Gov., Dems announce deal on remaining CA budget

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By JUDY LIN, Associated Press

SACRAMENTO, Calif. (AP) — Gov. Jerry Brown and Democratic leaders reached agreement Thursday to finalize California's budget.

The plan protects education, permanently reforms welfare and includes tough ongoing cuts, Brown said in a statement announcing the framework of the agreement.

"This agreement strongly positions the state to withstand the economic challenges and uncertainties ahead," Brown said in the statement. "We have restructured and downsized our prison system, moved government closer to the people, made billions in difficult cuts and now the Legislature is poised to make even more difficult cuts and permanently reform welfare."

A vote of the Legislature will take place next week.

Although Democrats passed the main budget bill on a majority vote last week, the governor pressed for deeper cuts to welfare and other social services amid a projected $15.7 billion shortfall. Brown has until Wednesday to sign or veto the main bill.

"We have a good deal with the governor," said Assembly Budget Committee Chairman Bob Blumenfield, D--Woodland Hills. "We were 99 percent there with the governor before. He took our bills, he still was pushing to go a little bit further, and we were willing to work with him and try to work out some of the details, and we've done it."

Other Democrats in the Assembly declined to comment, referring questions to Speaker John Perez, D-Los Angeles, who also declined to comment.

Democrats have majorities in both the Assembly and Senate, and can pass the budget without needing any Republican votes. Republicans have been shut out of the budget negotiations and did not immediately comment on the pending agreement.

"We can't comment on something we haven't seen. We haven't seen any language at all," said Bill Bird, spokesman for Senate Minority Leader Bob Huff, R-Diamond Bar.

Senate President Pro Tem Darrell Steinberg, D-Sacramento, said the agreement makes changes to four social programs to minimize the impact on the poor.

Democrats agreed to phase in federal work requirements after two years, but convinced the governor to drop his proposal to cut cash grants to the poor, a move that Democrats in the Legislature had feared would push families into homelessness. The two sides agreed to reduce funding for child care and suspend cost of living increases starting in 2013.

They also agreed to shift some 880,000 children from the Healthy Families program to Medi-Cal, a move they say will save on administrative funds. Steinberg said legislative negotiators also prevented deeper cuts to in-home support for now, but will negotiate more savings in the future.

The Legislature passed a $92 billion budget Friday but several companion bills must still pass before the state's spending plan can take effect. Many deal with some of the most contentious issues, including aid to the poor. The whole package hinges on voters approving an initiative in November to raise taxes.

"We are on the back end of this thing," Steinberg said. "If we pass those taxes in November we will be in a new chapter."

Democratic leaders also reached agreement with the governor on welfare programs, college aid and other social service cuts.

Brown, a Democrat, wanted to emphasize getting people back to work, while reducing aid for parents who aren't meeting requirements under CalWORKS, the state's welfare-to-work program. But Democrats say it's foolish to pay for job training when there aren't enough jobs to go around. They would rather preserve cash grants.

In passing the main budget bill, lawmakers met the minimum requirement to keep their paychecks flowing under a voter-approved measure that blocks lawmakers' pay if a budget is late.

California's new fiscal year begins July 1. Without a budget in place, the state will not be able make certain payments to school districts and vendors, or pay the salaries of elected officials and staff.

Both Brown and Democratic lawmakers are depending on the tax initiative to balance the state deficit. If the ballot measure fails, automatic cuts will be triggered, drastically reducing funding to public schools.

The initiative to raise the state sales and income taxes for some California residents qualified Wednesday along with a rival initiative that would raise income taxes on nearly all Californians.

Brown's proposal would backfill the state's general fund and guarantee funding to local governments for public safety. It would raise income taxes on a sliding scale on incomes over $250,000 a year for seven years and raise the state sales tax by a quarter cent for four years.

The rival proposal, backed by Los Angeles attorney Molly Munger, would raise income taxes on nearly all Californians on a sliding scale for 12 years, with the biggest increase on the wealthiest Californians.

Revenue from her proposal would go directly to public schools, while Brown's measure would use the money to prevent deeper cuts to schools and guarantee money for local public safety.

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Associated Press writers Hannah Dreier and Don Thompson contributed to this story.

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