Thread: CA. Assembly approves budget package, but Gov. to veto

Assembly approves budget package, but Schwarzenegger says he'll veto it

Legislation that could allow the state to avoid having to issue IOUs gets unexpected GOP support; governor says measures don't go far enough.

He also rejects deal over prison medical facilities.

By Evan Halper and Shane Goldmacher
1:45 PM PDT, June 25, 2009

Reporting from Sacramento -- The state Assembly today unexpectedly approved budget revisions intended to keep the state from having to issue IOUs next week, but even before the measures reached the Senate floor, Gov. Arnold Schwarzenegger declared the package inadequate and vowed to veto it.

Passage of the package, which would push some state expenses into the future, came as a surprise to many in the Capitol. GOP lawmakers had declared that they would block any proposals that did not close the entire $24-billion deficit.

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But with the prospects of IOUs going to local governments, welfare recipients and college students as early as July 2, some Republicans joined the majority Democrats to pass the measures.

Local governments have warned that the state's failure to make its scheduled payments to them in full could force them to stop providing some services. The state controller said Wednesday that California's cash-flow problem was so severe he might have to resort to IOUs next week.

Schwarzenegger, in a statement, said that what lawmakers passed "amounts to nothing more than a piecemeal proposal."

"Since the first day we began working to solve this $24-billion deficit, I have been clear: the Legislature must solve the entire deficit," he said.

If it passes both houses, "I will veto it because it doesn't solve the problem," the governor said.

The measures the Assembly approved would save money only if the legislation is put in place before Tuesday, when the current fiscal year ends.

Also today, the governor announced he is rejecting a deal his prisons chief struck with a court-appointed receiver to settle years of litigation over inmate civil rights complaints. The deal would have required the state to spend $2 billion updating prison medical facilities.

"We cannot agree to spend $2 billion on state-of-the-art medical facilities for prisoners while we are cutting billions of dollars from schools and health care programs for children and seniors," Schwarzenegger said.

And as the state's financial problems intensified, Wall Street slapped California with another downgrade of its credit.

Fitch Ratings lowered the state's bond rating from A to A- and warned that further downgrades may come. Fitch said the reduction reflected a belief that "the state's finances will continue to be strained through fiscal year 2010 and beyond, regardless of any likely outcome to the current budget impasse."

evan.halper@latimes.com

shane.goldmacher @latimes.com

http://www.latimes.com/news/local/la-me ... 6439.story

Just wonder how many little special projects the assembly included in the bill--the earmark stuff?