Calif. budget talks stall over cuts, borrowing


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What started off with such hope, has ended with more frustration. All day, the Big Five said they were so close to reaching a budget deal, but late Wednesday night found they were stuck again.

About an hour ago, /*Senate President Pro-Tem Darrell Steinberg*/, D-Sacramento, walked out of the governor's office vowing to protect education. That is where the talks have stalled. It was a day that started out with so much promise. When the day began, Governor Schwarzenegger appeared optimistic.

"There's no nastiness in the discussions, no blowups, chairs flying which is usually the routine. So I think we have a good shot of getting the budget done today," said /*Governor Arnold Schwarzenegger*/, R-California.

But as crowds of protestors formed outside the Capital, more concern over cuts to services for the poor, elderly and people with disabilities began to draw out the talks. Lawmakers have hinted that those services will take the brunt of the cuts. Democrats are trying to soften the blow.

"Every represents a family. Every number represents a child or elderly person. We're going to get this done but it is worth fighting for those people," says Senate President Steinberg.

After the Big Five met for three hours, Democratic leaders appeared less optimistic.

"We're working as hard as we can. I think we need to get this done in the next day or so," says Assembly Speaker Karen Bass, D-Los Angeles.

Democrats have fiercely guarded Proposition 98 -- the voter-approved initiative that guarantees school funding -- but now it appears to be back on the table. Assembly woman Noreen Evans is the budget chairwoman from Santa Rosa.

"It means that our schools that are already funded the lowest in the nation will drop even further in funding," says Assembly Member Noreen Evans, D-Santa Rosa.

The governor has insisted on no new taxes and that is why education is not immune. It's half the state budget and a tempting piece of the pie to help solve the state $26 billion deficit.

"I will not sign a budget that raises taxes and that doesn't deal with the necessary cuts to allow us to really move on and get us out of this financial crisis," says Governor Schwarzenegger.

Proposition 98 can be confusing and the Democrats want clarity. So far, state schools have lost $11 billion in funding and the Democrats want to make sure those schools are repaid when the economy gets better.

The Associated Press contributed to this report.

Follow updates throughout the meeting:

Schwarzenegger is tweeting from the budget meetings. You can follow his updates on Twitter at


Talk of deep cuts in education and social programs triggered an angry protest in San Francisco. A coalition of groups, from healthcare advocates, to seniors and the disabled crowded the steps outside the governor's office. They called on state leaders to find solutions to the budget mess that won't decimate vital services like education.

"The legislators and the governor are talking about suspending Prop 98 guarantees that will steal billions of dollars from our school kids and our community college students. It's a crime," said Ed Murray with the American Federation of Teachers.

Similar protests took place at the state capitol and the governor's other district offices in Fresno, Los Angeles and San Diego.

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