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September 3, 2008 > Schwarzenegger unlikely to get reforms on ballot

Schwarzenegger unlikely to get reforms on ballot

By Judy Lin, Associated Press Writer

SACRAMENTO (AP), Aug 30 _ Gov. Arnold Schwarzenegger's pledge to avoid signing a state budget unless it includes long-term fiscal reforms has put him in a tight spot.

Such steps will require voter approval, but the window for placing additional measures on the Nov. 4 ballot is shutting fast and the Legislature appears no closer to a budget compromise than it was two months ago.

So what happens if the reforms Schwarzenegger has insisted upon can't be put before voters this year?

The options are few and not very appealing. Among them: Strike a budget deal that fails to include reform or call a special election for next year that would cost tens of millions of dollars.

Schwarzenegger's aides say he is still demanding reforms in whatever budget plan eventually emerges from the Legislature and that he will figure out the next step later.

``This is something the governor hasn't given up on,'' said his communications director, Matt David. ``He believes it's totally unacceptable to put California on this roller coaster ride year after year after year.''

Failure to follow through on the reform pledge would mean yet another line in the sand drawn by Schwarzenegger during this year's budget talks that he later wiped away. He already has backtracked on pledges to avoid tax increases and veto any bills before lawmakers pass a budget.

By Monday, California's budget impasse will become the longest in at least 30 years, when the state began keeping such records.

``It's like that team that lost, you know, 82 games in a row. It's not the kind of record you want to talk about,'' Senate President Pro Tem Don Perata told reporters on Friday, after a budget bill similar to a plan Schwarzenegger put forth a week ago failed in the Senate.

The latest date the Legislature has approved a budget is Aug. 31. That was in 2002, when then-Gov. Gray Davis signed the spending plan into law on Sept. 5.

Schwarzenegger has tried prodding lawmakers to compromise so they could place the reform measures on the Nov. 4 general election ballot. With that appearing less likely by the day, lawmakers have one less incentive to act with urgency.

Many lawmakers now say the impasse could continue for weeks, given the divide in the Capitol over this year's $15.2 billion deficit.

Since January, Schwarzenegger has been asking lawmakers for a budget reform measure to expand the state's current rainy day fund and grant the governor authority to make midyear spending cuts when revenues lag behind projections.

He said both steps are needed to end ``this kind of madness every time there is an economic slowdown.'' Both reforms require voter approval.

``I've been sent to Sacramento by the people of California ... to fix problems permanently, not just for one year and then to kick that can down the road,'' the governor said during an appearance in Los Angeles.

Schwarzenegger also needs to go to the ballot to implement his lottery plan. He wants to expand the lottery's games and marketing in a gambit to raise money for the state budget. A more lucrative lottery would allow the state to sell bonds to Wall Street investment firms based on its future projected revenue.

His main non-budget policy priority for the year also requires voter approval _ a $9.3 billion water bond he worked out with Democratic U.S. Sen. Dianne Feinstein.

Perata, D-Oakland, declared budget reform and the lottery plan unlikely after the Senate failed to pass the latest budget proposal on Friday. No Republicans supported the plan, prompting Perata to challenge the GOP to propose an alternative. Republicans did that on Saturday, calling for deeper cuts and borrowing from state lottery proceeds instead of a tax increase.

The state has been operating without a budget since the fiscal year started July 1. The controller's office has estimated that $7.6 billion in payments to vendors, schools, hospitals and certain state employees will not be made if a budget isn't enacted by the end of September.

The state also will have to start borrowing at some point, potentially costing it hundreds of millions of dollars in interest and lending fees.

Schwarzenegger and Democrats have proposed closing the deficit with about $10 billion in cuts and a temporary sales tax increase. Republicans have been steadfast in opposing tax increases.

The Assembly and Senate are meeting through the weekend, wrapping up work on dozens of bills, but there has been no apparent progress on the budget negotiations.

Meanwhile, Secretary of State Debra Bowen has advised counties not to wait any longer for any last-minute legislative measures. She recommend ballots be drawn up for printing.

``At this late date, 67 days before the election, any more changes would seriously jeopardize the integrity of the election,'' Bowen said in a statement released Friday.

Schwarzenegger has the option of calling a special election, but with no budget before him, aides said a decision is premature.

``If the governor and lawmakers want to spend millions more ... they do have that power,'' said Bowen's spokeswoman, Kate Folmar.

The secretary of state's office estimates a special statewide election would cost between $50 million and $100 million, depending on whether it were held on a stand-alone date or consolidated with local elections scheduled for March 3, 2009. California spent roughly $100 million to hold its presidential primary in February.

Ballots for residents living overseas and military personnel are scheduled to begin going out on Friday. In Sacramento County, election officials are planning to go to the printers on Wednesday.

``We're on a hope and prayer they don't put any additional measures on the ballot,'' Sacramento County Registrar Jill LaVine said. ``At this point, we've got the ballot ready to go.''

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