Next test for budget deal: Voters

February 20, 2009 6:02:25 PM PST
Governor Schwarzenegger signed the state budget Friday after lawmakers battled over it for more than three months because of a $42 billion dollar deficit. But now, they have to persuade voters to go along with their decision.

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By signing the new budget, Schwarzenegger closed the state's record $42 billion deficit. He also used his line-item veto power to cut out another $1 billion in state spending. He cut 10 percent from the budgets of all Constitutional Officers, except Lt. Governor John Garamendi, a vocal critic of Schwarzenegger; he cut Garamendi's budget by 60 percent.

"We need to do those things in order to be fiscally responsible because government has to live within its means, that's the important message of this budget," Schwarzenegger said.

The new budget is heavily dependent on voters, who must approve all of the proposals for the financial plan to work. Among the financial measures on the May 19 special election ballot, Californians will be asked to borrow against lottery revenue so it can modernize and improve sales, allow flexibility in how the special tobacco tax is spent for children's programs and change how the mental health tax is distributed.

The most controversial is the proposal instituting a state spending cap, limiting the amount of money Sacramento doles out. If the spending cap passes, the temporary new taxes end in four years, but if it fails, those taxes hikes end in two years.

Taxpayer groups are already gearing a campaign against the spending cap, even though they have been pushing for one for years.

"It's not a real spending limitation; what it is about preserving existing tax increases, and it deserves a 'no' vote," Jon Coupal of the Howard Jarvis Taxpayers Association said.

The Governor has already hired a team to convince voters they must vote 'yes.' They warn the deficit will come back if voters do not support the money proposals.

"If the ones that provide funding to the budget don't pass, then we're going to have a hole in the budget," Schwarzenegger's press secretary Aaron McLear said.

Voters are not very happy with either choice. The state spending limit is popular, but not at the expense of having to pay for tax hikes for a longer period.

"You can't keep charging people more money, you got to cut, when you're broke, you're broke," Anthony Troppetti said.

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