Wednesday, September 17, 2008

79 Days + the clock is ticking: SCHWARZENEGGER VOWS TO VETO BUDGET - the view from two Times zones


[Transcript of Gov. Schwarzenegger's press conference vowing to veto state budget]

Schwarzenegger vows to veto state budget

Legislators say they will quickly override Schwarzenegger's action. He'd respond by killing many bills.

By Evan Halper and Jordan Rau • Los Angeles Times Staff Writers

September 17, 2008 -- SACRAMENTO — Gov. Arnold Schwarzenegger announced Tuesday that he planned to veto the state budget passed early that morning by the Legislature, setting the stage for an unprecedented confrontation in California's Capitol.

"When they send me the budget, I will veto it," Schwarzenegger said at a news conference here.

A budget veto would be a first for modern California.

The governor also said that if lawmakers decided to override him -- which they were openly planning -- he would kill most of the legislation they passed this year.

"Hundreds of bills will be vetoed," he said.

Schwarzenegger had warned lawmakers before they passed the spending plan, which was 78 days late, that he would reject it if it did not include three provisions to ensure the state a reliable rainy-day fund for times of fiscal trouble. This year, California has developed a $15.2-billion budget gap.

The Legislature agreed to two of his three requests, but balked at putting more restrictions on lawmakers' ability to raid the state's reserves.

The budget and accompanying bills are expected to be printed and reach the governor's desk in coming days. Legislative leaders in both parties said they would override a veto quickly.

"I'm pretty confident we are not going to have any difficulty," Assembly Speaker Karen Bass (D-Los Angeles) told reporters. "We would do it in rapid fire."

Senate Republican leader Dave Cogdill of Modesto said in a statement that he would vote for an override, "as should every other legislator who approved this budget."

The last override of any bill veto was in 1979, when Jerry Brown was governor, on measures concerning state employees and insurance. Schwarzenegger has rejected hundreds of bills since being elected in 2003, but none of his vetoes has been overruled.

An override requires a two-thirds majority in the Assembly and the state Senate, the same margin required for the budget that passed in the wee hours Tuesday.

Schwarzenegger's veto announcement is certain to cause anxiety among thousands of healthcare clinics, day care centers, schools and others reliant on state money but unable to receive it in the absence of a budget. The state has never gone as long without a spending plan, and many providers have stopped paying their staff or have shut down.

"Californians who are suffering need a budget," Cogdill said.

However, the governor, like many others at the Capitol, had harsh words for the deal cobbled together by lawmakers. By borrowing billions of dollars from taxpayers, their plan would avert deep program cuts as well as a multibillion-dollar tax increase that Democrats and Schwarzenegger had advocated.

The borrowing would consist of accelerated tax collections from individuals and businesses, taking cash now that otherwise would not come in until next year. That leaves a big hole for next year.

Schwarzenegger said the plan "takes our problems and makes them even worse. . . . The way this budget is right now, we will need a huge tax increase next year or to cut education severely."

Education expenditures make up roughly half the $106.4-billion general fund budget that lawmakers passed.

He said the spending restraints lawmakers approved amount to "fake budget reform."

"You . . . say we can do anything we want with the rainy-day fund and you can do it any time," he said.

Democrats said the governor was in no position to be making such charges. They said Schwarzenegger's inability to secure votes from fellow Republicans for his own budget proposal, which would have closed the deficit with the help of a one-cent sales tax hike, left the Legislature without recourse.

"He is a leader with no followers," said Senate leader Don Perata (D-Oakland).

Assembly Republicans said the changes the governor wants would do little or nothing to curb spending and thus are not worth a further delay in the budget.

Jack Pitney, a professor of government at Claremont McKenna College, said that if lawmakers do bow to Schwarzenegger's demands and begin renegotiating the budget, the governor may come to regret it.

"There's no guarantee the budget would go in a direction he likes," Pitney said. "Special interests would try to reopen certain issues and undo certain deals."

Regardless of what happens this week, Pitney said, the governor's historic standoff with lawmakers may not impress Californians.

"This isn't what people expected" when they recalled a sitting governor to put Schwarzenegger in office, Pitney said. "There was enormous hope for the governor that he'd be able to get Republicans and Democrats inside the smoking tent and smelling like a rose. . . . Things have worked out differently."

The governor's threat to use his veto pen aggressively on other legislation if lawmakers do not meet his demands leaves 873 bills hanging in the balance. Among them are measures to require chain restaurants to post calorie information, to impose fees on port cargo to pay for air-pollution reduction, and to deter metal theft by requiring scrap sellers to supply their thumbprints.

Lawmakers advised the governor against trying to punish them with his veto pen.

"To threaten bills without taking each one on the merits is more immature politically than anything else," said Assemblyman Chuck Calderon (D-Montebello).

He said lawmakers could just as easily turn the tables, declining to pass bills important to the governor's policy agenda or purposely putting bills on his desk that he doesn't want -- "veto bait," in the parlance of the Capitol.

"If he arbitrarily takes this action," Calderon said, "I think he has to worry about what bills the Legislature sends him."

The New York Times

Schwarzenegger to Veto Budget and Other Bills

By JESSE McKINLEY - New York Times

September 17, 2008SAN FRANCISCO — Gov. Arnold Schwarzenegger said Tuesday that he would veto a long-overdue state budget, and he threatened also to veto hundreds of other pieces of legislation, as the state’s 78-day budget crisis dragged on.

The California Legislature finally passed a $104 billion general fund budget by potentially veto-proof two-thirds majorities early Tuesday morning, after setting a record for tardiness.

But Mr. Schwarzenegger, a Republican, said he would not sign it, or very little else, until a “good budget” was passed.

“I say enough is enough,” he said at a news conference in Sacramento. “Californians have been put through this rollercoaster ride too many times.”

In particular, the governor asked for guarantees regarding contributions to a so-called rainy day fund, something he regards as critical to budget reform, which has become central to his second term in office.

Mr. Schwarzenegger said he expected the Legislature to override his veto, but promised to return the favor by sending back most of the laws it passed in the last legislative session. “Every bill will be carefully evaluated, and hundreds of bills will be vetoed,” he said.

Lawmakers on both sides of the aisle said they were prepared to override any budget veto.

“Not getting your way is no reason to veto the state budget,” said Mike Villines, a Republican. “It is disappointing that he would take this unnecessary step that will only prolong our budget stalemate and cause more pain for many Californians.”

Karen Bass, a Democrat and speaker of the state’s Assembly, said a vote to override the governor’s veto could come as early as Wednesday.

Leaders on both sides admitted that the budget that was passed was a disappointment and that lawmakers were likely to face similar problems next year.

“We tried,” Ms. Bass said. “But we weren’t able to do anything better.”

Under the bill, the state would close a $15 billion budget gap with about $9 billion in cuts and additional revenue essentially borrowed from future tax payments. Some tax exemptions, including business losses, would be temporarily suspended, and some loopholes would be closed.

Republicans in the Legislature had refused to consider new taxes desired by Democrats. And because California law requires two-thirds majorities for tax increases, several proposals, including a one-cent increase in the sales tax, were nonstarters.

All of which led to more than a little frustration.

“This is not a budget the Democrats or the governor wanted,” said Don Perata, a Democrat and Senate president pro tem. “It’s a failure. But Republicans had the final say — and they said no.”

Tens of thousands of businesses, from child care to nursing homes, have been missing payments from the state as the crisis dragged on. Mike Danneker, executive director of the Westside Regional Center, a state-financed medical services organization in Culver City, said that his center ran out of money last Friday.

“These guys have been playing with this stuff for 77 days,” Mr. Danneker said. “They should have done this in May.”

While Mr. Schwarzenegger’s veto announcement set the stage for a showdown with the Legislature, some experts said it was likely to be a lonely fight.

“Everybody has the votes to override him, so he doesn’t really matter anymore,” said John Ellwood, professor at the Goldman School of Public Policy at the University of California at Berkeley, “If I was a Democrat or Republican leader, I would say, “What has this guy given me?’ ”

On Tuesday, at least, the governor seemed to be asking the same thing. “They are three months late with the budget” he said. “And this is what we get on the desk.”

Rebecca Cathcart contributed reporting from Los Angeles.

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