Extending the state's longest budget fight, Gov. Arnold Schwarzenegger announced Tuesday that he will veto a proposed state budget that "takes our problems and makes them even worse."
"I say enough is enough," Schwarzenegger said. "Californians have been through this roller-coaster ride too many times and so this is why, when they send me a budget, I will veto it."
Schwarzenegger criticized a compromise budget passed by lawmakers in the early morning hours Tuesday as irresponsible for pushing fiscal problems into next year and for failing to impose tight restraints on future spending.
The governor threatened to veto hundreds of bills on his desk unless legislators make changes in the proposed $104.3 billion spending plan intended to end the 79-day budget standoff.
Legislative leaders vowed Tuesday to override a gubernatorial veto for the first time since the days of then-Gov. Jerry Brown in 1979. Doing so would require a two-thirds vote of each legislative house.
"I'm pretty confident that we're not going to have difficulty doing that," said Assembly Speaker Karen Bass, D-Los Angeles.
Republican leaders Mike Villines in the Assembly and David Cogdill in the Senate said they would support overriding a veto by Schwarzenegger, who also is a Republican.
"It's a mistake," Cogdill said of Schwarzenegger's decision. "I will vote to override the governor's veto, as should every other legislator who approved this budget."
Political analysts said the fighting is likely to worsen the already low approval ratings of the governor and lawmakers.
"From what I've seen, I think voters are extremely frustrated at everyone," said Gale Kaufman, a Democratic political strategist.
In approving a compromise budget, lawmakers scrapped Schwarzenegger's proposed temporary, 1-cent sales tax increase and replaced about roughly $4 billion it would have raised by accelerating – but not increasing – corporate and individual tax obligations.
A key element of the plan calls for increasing taxpayers' income tax withholding by 10 percent, thus boosting revenues quickly, then refunding any overpayments later.
Schwarzenegger argues that such accounting maneuvers merely delay the state's fiscal reckoning.
"I will not sign a 'get-out-of-town budget' that punishes taxpayers, pushes the problem into the next year and includes fake budget reform," he said.
Schwarzenegger labeled the proposal a tax increase in disguise. "It's just withholding people's money," he said. "You're taking away billions of dollars from California taxpayers, no matter if it is through a sales tax or through this."
Legislative leaders counter that the proposed budget is a way to bridge the state's $15.2 billion deficit without raising taxes or making deep cuts to education or health-care programs.
The proposal essentially is a way for the state to borrow future tax revenue, interest-free, without increasing the total amount due from taxpayers in any given year.
Legislative supporters say the compromise was the best possible, with Republicans adamantly opposed to tax increases and Democrats determined to hold the line on deep cuts to schools or health-care programs.
"While not perfect, the budget compromise funds our state's priorities without raising taxes on California's hard-working families," Villines said in a written statement.
Both the Senate and the Assembly approved the compromise budget by more than a two-thirds majority.
Republican Sen. George Runner of Lancaster applauded the governor's veto promise.
"Let's face it – this budget needs more work before it is delivered to Californians," Runner said. "The governor is using his executive position judiciously."
Aaron McLear, Schwarzenegger's spokesman, said GOP legislators could have a hard time justifying a veto override to voters. "Republican lawmakers will be voting to override a Republican governor who is fighting to control spending," he said.
Schwarzenegger reserved some of his harshest criticism Tuesday for the budget proposal's failure to institute tight controls on future state spending.
The spending plan would beef up the state's rainy-day fund for emergencies, but it would allow money to be diverted by a two-thirds vote of the Legislature. Schwarzenegger wants diversions to be permitted only if the economy takes a nosedive.
"We've got to look forward and say, 'How do we fix this system once and for all?' " he said.
At a news conference, Schwarzenegger initially said that he would kill all the bills on his desk if legislators override his budget veto.
Pressed on the issue, Schwarzenegger seemed to soften his stance. More than 800 bills await his approval or veto this month.
"The only power that I have as governor in a situation like this is looking at the bills very carefully. … I'm just saying that every bill will be carefully evaluated and hundreds of bills will be vetoed."
One key bill, by Democratic Sen. Darrell Steinberg of Sacramento, is designed to discourage urban sprawl by steering state money for roads toward projects that put homes close to workplaces.
"If the governor wants to veto a bill that's unrelated to the budget and essential to his environmental legacy, that's his choice," Steinberg said.
Senate President Pro Tem Don Perata, D-Oakland, said the governor is treating the disagreement like an eighth-grade schoolyard fight, vowing to retaliate for a perceived slight.
"If he wants to veto those bills, that's up to him, but it once again shows how little he understands about this place – because the only thing that matters to us right now is the budget," Perata said.
Call Jim Sanders, Bee Capitol Bureau, (916) 326-5538. Steve Wiegand of The Bee Capitol Bureau contributed to this report.
