San Francisco, July 21: California Governor Arnold Schwarzenegger and legislators agreed on a plan to solve the state’s multibillion-dollar budget crisis on Monday after months of bitter wrangling.
After a day of talks to close California’s $26.3bn deficit, Schwarzenegger emerged alongside Democratic and Republican lawmakers at the state capitol in Sacramento to announce a deal had been reached.
Few details of the agreement were announced although Schwarzenegger and lawmakers said the revised budget did not include any significant tax increases or cuts to essential services such as education.
“As you can see, we came to a basic budget agreement and obviously we’re very happy,” Schwarzenegger said. “We’ve accomplished a lot and I want to thank the legislator leaders for hanging in there. It was like a suspense movie.”
Schwarzenegger and state lawmakers had been at loggerheads for months over how to solve California’s deficit, which had pushed the state to the brink of bankruptcy and forced the world’s eighth largest economy into issuing IOUs.
Republican Governor Schwarzenegger had vowed to narrow the deficit by cutting funding for a wide range of social services while steadfastly vowing to veto any proposals from lawmakers that would increase taxes.
“This is a budget that has no tax increases and a budget that is cutting spending,” Schwarzenegger said on Monday. “We’re protecting education and making government more efficient and cutting waste and abuse.
“All around this is a really great achievement.”
Democratic majority leader Karen Bass said the state had reached agreement on plugging the budget hole without slashing funding to programmes designed to help California’s neediest as had been threatened by Schwarzenegger.
“After several weeks we have closed the deficit in a responsible manner,” Bass said. “We have protected the safety net and that was very important in these times.”
California’s latest budget crisis came less than five months after marathon negotiations resulted in tax increases and spending cuts to eradicate a $42bn hole in the budget.
Since then, California’s deficit has spiralled as soaring unemployment and one of the worst home foreclosure crises in the United States have sent state revenues plummeting to levels not seen since the 1990s.
—Agencies