California Leaders Agree on Budget

California Gov. Arnold Schwarzenegger reported late Monday from his Twitter account that he and state legislative leaders had reached a budget deal, which will be voted on by the full Legislature on Thursday.

Budget negotiations to help close the state’s projected $26.3 billion shortfall have been ongoing for weeks, and the agreement — which includes $15 billion in spending cuts — will stop the state’s issuance of registered warrants, otherwise known as IOUs, to more than 27,000 individuals and companies, according to State Controller John Chiang.

Speaker of the Assembly Karen Bass said the budget revision contains “painful solutions for all Californians.”

“Many of the cuts we have to make would be unthinkable if we weren’t in the midst of an unprecedented and ongoing recession that is plaguing our nation and our state,” Bass said. “But despite a two-thirds vote requirement that hamstrings our ability to pass responsible revenue solutions, we’ve prevented irreparable harm to our schools and prevented the proposed elimination of California’s safety net.”

Still rumored to be in the budget is a plan to sell some of the State Compensation Insurance Fund’s assets for $1 billion. Schwarzenegger had proposed selling some of the workers’ compenssation insurer’s assets in his May Revision General Fund Proposals. Yet sources close to the Capitol said the budget deal does not include the Governor’s proposal to implement a 2.8 percent surcharge on all residential and commercial property insurance statewide to enhance the state’s emergency response capabilities.

In his May Revision, Schwarzenegger proposed increasing the insurance surcharge to 4.8 percent to fund a portion of the Department of Forestry and Fire Protection’s baseline firefighting operations and provide assistance to local first response agencies in support of the state’s mutual aid system. He said the surcharge would have averaged approximately $48 per insurance policyholder.

“There was no way we could close a $26 billion budget deficiti through cuts alone,” Bass noted.

Sources: Offices of the Governor, Assemblywoman Karen Bass, and Senator Darrell Steinberg