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**Susanleech** · 02-21-2009, 02:33 AM

Congrats to California!

http://www.nytimes.com/2009/02/20/us...fornia.html?hp

In Budget Deal, California Shuts $41 Billion Gap

LOS ANGELES — Take-home pay for Californians is about to shrink. Jeans, hammers, burgers and fries will cost more. Public school children will make do with old textbooks and find more classmates sitting next to them. Parents will receive fewer tax benefits, and state university students will pay 9 percent more in tuition.
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Rare Centrist in State Senate Used Power to Shape Budget (February 20, 2009)
Room for Debate: California, the Drama Queen (February 19, 2009)
The Lede: What's the Matter With California? (February 19, 2009)
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As the sun rose in Sacramento on Thursday, state lawmakers ended months of political gridlock and agreed on a series of budget measures that included something for most everyone in California to despise. The $143 billion budget closes a $41 billion deficit through 2010 with tax increases, deep cuts in services and extensive borrowing.

Although California’s budget process is unusual and its fiscal problems outsized — the state’s deficit is larger than the expenditures of all but 10 other states — economists say this budget foreshadows the difficult choices that other state legislatures will soon face as the national economy worsens.

Republican lawmakers voted for tax increases at the possible expense of losing the next election; Democrats agreed to spending cuts unheard of in other downturns; and most everyone in Sacramento averted even greater compromises by looking to the federal stimulus money to bail them out.

California wrestled with its budget shortfall earlier than other states essentially because of a trick of timing. The state’s current budget was passed months late last fall and was immediately shot through with holes because of the economic downturn. In a lengthy emergency session that ended with the vote on Thursday, legislators closed the current gap as well as the projected gap for the next fiscal year.

Most other states are only beginning to address their shortfalls. But with 40 states operating in the red, similar days of reckoning will soon be coming to state capitals from Florida to Arizona, state budget officials say.

“California is an example of what you will see” across the country, said Susan Urahn, the managing director of the Pew Center on the States and a budget expert. The size of budget deficits in other states will lead to similarly hard-fought debates on how to close the gaps, Ms. Urahn said.

What is more, California might have set the template as other states ponder how to apply the more fungible outlays of the federal stimulus money. “My guess is states will use what they can to reduce cuts to the bone in education and health care,” Ms. Urahn said.

California’s budget agreement came after a record-long floor session of nearly 46 hours. Democrats, who control both houses of the Legislature, reluctantly agreed to a series of concessions to win the support of a single Republican senator, whose vote was necessary to reach the two-thirds majority required under state law for budget bills.

All 75 Democrats in the Legislature voted for the budget agreement, along with 6 of the 44 Republicans in the two houses. Gov. Arnold Schwarzenegger, a Republican, said he would sign the agreement on Friday.

The pact contains $14.8 billion in spending cuts, including to public transit, health care, schools and the courts; $12.5 billion in tax increases; $5.4 billion in new borrowing; and the creation of a $1 billion reserve fund.

Personal income tax rates will rise by one-quarter of a percent, and the state sales tax will climb by 1 percentage point, to 6 percent, though each county will have different rates and the average will be 8.9 percent. The state’s vehicle license fee — which Mr. Schwarzenegger abolished with great theatrics when he took office in 2003 — will nearly double, to 1.15 percent of the value of the vehicle.

Left on the cutting-room floor was a proposed 12-cent increase in the gasoline tax; lawmakers filled the gap instead with $600 million in cuts and an infusion of federal stimulus money.

According to the budget documents, if the state receives what it predicts from the federal stimulus package — more than $9 billion — there would be other benefits to the budget: borrowing would be reduced by roughly half, $950 million in cuts would be restored and the tax increases would be reduced.

After negotiating almost without sleep since Saturday, a deal was struck in the early hours on Thursday when Democratic lawmakers agreed to the lion’s share of the demands made by the holdout Republican, Abel Maldonado of Santa Maria, who wanted state constitutional amendments banning legislative pay increases during deficit years and creating more competitive elections by establishing open primaries.

It was a hard-fought but costly victory for Mr. Schwarzenegger, who became governor during another budget crisis in 2003 in part by vowing never to raise taxes. He will soon have the distinction of being the first California governor to sign off on a major tax increase since Pete Wilson, a Republican, negotiated a $7 billion broad-based increase in 1991.

Mr. Schwarzenegger rode into office as a reformer but has morphed into a centrist often at odds with his party.

02-21-2009, 02:33 AM	#2
Susanleech Join Date Oct 2005 Posts 451 Senior Member	Congrats to California! http://www.nytimes.com/2009/02/20/us...fornia.html?hp In Budget Deal, California Shuts $41 Billion Gap LOS ANGELES — Take-home pay for Californians is about to shrink. Jeans, hammers, burgers and fries will cost more. Public school children will make do with old textbooks and find more classmates sitting next to them. Parents will receive fewer tax benefits, and state university students will pay 9 percent more in tuition. Skip to next paragraph Related Rare Centrist in State Senate Used Power to Shape Budget (February 20, 2009) Room for Debate: California, the Drama Queen (February 19, 2009) The Lede: What's the Matter With California? (February 19, 2009) Enlarge This Image Readers' Comments Readers shared their thoughts on this article. * Read All Comments (181) » As the sun rose in Sacramento on Thursday, state lawmakers ended months of political gridlock and agreed on a series of budget measures that included something for most everyone in California to despise. The $143 billion budget closes a $41 billion deficit through 2010 with tax increases, deep cuts in services and extensive borrowing. Although California’s budget process is unusual and its fiscal problems outsized — the state’s deficit is larger than the expenditures of all but 10 other states — economists say this budget foreshadows the difficult choices that other state legislatures will soon face as the national economy worsens. Republican lawmakers voted for tax increases at the possible expense of losing the next election; Democrats agreed to spending cuts unheard of in other downturns; and most everyone in Sacramento averted even greater compromises by looking to the federal stimulus money to bail them out. California wrestled with its budget shortfall earlier than other states essentially because of a trick of timing. The state’s current budget was passed months late last fall and was immediately shot through with holes because of the economic downturn. In a lengthy emergency session that ended with the vote on Thursday, legislators closed the current gap as well as the projected gap for the next fiscal year. Most other states are only beginning to address their shortfalls. But with 40 states operating in the red, similar days of reckoning will soon be coming to state capitals from Florida to Arizona, state budget officials say. “California is an example of what you will see” across the country, said Susan Urahn, the managing director of the Pew Center on the States and a budget expert. The size of budget deficits in other states will lead to similarly hard-fought debates on how to close the gaps, Ms. Urahn said. What is more, California might have set the template as other states ponder how to apply the more fungible outlays of the federal stimulus money. “My guess is states will use what they can to reduce cuts to the bone in education and health care,” Ms. Urahn said. California’s budget agreement came after a record-long floor session of nearly 46 hours. Democrats, who control both houses of the Legislature, reluctantly agreed to a series of concessions to win the support of a single Republican senator, whose vote was necessary to reach the two-thirds majority required under state law for budget bills. All 75 Democrats in the Legislature voted for the budget agreement, along with 6 of the 44 Republicans in the two houses. Gov. Arnold Schwarzenegger, a Republican, said he would sign the agreement on Friday. The pact contains $14.8 billion in spending cuts, including to public transit, health care, schools and the courts; $12.5 billion in tax increases; $5.4 billion in new borrowing; and the creation of a $1 billion reserve fund. Personal income tax rates will rise by one-quarter of a percent, and the state sales tax will climb by 1 percentage point, to 6 percent, though each county will have different rates and the average will be 8.9 percent. The state’s vehicle license fee — which Mr. Schwarzenegger abolished with great theatrics when he took office in 2003 — will nearly double, to 1.15 percent of the value of the vehicle. Left on the cutting-room floor was a proposed 12-cent increase in the gasoline tax; lawmakers filled the gap instead with $600 million in cuts and an infusion of federal stimulus money. According to the budget documents, if the state receives what it predicts from the federal stimulus package — more than $9 billion — there would be other benefits to the budget: borrowing would be reduced by roughly half, $950 million in cuts would be restored and the tax increases would be reduced. After negotiating almost without sleep since Saturday, a deal was struck in the early hours on Thursday when Democratic lawmakers agreed to the lion’s share of the demands made by the holdout Republican, Abel Maldonado of Santa Maria, who wanted state constitutional amendments banning legislative pay increases during deficit years and creating more competitive elections by establishing open primaries. It was a hard-fought but costly victory for Mr. Schwarzenegger, who became governor during another budget crisis in 2003 in part by vowing never to raise taxes. He will soon have the distinction of being the first California governor to sign off on a major tax increase since Pete Wilson, a Republican, negotiated a $7 billion broad-based increase in 1991. Mr. Schwarzenegger rode into office as a reformer but has morphed into a centrist often at odds with his party.
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