Senate passes compromise budget

SACRAMENTO (AP) -- In an effort to end California's 27-day budget deadlock, state senators approved Sunday a compromise spending plan that imposes close to $13 billion in cuts but raises no new taxes.

The budget bill passed on a vote of 27 to 10, with only five Republicans supporting the plan. The near-$100 billion proposal now goes to the Assembly, which is expected to consider it early this week.

The proposed budget largely protects education funding for the next year. Public health and human service programs are also expected to be maintained at the same levels as last year.

But because lawmakers could not agree on imposing deeper cuts or raising taxes, tough decisions over closing a shortfall that could reach $8 billion by next summer have been put off at least a year.

"There's something in here for almost everybody to hate," said Senate President Pro Tem John Burton, a Democrat from San Francisco who helped negotiate the deal with Republican leader Jim Brulte of Rancho Cucamonga.

The compromise is expected to be embraced by the Assembly and Gov. Gray Davis has indicated he supports much of the plan.

"I commend the Senate for approving a budget that protects K-12 education," said Davis in a statement. "Compromise on this budget required difficult choices.

"However, the consequences of a late budget are more costly than ever before. I urge the members of the Assembly to quickly take up the budget bill and send it to my desk," he said.

California faces a $38.2 billion budget deficit by next July if deep cuts are not made or tax hikes approved. Already with the nation's worst credit rating among states, California saw its rating downgraded last week by one Wall Street firm because of the uncertainly over the budget crisis, coupled with the coming recall election aimed at Davis.

Although passage of a budget plan this week would ease some fears of investors about the state's solvency, a new budget is not likely to result in any improvement in the credit rating.

The agreement in the Senate comes only a few days after critics of the governor received notice from Secretary of State Kevin Shelley that a recall petition met the requirements for a historic election this October that could remove Davis from office.

According to an analysis of the budget by the Republican caucus, the plan would increase spending on K-12 schools above those levels Davis proposed in May by $1.8 billion.

But higher education will take a hit: The University of California would lose about $161 million in funding, including $29 million for research. The California State University system would lose about $125 million, including money for outreach aimed at low-income students.

The Senate plan would eliminate funding for the Office of Criminal Justice Planning, saving about $400,000 a year. They would also cut all funding for the Technology, Trade and Commerce Agency, sending many of its functions to other departments.

All funds for the state's foreign trade offices would be eliminated -- a program that has come under fire for not producing measurable trade benefits. The Senate plan would also trim $11 million from the state's Arts Council.

The proposal includes a 5 percent rate reduction in reimbursements due doctors and other Medi-Cal providers. All 34 optional benefits available to Medi-Cal clients would be retained, but there would be some reductions in the dental and hearing aid benefits.

While there had been much concern that thousands of Medi-Cal clients would lose their benefits because of a plan to enforce more frequent qualification reports to the state, the Senate plan does not change the current requirement that Medi-Cal clients file applications twice a year.

Local government will lose about $250 million in money from redevelopment agencies, as well as $38.2 million the state reimburses cities for charges that counties impose for booking inmates into jail.

The plan also fully funds the Williamson Act, a provision that provides a tax break to landowners who agree to keep their land in open space or farmland.

The budget deadlock was brought on by a disagreement between Democrats and Republicans over tax increases and spending cuts. Democrats, who hold big majorities in both houses, wanted a half-cent sales tax to close the budget gap. Republicans, who have just enough seats to block a budget plan, have said the gap could be closed using existing revenues and deep cuts.

In the end, the two sides remain at odds, but to get a budget plan approved the two sides agreed to put off how to resolve a spending imbalance that could reach $8 billion by next July.

To solve the issue, party leaders proposed a complex tax swap that allows the state to borrow nearly $11 billion to wipe out the existing deficit over the next five years.

While Brulte represented the budget as one that included no higher taxes, some members of his own party disagreed. State Sen. Tom McClintock, R-Thousand Oaks, said the budget actually included $5 billion in higher taxes, as it assumed the increase of the state's car tax back to 1998 levels and the elimination of the manufacturers tax credit.

"Mark my words: This budget solves nothing," said McClintock, who said he's likely to run for governor in the recall election. "The day that it is signed will be the first day of the budget crisis of 2004."

On the Net:

California State Senate

http://www.sen.ca.gov/