Legislature Passes State Budget

California legislators finalized a slew of proposals aimed at closing the state's budget deficit Friday, bringing a tentative end to a legislative marathon that kept lawmakers up Thursday night.

Seeking to close the state's $26.3 billion budget shortfall, the package of about 30 bills proposed drastic cuts, including $3.2 billion from health services and social programs and $2 billion from the UC and CSU systems.

Gov. Arnold Schwarzenegger is expected to sign the bills into law early this week, but he said that California's budget future is still on shaky ground.

"We're not out of the waters yet," he said in a press conference Friday. "There still could be further drops in revenues, we could be back within six months to make more cuts that are necessary."

In the package approved Friday, the Cal Grant program was spared from elimination. Schwarzenegger's proposal to cut the program was rejected by the conference budget committee in June.

Grant recipients for the 2009-10 school year should expect to receive the grant money, said UC spokesperson Peter King.

But King said that the future of the program, which serves 46,000 UC undergraduates, remains uncertain.

"They are simply honoring commitments they've already made," he said. "We're fighting now so we can get them in the long term, but right now it's just the status quo."

The new bill package also proposes $15.5 billion in spending reductions. Since February, almost $31 billion has been cut from the state's budget.

Though Democrats supported the bills, many were frustrated with the legislature's inability to pass taxes to prevent deep cuts to safety net services.

"We had to have more cuts to health and human services and education because Republicans dug in their heels and refused to vote any new revenues into the budget," said Terri Waller, district director for state Senator Loni Hancock, D-Oakland.

Schwarzenegger applauded legislators for their commitment to passing the budget without tax increases.

"We don't look to the taxpayers or businesses to foot the bill for Sacramento's appetite for spending," he said.

Schwarzenegger also acknowledged the effect these new cuts will have.

"I know that college students will pay now higher tuition ... teachers will be laid off and I know that our state workers will get less money," he said. "But we have to do that. It's the only way to solve the problem and save our great state."

Despite Senate approval, the Assembly rejected two controversial proposals, one aimed at borrowing $900 million in gas tax revenues from local governments, and another that would have generated $100 million annually through offshore drilling.

The governor is expected to cover that shortfall through other cuts to be announced this week.

Tags: CALIFORNIA BUDGET 2009