California Legislature approves budget bill

The California Legislature passed a budget early Thursday to help close a $42 billion deficit, ending an epic impasse that involved several all-night sessions and threatened to throw thousands of state employees out of work.

Republican Gov. Arnold Schwarzenegger praised the bill, passed by the Democratic-controlled Senate and Assembly. He came out of his office after the budget vote and disconnected a large deficit clock counting the number of days – 106 as of Thursday – that the Legislature had failed to act since he declared a special session to deal with the state’s fiscal problems.

“I’m absolutely delighted about the budget passing,” Schwarzenegger said.

The budget deal flew through the Assembly less than an hour after it won approval by a single vote in the Senate after late-night horse trading to win over a final Republican vote. The vote marked the end of the Senate’s longest session at 45.5 hours.

The package included a combination of spending cuts, tax increases and borrowing, intended to close a projected multibillion dollar deficit and avert fiscal disaster for the state. Some 10,000 state workers could have lost their jobs without the budget package.

The plan cut California’s current fiscal year spending by nearly $13 billion – from $103 billion down to $90.7 billion. For the 2009-2010 bookkeeping year, which begins July 1, it sets a spending plan of $96.3 billion.

The plan would raise the state sales tax by 1 cent on the dollar and increase the fee for licensing vehicles. The state personal income tax rate would go up by 0.25 percent.

On the spending side, education funding would be cut $8.6 billion over two years, likely forcing schools to lay off teachers, slash salaries and postpone spending on construction and textbook purchases.

Senate leaders secured the final vote needed from moderate Republican Abel Maldonado in late-night negotiations by agreeing to his demands for election changes, government reform and removal of a gas tax increase, giving them the two-thirds vote needed to pass the package.