Governor tries balancing budget, again

Governor Arnold Schwarzenegger is out with his revised budget. He's backed off several highly-controversial proposals to close a $17 billion deficit.
Governor Arnold Schwarzenegger is out with his revised budget.

He's backed off several highly-controversial proposals to close a $17 billion deficit.

He's put on the table some new ideas that are certain to draw criticism.

The governor said, "How many more years should we go through this crisis just because we can't get our act together."

Governor Arnold Schwarzenegger said the key is to live within our means and reform the budget process to soften the blow from future budget crises.

His new plan for closing the budget gap includes a constitutional amendment to establish a rainy day fund that would grow in good revenue years, and be drawn down in bad years.

For the first time, he's put on the table a sales tax increase which is tied to a proposed ballot initiative to borrow money against future profits from the state Lottery.

The governor said, "The Lottery is an under-performing asset, let's borrow against it and put that money in the rainy day fund."

Number crunchers in the governor's office say the state could generate as much as 15-billion dollars over three years by borrowing against future lottery profits.

Attached to that initiative is what Schwarzenegger calls a one-time fail-safe mechanism.

If the lottery initiative is rejected by voters, that would trigger a one-percent increase in the state sales tax.

The governor said, "If revenues drop dramatically, the trigger is pulled on a temporary tax increase."

The administration said the tax hike would bring in an additional $6 billion a year, and would stay in effect until the state's finances are out of the red.

The tax hike would require a two-thirds vote by the Legislature.

GOP lawmakers aren't biting.

Assembly member George Runner from Lancaster said, "We should be making better use of the revenues we have, that's the real issue at hand here."

The governor's budget still contains deep cuts in services, including health care for the poor, including people who receive in-home support services with deeper cuts than the nearly $5 billion he's already proposed.


The governor said, "Health and Human Services represents the second biggest chunk of our budget and I know these will be painful cuts."

The governor has backed away from several controversial proposals, such as the early release of some 22,000 low-risk prison inmates and the closure of 48 state parks.

Legislators of both political parties said California should sell un-needed state properties instead of selling the state lottery to help close the budget gap next year.

For what it's worth, the legislature is required to produce a budget by June 15.

There is no penalty if it fails to meet that deadline and it rarely does.

The new fiscal year starts July 1, and the governor is required to have signed a budget by that time.
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