Governor, legislative leaders agree on pain-filled budget

Gov. Arnold Schwarzenegger and the leaders of the Legislature reached agreement Monday evening on a pain-filled, recession-driven, $25 billion state budget revision that cuts some $9 billion from public schools, colleges and universities, takes $4 billion from cities and counties, continues three furlough days per month for most state employees and cuts $1.4 billion from the state's prison system.

Still more cutting loomed. "Frankly, we may not be done (cutting) yet," Senate Leader Darrell Steinberg said after the agreement was reached. He said the state has confronted a $60 billion cumulative shortfall since Jan. 1.

Most of the cutting had been approved by a two-house budget conference committee, said Assembly Speaker Karen Bass, who said the spending plan includes "painful cuts for all Californians." Hundreds of California cities and the state's 58 counties would be "partners in this pain," she added.

The proposed budget, which requires approval by the Legislature, includes an emergency reserve of $875 million, even as most revenue projections assume a multi-billion dollar shortfall in future budget years. The governor said the proposal does not include new taxes, and Bass said the document protects the basic safety net for social services, although there was a $500 million reduction to the welfare-to-work program known as CalWORKS and a $226 million hit to Healthy Families, a state-federal program that provides health care to poor children.

The plan avoids deep cuts to the state park system  and includes a speed-up of corporate and personal income-tax withholdings.

The draft budget counts on money from two major pieces that have yet to be finalized — the sale of a portion of the State Compensation Insurance Fund that is hoped to fetch $1 billion and the approval of a controversial off-shore oil lease off Santa Barbara that is expected to draw $100 million annually.

The cuts to education mean local school districts will have the ability to cut up to five days off the school year. Sources told Capitol Weekly that some of the education cuts — perhaps $3.9 billion worth — could be made up by federal money. Also, some $1.7 billion listed as cuts were in the form of delayed payments to K-12 schools and community colleges and could be recouped in future budget years.

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