Governor Will Veto Democratic Budget

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(Sacramento, CA)
Thursday, December 18, 2008

It’s been a week of drama at the State Capitol – from a lock-down of the Assembly to late night budget wrangling. But Thursday offered the real twists and turns. 

After hours of debate, the legislature approved an 18 billion dollar Democratic package of cuts and tax increases – without Republican support.  But the Democratic celebration was short-lived:

“This proposal that they have sent down, this package that they are sending down really only does one thing – and that is, punish the people of California.”

Governor Schwarzenegger said he would veto the measures, which included hikes in the sales, gas and income taxes, as well as billions in cuts.  The Governor said the package didn’t include enough of an economic stimulus plan.  He wanted more construction projects to be exempt from environmental regulations, and provisions to help homeowners in danger of foreclosure.  Republicans had called for the veto.  They considered the Democratic plan unconstitutional because it raised some taxes without a two-thirds vote of the legislature. They had threatened to sue.  But Democrats pointed out it was the only package to reduce the deficit that had a chance of passing.  Earlier in the day, Senate Leader Darrel Steinberg addressed the possibility of a Governor’s veto:

“But don’t throw an 18 billion dollar solution out the window because you didn’t get exactly what you wanted in the way you say you wanted it.”

State Treasurer Bill Lockyer released a statement, saying that if California didn’t enact the measures, investors would “throw up their hands in disgust.”  He said the state’s credit rating would likely sink even lower.  Earlier this week a state board cut off funding for thousands of public works projects.  The Treasurer blamed the state’s unbalanced budget and the tight credit market.  Meantime, Governor Schwarzenegger is urging lawmakers to keep working:

 “I think that the legislature owes it to the people of CA to solve this problem before Christmas, so I will urge them to stay here.”

However, both legislative leaders said they sent their members home until the New Year.