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Governor Signs State Budget, But Financial Crisis in Sacramento Will Likely Continue

By Jeff Hudson - July 31, 2009

Governor Arnold Schwarzenegger signed the new state budget into law on Tuesday, amidst political fanfare that the budget included no new taxes.

But before the day was out, Democratic legislative leaders were angrily criticizing the line item vetoes that the Governor announced when he put his signature on the budget bills.

And over 180 city and county governments, along with the California Redevelopment Association, made it clear that they will soon go to court to block the $2 billion that the state “borrowed” from local government property taxes as part of the deal.

The budget signing ceremony on Tuesday came after the Assembly approved the budget last Friday afternoon, following approval of the budget by the California Senate early last Friday morning.  The Governor’s worked over the weekend into Monday, drawing up a list of line item vetoes, which the Governor announced on Tuesday when he signed the budget bills.

The Governor vetoed $705,000 in funding for the California Department of Education’s Curriculum Commission – though that move generated few headlines.  The Curriculum Commission advises the California State Board of Education on curriculum and instructional materials adoption.

Most of the other line item vetoes – totaling nearly half a billion dollars – hit non-education categories, including child welfare programs, programs benefitting the elderly and AIDS patients, programs to combat domestic violence, and funding for state parks.

Sen. Darrell Steinberg, the Democratic leader in the upper house, questioned the legality of several of Gov. Schwarzenegger’s vetoes, and vowed “This is not the last word.” Assembly Speaker Karen Bass issued a lengthy statement blasting the vetoes as well. Schwarzenegger’s staff sent out a terse response maintaining “The Legislature handed the Governor a budget that fell short, which is why he used his executive authority to balance the budget.”

Meanwhile, John Shirley, executive director of the California Redevelopment Association (which represents dozens of local redevelopment agencies), called the new budget “illegal and irresponsible,” and said “We intend to sue the state.” In an interview with the financial journal The Bond Buyer, Shirley said the new budget “puts redevelopment agencies out of business” by taking their funds. “This is a truly desperate attempt to rewrite the (state) constitution by statute, which everyone knows can’t be done,” Shirley said.

With California’s unemployment rate still rising, and the economy still mired in recession, even Gov. Schwarzenegger allowed that “nothing guarantees (the state’s) revenues won’t drop further.”  Many observers are predicting there will be another legislative debate over further budget reductions within the next six or seven months.

Editor's Note: Jeff Hudson is the editor of EdBrief and an award-winning education reporter and writer in print, radio and television media.