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California lawmakers, governor nearly in agreement on budget: report
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10:45, July 16, 2009

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California legislative leaders have reached agreement with Governor Arnold Schwarzenegger on how to close almost all of the state's 26.3-billion-dollar deficit, it was reported on Wednesday.

The progress came after a series of meetings in the office of Schwarzenegger that went on until almost midnight, according to the Los Angeles Times.

Work on the matter would be finished soon, probably later Wednesday, said the paper.

The paper quoted Democratic and Republican leaders as saying they would brief their caucuses later in the day on progress made in the closed-door talks.

They said they planned to meet with the governor on Wednesday afternoon in hopes of concluding negotiations.

"I don't think there is anything that would make negotiations shut down at this point," said Assembly Speaker Karen Bass, a Democrat.

Senate GOP leader Dennis Hollingsworth agreed that a final budget deal was probably imminent.

The legislative leaders refused to discuss details of the negotiations.

Legislative staffers involved in the confidential talks said the leaders had largely resolved the most contentious issue in negotiations -- education cuts.

The influential California Teachers Association has been running television advertisements to pressure them not to suspend voter-approved funding formulas that guarantee schools a set amount of money each year. Fiscal experts have been struggling for days to find a way to cut billions of dollars from schools.

Democrats and Republicans agree that such cuts are essential to wiping out the deficit without suspending the Proposition 98 funding formulas, according to the paper.

Legislative and administrative fiscal staffers appeared to have worked out a complex scheme that could avoid a suspension, said the paper.

The governor is pushing to close that last portion of the deficit with more cuts in social service and healthcare programs, while Democrats are angling to blunt the effect on those programs by achieving the savings through accounting shifts and expense deferrals, the paper said.

Any final deal is expected to include some of the sharpest cutbacks in government services the state has experienced. Programs that have not been cut deeply in years are likely to shrink considerably, with tens of thousands of Californians losing access to programs they have relied on.

Some programs may be wiped out entirely. Large numbers of low-income Californians receiving healthcare through the Medi-Cal program are expected to be moved into managed care, and thousands of seniors who receive home healthcare would lose it.

The paper noted that the progress in negotiations came as the cash-starved state is issuing IOUs to vendors, college students and local governments and a third Wall Street credit rating agency on Tuesday dropped California's bond rating to the level it was in2004, just after voters recalled former Governor Gray Davis.


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