Californians To Vote on Debt Plan
Legislature Approves Schwarzenegger Proposal
By Rene Sanchez
Washington Post Staff Writer
Saturday, December 13, 2003; Page A01
LOS ANGELES, Dec. 12 -- California's legislature agreed Friday to allow Gov. Arnold Schwarzenegger (R) to seek voter approval for $15 billion in borrowing and a ballot measure that would limit spending, two steps he said are urgently needed to end the financial crisis engulfing the nation's most populous state.
In a decisive show of support for the new governor, and with rare bipartisan spirit, the financial recovery plan passed with ease in both houses of the legislature, which is controlled by Democrats.
"I am a happy governor, because this is a new day for California," Schwarzenegger said Friday night as he signed the package.
Schwarzenegger and Democratic leaders reluctantly made an assortment of compromises during marathon talks this week to craft the plan. Then he persuaded skeptical conservative Republican lawmakers to back it.
They had little time to spare. California is saddled with a deficit exceeding $14 billion, its economy lost 14,000 more jobs last month, and Wall Street dealt the state another significant blow this week by lowering its already beleaguered bond rating to rock-bottom levels.
Schwarzenegger's first attempt to get the plan approved was soundly rejected by both liberal Democrats and conservative Republicans a week ago -- even though he had warned that "failure is not an option."
Afterward, he threatened to bypass the legislature and launch a petition drive to get his proposals on the ballot next year. But he decided to continue negotiating and wound up brokering a deal that he and many lawmakers said was less than what they wanted, but fair.
The movie star-turned-governor, who took office last month, emerged from the budget debate praising the legislature, saying it had set aside partisanship and "taken the first step to put California back on sound financial footing."
Democratic leaders credited Schwarzenegger for taking an aggressive but amicable approach to the budget talks and for showing political pragmatism.
"I can see how the governor got where he was and where he is, because he didn't want to give up on trying to reach a solution," said state Senate President Pro Tem John Burton (D). He described the budget deal as "about as good a bipartisan effort as I've seen since I've been around here all these years."
Now, Schwarzenegger has to sell it to voters -- and he could still face formidable obstacles to getting it passed.
Schwarzenegger's plan is scheduled to appear on the March ballot. It would rely on borrowing to wipe out the nearly $11 billion deficit he inherited upon taking office and the nearly $4 billion he just added to it by repealing the tripling of car taxes that his predecessor, Democrat Gray Davis, imposed this year. The plan would put new spending restrictions on the legislature, including a future ban on the kind of borrowing that Schwarzenegger now wants to do. It would also force lawmakers to create a reserve fund to deal with any future budget shortfalls.
But some conservative political groups are suggesting that they might challenge the proposals, and state Treasurer Phil Angelides, a Democrat who may run for governor in 2006, is already campaigning against it. In speeches and television ads, he is denouncing the massive long-term borrowing that Schwarzenegger wants as "morally repugnant" because interest on it could greatly burden Californians in the future, when the debt has to be repaid.
When he campaigned for governor this fall, Schwarzenegger did not mention borrowing as an option to deal with California's immediate fiscal crisis. But since taking office, he and his aides have said that it appears to be the only alternative either to tax increases or huge cuts in state programs.
Even with Friday's agreement, Schwarzenegger's debate with the legislature over California's severe financial problems is far from over. He is scheduled to submit his first budget early next month, and it is likely to include spending cuts that Democrats loathe. Schwarzenegger already has said that he might have to cut about $2 billion from state programs mostly for the disabled and the poor, which has sparked large protests. And this week he appeared to retreat from a campaign promise to spare education programs from any budget cuts.
GOP lawmakers had wanted Schwarzenegger to get Democrats to accept much stricter limits on state spending in this week's budget negotiations, but most said Friday that they could live with the compromises he made.
Senate Republican leader Jim Brulte called the agreement "step one in getting our fiscal house in order."
Democrats also expressed hints of optimism on the budget crisis -- and Schwarzenegger.
"It's a positive step for him," said state Sen. Debra Bowen (D). "It's certainly much better for him to go into a difficult budget year being able to pull together a bipartisan solution to a real difficult situation."
Special correspondent Kimberly Edds contributed to this report. |
