Budget aims to cut $7.1 billion in services

GLENDALE — A historic budget impasse that was thought to have been put to rest earlier in the week finally ended Friday when the Legislature adopted the state’s $104.3-billion budget, which Gov. Arnold Schwarzenegger is expected to sign.

While the final version drew support from local lawmakers, most stewed over the newest spending plan and lack of structural reforms it provides to heal what many consider to be the state’s flawed fiscal system.

The budget would cut $7.1 billion from state-funded programs, including reductions in public transit and human service programs; borrows against future lottery revenue to secure $10 billion over the next two fiscal years, starting in 2009; and fully funds public schools under Proposition 98’s minimum funding guarantee, though the slight increase included in the budget does not comprise a cost-of-living increase.

The spending plan also precludes the state from withholding 10% from workers’ paychecks to help cover state spending gaps for which lawmakers had initially voted.

“We get rid of the increased withholding, which most of us thought was a bad idea anyway,” Assemblyman Paul Krekorian said. “But it constrains the Legislature to deal with the fiscal action next year.”

Schwarzenegger had complained that the budget the Legislature voted for Tuesday did not include enough of a rainy-day fund, and that some of the accounting maneuvers lawmakers included to cover some of the $15.2-billion deficit did not go far enough to fix the structural problems he said could constrain lawmakers during the budget negotiations next year.

Lawmakers went back to the drawing board this week, eschewing a veto-override plan due to doubts raised about gathering enough Republican votes to successfully override Schwarzenegger.

With a spending plan in place, the state can now dole out $12 billion in stalled funding for schools, hospitals and other services.

Most of the funds will be repaid within 15 days of Schwarzenegger’s signature, with the neediest groups — such as those in the Medi-Cal program — set to receive funds within 48 hours, said Garin Casaleggio, a spokesman for the state controller’s office.