Deal ends California budget standoff

SACRAMENTO, Calif. – Legislative leaders announced Sunday that they had reached a deal on a no-new-taxes state spending plan, bringing the longest budget impasse in modern California history nearly to an end.

Their proposal would increase spending for education and health care, although not enough to avoid cutbacks in services. It would borrow against the state lottery. And it relies heavily on maneuvers that would push the state’s financial problems into the future at a time when economists have little hope that revenue is on the rebound.

The plan would require hundreds of thousands of businesses and individuals to hand over more of their taxes sooner, so the state could use the cash infusion to pay its bills. The payments made now will not be available for next year’s budget.

Votes on the plan are scheduled for today in the Assembly and Senate.

Gov. Arnold Schwarzenegger, who appears to have been left out of the final dealmaking, is not yet on board, and administration officials suggested that he could demand changes. Nevertheless, legislative leaders said they expected the governor to approve the package.

“We will very quickly send the budget down to the governor, and we will expect his signature,” said Assembly Speaker Karen Bass, a Los Angeles Democrat, at a Sunday news conference with Senate Leader Don Perata and Republican leaders.

Once the governor signs a budget, the state can resume paying its bills.

The deal came days after Democrats in the Senate abandoned their months-long crusade to close the $15.2 billion budget gap with the help of increased taxes. Schwarzenegger spokesman Aaron McLear said the lawmakers’ agreement, which includes a provision to boost the state’s rainy-day fund, might not meet the governor’s demand for restraints on spending when state coffers are flush.

“We are analyzing their proposal but have concerns that budget reform may not be strong enough,” he said.

The absence of a state budget has wreaked havoc on providers of government services and those who rely on them. Billions of dollars in scheduled payments to health care clinics, day care centers, group homes for the disabled and others have been withheld since July.