California Cuts Budget Deal

Soon California can stop being the butt of jokes—although seriously, Alabama, let’s not point fingers. Party elders in Sacramento have reached an agreement that should balance the budget with $15.5 billion in cuts that will hurt students, the poor, children and the elderly. Republicans, who make up only about a third of the state Legislature, managed to thwart any new taxes.

The state will also borrow a few billion from local governments, which themselves are struggling to cope with the economic crisis.

San Jose Mercury News:

Schools will take a $6 billion cut, but won a commitment to be paid back $9.3 billion in cuts from previous years. The agreement also cuts $2.8 billion from the University of California and California State University systems, $1.2 billion from the corrections department, and $1.3 billion from MediCal funding.

Schwarzenegger and Republican lawmakers were able to uphold their vow of no new taxes with a series of accounting shifts, borrowing and fund shifts. The state will extract $4.4 billion from local governments’ revenues — about $2.1 billion in borrowing by suspending Proposition 1A, $1.3 billion in redevelopment dollars, and $1 billion in transfers from local gas taxes.

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