Schwarzenegger criticizes lawmakers for not reaching budget deal

Frustrated that the state has no budget more than two weeks into the fiscal year, Gov. Arnold Schwarzenegger said Wednesday he may insist that legislative leaders begin marathon negotiating sessions until they secure a deal.

"It is almost like there is no emergency there," Schwarzenegger told The Bee in an interview. "At one point or the other, you have to say, like they do with labor negotiations, 'let us sit in the room and not leave the room until it's done.' We have done that in the past, we have sat here until three in the morning. Eventually, I'm going to go and ask them again to sit down and let's not leave the room until it's done."

For several weeks, Republican and Democratic leaders in both houses have met without the governor in an as yet unsuccessful effort to resolve a $15.2 billion shortfall in the $101 billion general fund budget.

Schwarzenegger ramped up criticism of lawmakers this week, but he so far has refrained from using harsh tactics such as visiting lawmakers' districts and cajoling them, as he did during a late budget in 2004.

The Republican governor has been meeting with leaders individually, though he said he "didn't really want to interfere with their process." The parties remain divided over whether the state should use tax increases to bridge the gap, as majority Democrats have proposed.

"I think the governor just doesn't quite understand how much we're meeting," said Assembly Republican leader Mike Villines of Clovis. "At this point, everything is on the table, and we're just trying to decipher through how do we defend both of our positions. We believe in no taxes, and they believe in raising a lot more taxes. Reconciling those differences is a lot more problematic."

The governor attacked tax proposals in previous years, but he did not do so Wednesday. "I think this is their way of looking at it, and I'm sure they have their reasons," he said of Democratic tax proposals. "And I think this is what makes the world go around. People have different ideas for how to solve a problem."

Schwarzenegger criticized one potential solution that has gained traction – raiding transportation and local government funds to help balance the budget.

Lawmakers are looking at those funds to balance the deficit, say advocates for transportation and local government programs.

As much as $3 billion could be on the table, but the borrowing would be only a temporary fix for California's structurally unbalanced budget. Two voter-approved ballot measures will force any raids to be repaid – with interest – within three years.

The governor continues to push for his lottery securitization plan, which he called "a gift from the future." He said it wouldn't be fair to take rainy-day funds away from cities and counties when the state made the mistake of not setting one up for itself.

"Any time you go and do those things, it's maybe one way of getting out of the situation and coming up with a compromise," Schwarzenegger said, "but I don't think it's the right way to go."

The governor said it's fiscally irresponsible for Democrats to propose spending $2.8 billion more on education than he proposed in his updated budget in May. Democrats have proposed $8.2 billion in taxes on the wealthy and businesses, but Schwarzenegger suggested that lawmakers should work with revenues they have.

"They've got to learn that we can't expand programs and that we can't go and spend money that doesn't exist," Schwarzenegger said.

The governor's campaign office sent e-mails Wednesday asking his supporters to contact their legislators. He said lawmakers need to acknowledge that the state could run out of cash reserves in mid-August.

Assembly Speaker Karen Bass, D-Los Angeles, said in a statement that legislative leaders continue to "make progress."

"If that means we take a few extra days to make sure we don't slash education and health care, then it's time well spent," Bass said. "Our goal is to craft a budget that's gimmick-free and reflects the values of Californians, and we're not about to be bullied into anything less than that."

The governor has scheduled a "Big Five" meeting with the four legislative leaders for today, the first such session in a month.

"We'll judge by that meeting what will be the best way to move the process forward and come to a conclusion," he said.

About the writer:

• Call Kevin Yamamura, Bee Capitol Bureau, (916) 326-5548. Shane Goldmacher of The Bee's Capitol Bureau contributed to this report.