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CDCAN

December 22, 2008

Governor hopeful that budget crisis deal with Democratic leaders close

California budget crisis

* Governor says progress being made on budget crisis

* Will continue talks with Democratic leaders tuesday

* Hopeful that compromise will be reached

Major impact to people with disabilities, mental health needs, seniors and low income families – Not certain yet when legislature will return to state capitol though if deal is reached with Democrats floor sessions to vote on it next week likely

SACRAMENTO (CDCAN) - Governor Arnold Schwarzenegger, said in a press conference in the Los Angeles area today (December 22), that he was "hopeful" that a deal with Senate President Pro Tem Darrell Steinberg (Democrat – Sacramento) and Assembly Speaker Karen Bass (Democrat – Los Angeles) can be reached before Christmas to ward off his threatened veto of a $18 billion package of bills – including $7.3 billion in spending cuts and over $9 billion in new revenues - that the Legislature passed last week. An agreement with the Governor and the Democrats would ward off a threatened veto of the Democratic deficit reduction plan, that was passed without the need of Republican votes. [Note: watch later today for CDCAN Action Alert on the budget crisis]

The spending cuts included permanent reductions to CalWORKS, regional centers and cuts to SSI/SSP – though not to the level that the Governor and Legislative Republicans wanted. Because the Democratic plan was passed on a majority vote – bypassing the need for Republican votes – the bills – if signed by the Governor – won't take effect until 90 days after he approves it. Other proposed cuts by the Governor and Legislative Republicans to In-Home Supportive Services (IHSS), CAPI (Cash Assistance Program for Immigrants), Medi-Cal and the rollback of SSI/SSP to the lowest level allowed by the federal government were not included in the Democratic plan that was passed.

Legislature not scheduled to return Tt Capitol until January 5th – for now

Neither the Assembly or State Senate has any floor sessions scheduled this week or next, though that can change if a budget deal is reached.

The Legislature officially ended the special session Thursday that the Governor called on December 1st, after they passed – over objections of Republicans – a package of bills that would cut the $41 billion projected deficit by $18 billion.

The Legislature currently is not scheduled to return to Sacramento until January 5, 2009 – though they could return as early as this weekend or more likely, Monday or Tuesday.

Governor will continue meeting with Democratic leaders on Tuesday

The Governor said that he will meet with the two Democratic leaders on Tuesday (December 23) to continue talks – that have not included Assembly Republican Leader Mike Villines (Republican – Clovis) or Senate Republican Leader Dave Cogdill (Republican – Fresno). Villines issued a statement today saying he would refuse to participate in discussions around the Democratic plan that approved revenue increases that he and other Republicans say was done illegally in violation of the State Constitutional requirement of 2/3rds vote in both houses to raise taxes. Democrats say the move was legal, backed by the Legislature's legal counsel, and was necessary because of the stalemate.

The Governor believed that if a deal could be reached with the two Democratic leaders – then the Legislature would need to come back to Sacramento to approve some additional special session legislation probably between Christmas and New Year's.

No details ere available on what was discussed though last week the Governor said he was not happy with the Democratic plan because it did not go far enough in permanent spending cuts, went too far in raising revenues and did not have what he believed were important provisions that would help the State's economy – including changes to regulations that would help business.

Governor issued executive orders last week

Underscoring the urgency of the budget crisis – and his threatened veto of the Democratic deficit reduction plan, the Governor late on Friday signed three executive orders today addressing the State budget crisis, including a new order that declares a "fiscal emergency" that orders the Legislature back into a new special session. He also issued a third executive order today to prepare state government and state employees for the worsening state budget crisis, including furloughs and lay-offs impacting most state departments and agencies.

The Governor last week warned that the State's budget situation was growing worse every day and "as we free-fall toward a fiscal Armageddon the Legislature still can't cross the special interests, and do what is right for the state of California. The people and our economy deserve better."