Arnold
reveals budget plans
SACRAMENTO (AP) — Voters in March
should be asked to approve a carrot-and-stick
approach to breaking the state’s cycle
of enacting fat budgets in good times that
can’t be sustained during economic
downturns, Gov. Arnold Schwarz-enegger’s
finance director told state lawmakers.
Schwarzenegger
wants voters to increase the state’s
long-term debt by $15 billion to cover much
of the current budget deficit. That could
cost taxpayers $30 billion over 30 years
to pay back, and already is drawing objections
from the new governor’s fellow constitutional
officers as well as lawmakers.
In
return, however, Schwarz-enegger proposes
that voters simultaneously approve spending
limits to avoid a repeat of the boom-bust
spending cycle that has resulted in California’s
record budget deficits.
Schwarzenegger
wants to use the $15 billion mainly to replace
about $13 billion worth of bonds approved
by the Legislature in the current budget,
but which are the subjects of court challenges.
That includes about $2 billion in pension
bonds struck down by a judge, and $10.7
billion in deficit finance bonds that are
being challenged in court because they were
passed by the Legislature, not voters through
a statewide vote.
A
bipartisan group of 11 Assembly members
wants to limit appropriations to 97 percent
of projected revenue, with the other 3 percent
going to build a budgetary reserve fund,
then to fund infrastructure improvements,
with possible one-time school payments and
sales tax rebates. Their proposal would
limit spending growth using a formula based
on increases in population and personal
income.
A
competing plan by Assemblyman John Campbell,
R-Irvine, would peg growth to a formula
based on population and inflation, which
grows more slowly. His proposal would split
excess revenue between a rainy day fund
and debt retirement, with potential one-time
income tax rebates.
It
was the bond portion of Schwarzenegger’s
proposal that drew criticism Wednesday from
state lawmakers and Legislative Analyst
Elizabeth Hill, as it has previously by
Democratic Controller Steve Westly and Treasurer
Phil Angelides.
The
state already borrows too much, Hill told
the committee, and Schwarzenegger’s
plan continues to paper over the existing
budget imbalance and would leave ‘‘future
generations — my grandchildren for
example’’ to pay for past spending.
Lawmakers
have just until Dec. 5 if they are to put
Schwarz-enegger’s plan on the March
ballot, and their special session is to
be interrupted by the long Thanksgiving
holiday.
The Senate Budget Committee is expected
to begin considering the bond plan Thursday.
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