Schwarzenegger Newsletter, Augest 2008

From the office of
Aronald Schwazenegger


EXTERNAL AFFAIRS




AUGUST 2008
Monthly Newsletter

Today, it is two months past the Legislature's deadline to pass a state budget and a month and a half into the new fiscal year, but we have no budget and a continuing impasse.

What's more, we are rapidly coming upon the deadline to put initiatives onto the November ballot. That means high-speed rail, a statewide water plan, budget reform, Lottery modernization - all issues critical to California and priorities to the Governor - could be put off yet again, victims to the stalemate between Democrats and Republicans in the Legislature.

So, it seems an appropriate time to explain Governor Schwarzenegger's recent actions, and his No. 1 goal, in the budget negotiations this year.

The Governor has two deadlines when it comes to the budget process: to submit a budget proposal in January and then to revise that proposal with updated revenue data mid-May. The Governor made both deadlines, as he has each year he has been in office. Beginning back in January, Governor Schwarzenegger began urging the Legislature to take early action on the budget - not to treat this year as business-as-usual - because he foresaw the large deficit, which now sits at $15.2 billion. Legislators did not take that call to action and their June 15 deadline came and went.

Now, as a result of the Legislature's failure to come to a compromise coupled with our slow economy and lower-than-projected revenues, California is facing a very real cash crisis. Also, the savings that would have resulted from cuts made in an enacted budget are eroding, making our situation worse by the day - to the tune of nearly $500 million by the end of August.

But the Governor is not willing to sign a below-par budget full of gimmicks and borrowing that will simply push off our problems to the next budget year. Sacramento's budget-writing process is seriously broken. The annual impasse and our rollercoaster ride of revenue peaks and valleys from year to year are evidence of that. So, the Governor's No. 1 goal is budget reform, which he has been working toward since the day he was elected in 2003.

True and lasting budget reform means a strengthened rainy-day fund, which the state is forced to put money into in the good years and can only withdraw from in the really bad years, like this one, in order to cover a deficit. It also means the ability to make quick mid-year adjustments. The Governor has said he will not sign a budget without meaningful budget reform.

Throughout recent months, the Governor has worked with legislative leaders daily. At their request, he initially allowed them to work within their "Big 4" process. When it became clear that process was not working and the Governor became frustrated, he called several meetings with all of the leaders and also began meeting with them more frequently on an individual basis.

When the bulk of the Legislature came back from a summer vacation and took up hundreds of bills that have nothing to do with the state's top priority, enacting a budget, it became clear to the Governor that legislators were not focused where the people expect them to be. So, the Governor announced that he would not sign a single bill until a budget deal was struck. And while that may mean some good bills die, he said he would veto bills before they become law.

The Governor is doing what is in his power to bring the Republicans and the Democrats in the Legislature toward a compromise.

At the same time, he has the responsibility to make sure the state can continue to pay its bills in the face of a continued budget impasse. With the looming threat of a cash crisis, the Governor used his executive authority to conserve cash by ordering all state agencies under his authority to stop any overtime work except where it concerns public safety and the protection of life. That order, in accordance with the state constitution and the state Supreme Court, means that many state workers will temporarily only receive the federal minimum wage until a budget is enacted, when they will receive all of the pay due them.

The bottom line is that there is no reason the Legislature cannot pass a compromise budget and then pass a comprehensive water bond in time for the ballot deadline. If they do not, budget negotiations will be back to square one and many of California's priorities will again be put on hold, and that is not what Californians expect and not what they elected leaders to go to Sacramento and do.