Steinberg, D-Sacramento, center right, gets a hug from Sen. Mark Leno, D-San Franciso, left, after the Senate approved a package of 31 bills to close California's $26 billion budget deficit, at the Capitol in Sacramento, Calif., Friday, July 24, 2009. (AP Photo/Rich Pedroncelli)

SACRAMENTO — Often struggling to stomach the task of slashing services, the Legislature emerged from a marathon session Friday afternoon with final approval to most of a $26.3 billion deficit-cutting package that is sure to have far-reaching and, in many instances, devastating impact.

Because the Assembly failed, however, to approve measures to borrow gas-tax revenues from local governments and on oil drilling, the Legislature handed Gov. Arnold Schwarzenegger a budget that falls short by $1.1 billion of being balanced.

Scwharzenegger said he would make line-item cuts in the next few days to make up for the gap, but lauded lawmakers for taking on the painstaking job.

"This is not an easy budget — it's a difficult budget, but it's a necessary budget," the governor said in a press conference afterward. "California has experienced an unprecedented drop in revenues and we have no choice but to live within our means."

The Senate, which finished its voting 11 hours after it opened session at 7:30 p.m. Thursday, adjourned nearly nine hours earlier than the Assembly, which had difficulty rounding up votes on four issues: repayment of $9.3 billion to schools, cuts to In-Home Support Services, oil drilling off the Santa Barbara coast and borrowing $2 billion from local governments.

"We got through it; we made our deal," said Assembly Speaker Karen Bass, D-Los Angeles.


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"There's no question I have a great sense of relief in overcoming this hurdle," said Senate Leader Darrell Steinberg, D-Sacramento, after his chamber finished its work at 6:23 a.m. Friday. "But I am very sober about it. Getting it done is very, very important. But I also recognize this budget will be very, very difficult for a lot of people."

The tense and laborious session reflected the excruciating choices lawmakers had to make that will have a real effect on real lives, said Larry Gerston, a political science professor at San Jose State.

"It's one thing to read about all the changes — it's all on paper now," Gerston said. "But it's another thing when parents see how large their class sizes are in the fall, when suddenly people who are shut in their homes can't get people to work for them, when potholes can't be filled. When people see the state's infrastructure deteriorating the way it will, that's when the real question will hit: Was it all worth it?"

Staggering out of the Capitol after, for many, more than 30 hours at work, lawmakers broke for a three-week summer recess. It's a break lawmakers savor after a six-month stretch of continually dealing with the wreckage of the state's economy. In that time, the Legislature cut, in total, $60 billion from its budget and is now operating on a budget of a little more than $80 billion.

It is an outcome to the liking of Republicans, who were able to get through negotiations without taxes ever being seriously considered. Republicans had already provided the minimum amount of votes for a $12 billion tax hike in February, and used the state's two-thirds vote requirement as a shield against more taxes.

"This was one of the toughest budgets California has ever faced," said Assembly Minority Leader Sam Blakeslee, R-San Luis Obispo. "In the midst of the deepest recession in a generation, this compromise reigned in spending, instituted reforms and closed the budget gap without raising taxes. This is a victory for California."

For welfare advocates, the budget slashing was a bitter pill.

"It is shameful, disgraceful and one of the lowest moments in the history of social welfare in California," said Michael Herald, lobbyist for the Western Center on Law & Poverty. "It is deeply offensive to hear Democratic leadership claim to have "saved the safety net" or that they will undo this in the future. They will never have the votes to restore CalWORKs and they should stop trying to deceive the public about the harm they have done."

Hundreds of thousands of people who depend on government services — from college students and elementary school teachers to welfare-to-work recipients and sick children — will bear the brunt of a budget package months in the making.

Of the $25 billion in budget "solutions," $15.5 billion come by way of cuts, with schools ($6 billion) taking the biggest hit. The University of California and California State University systems will be slashed by $2.8 billion; MediCal services are facing a $1.3 billion hit; corrections departments are facing an unspecified $1.2 billion in cuts; and three major welfare programs — the welfare-to-work CalWORKs program, In-Home Supportive Services and the children's health insurance program — stand to lose a total of $878 million.

The rest — about $10 billion — is achieved through one-time raids on local government funding (for a total of $3.4 billion) and accounting maneuvers, such as deferring state employee paychecks by one day for a savings of $1.2 billion. Another $1.7 billion is saved by speeding up tax withholdings on individuals and businesses.

The proposal to allow offshore oil drilling off the Santa Barbara coast in exchange for $100 million in selling the rights, the final issue taken up, fell well short, on a 28-43 vote, a major victory for Democrats and environmentalists.

Earlier, cuts to higher education, college grants, health programs, welfare, in-home supportive services and state prisons barely cleared the required two-thirds threshold in the Senate, on a 27-13 vote, though it went through more easily in the Assembly, on a 57-22 vote.

Republicans had balked over the corrections cuts out of concern they would be seen as favoring a plan that calls for the early release of 27,000 prison inmates. The vote they took was technically for "unallocated" cuts, to be determined when lawmakers return next month after summer recess.

"Tonight we were essentially asked to close our eyes and vote, sight unseen, on funding cuts to public safety," said Sen. Tom Harman, R-Costa Mesa, who voted against the measure. "There were absolutely no details of how those spending reductions would be enacted. Without details, there is no guarantee the cuts would not ultimately result in the early release of 27,000 inmates."

Republicans have been assured that the GOP plan will be considered when lawmakers return from their summer session. But the plan will only require a majority vote, meaning Republican votes will not be needed — and likely will contain some elements of an early release.

Administration officials and Democrats insist that only 6,300 of the inmates would be released early from prison, but don't define it as such, saying the inmates would remain under DOC supervision on house arrest.

Earlier, Steinberg said that he hoped lawmakers wouldn't have to come back any time soon to deal with more revenue problems, but that the economy hadn't yet bottomed out and revenues might continue to drop.

"But I will tell you, we have cut enough," he said. "When it comes to cuts as we go forward, enough is enough. I think the people frankly are going to want us to put back some of these investments as soon as we can."

The budget plan also assumes bringing in $1 billion from the sale of part of the State Compensation Insurance Fund, a quasi-governmental agency that is the state's largest writer of workers' compensation insurance. The state Legislature's budget analyst, however, has said it is unlikely that a sale could be completed by June 30, the end of the fiscal year.

Steinberg said he hoped that the Legislature would not have to make any more cuts for the rest of the year, saying that the deficit-cutting actions of the past six months should allow the state to sell enough bonds later on to deal with any potential cash problems to take the state through June 30.

That would enable the Legislature, Steinberg said, to begin to focus on reforming government — including going to the people for a vote to eliminate the two-thirds vote on budgets that he said forces the kinds of drastic actions they had to take this week.

Reach Steven Harmon at 916-441-2101.