Pact Ends California Budget Impasse

[alp227]

Source: Bloomberg News

SACRAMENTO — Gov. Arnold Schwarzenegger and top lawmakers agreed to a compromise to close a $19.1 billion deficit and give California a budget, ending the state’s record three-month impasse with a vote expected next week on the spending plan, according to legislative leaders.

The accord does not raise taxes, as sought by Democrats, nor does it dismantle the state’s welfare system, proposed by Republicans, the leaders said. Mr. Schwarzenegger and the Democratic and Republican heads of the Senate and the Assembly came to the agreement after five hours of negotiations in the governor’s Sacramento office.

Read more: http://www.nytimes.com/2010/10/02/us/politics/02budget.html

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AP: California Budget Deal Claimed, Without Detail (more detailed)

Filed at 4:33 a.m. ET on October 02, 2010

SACRAMENTO, Calif. (AP) — Despite reaching a long awaited budget agreement, Gov. Arnold Schwarzenegger and legislative leaders remain mum about how they plan to close California's $19 billion deficit.

Late Friday night, leaders of the state Senate and Assembly from both parties stood together outside the governor's office after an intensive five-hour meeting that signaled an end to the state's record-long budget stalemate that has lasted 94 days.

"Legislative leaders and the governor have finally reached an agreement on a no-tax budget that protects California jobs," Assembly Minority Leader Martin Garrick, R-Solana Beach, said in a statement.

[nyy1998]

1. If it doesn't raise taxes or cut welfare, what does it cut?

[JDPriestly]

3. It's based on a lot of optimistic projections and on selling government property.

To make up the shortfall, the agreement counts on an improving economy and the federal government to provide more money than previously projected.

Senate President Pro Tem Darrell Steinberg, D-Sacramento, said last week that the leaders turned to some "creative" bookkeeping after Republicans refused to raise taxes and Democrats rejected deeper budget cuts.

The pact he and the others reached Friday night assumes about $5 billion will come from the federal government, up from the $3.4 billion the governor had projected, said multiple sources close to the negotiations. It uses the Legislative Analyst's Office optimistic forecast of an additional $1.4 billion flowing to the state from higher-than-projected revenues. And it counts on as much as $1.2 billion from selling 11 state properties, then leasing them back.

http://www.nytimes.com/aponline/2010/10/01/us/AP-US-California-Budget.html

The sale-lease-back idea seems really dumb to me. What is to prevent the state from exercising its right to eminent domain on that same property at some time in the future if the rent seems high compared to the market value of the property at some point in the future? What a stupid idea.

[globehop]

4. office building sale

The dumbest part of that was they didn't even take the highest bid. Another company bid over $3 billion, but they took a bid of $2 billion. That's another billion they could have used in covering up some of these accounting gimmicks or at least have in the reserve when the federal government stops reimbursing for Medicare. I agree that the sale can end up being a bad idea, but if you're going to do it, at least make sure you get the max value for it.

[Merlot]

2. Budget stalemate 3 months - this is what happens when the minority rules

If the minority rules by obstruction, can we really call this a democracy?