California Insider

With a vote expected in just a few hours, the details are finally dribbling out about the budget deal agreed to by the four legislative leaders and the governor.

Some highlights:

The budget would spend about $7.4 billion more than it takes in, with about $4 billion of that going toward debt repayment or other one-time expenditures, leaving a “net operating deficit” of about $3.5 billion. The shortfall is to be covered by funds carried over from the current fiscal year. At the end of the budget year, lawmakers and the governor expect to have about $2 billion left in reserve. If that money is there and is applied to the following year’s shortfall, the remaining, projected problem in '07-08 would be about $3.4 billion.

“We have some work to do next year,” Finance Director Mike Genest told reporters.

On the biggest item in the budget – education – the negotiators split their differences. The Democrats wanted more of the new money to go to the schools unencumbered by strings from Sacramento. The governor wanted to direct how more of that money would be spent. In the end, the one-time money that the schools will be getting will be split between a block grant of $534 million directly to the districts (25 percent) and the school sites (75 percent), and a separate grant to districts of $500 million directed toward PE, arts and music.

The governor also got $200 million to expand high school counseling and $50 million to expand preschool, directed at children in low-performing schools. The Democrats also got $350 million directed to poor children in what is known as Economic Impact Aid.

In other parts of the budget, the Democrats got an extra $25 million ($75 million counting what the governor proposed) to expand foster care services, and $100 million for services to people on CalWorks, formerly known as welfare. They kept the governor from spending $300 million targeted for local transit on bond repayment instead.

The governor got $1.4 billion to pre-pay the state’s obligation to Proposition 42 transportation fund. And he got $126 million more for local public safety than the conference committee was proposing.

Altogether, the budget includes nearly $5 billion in set-asides that won’t be spent for ongoing programs - $2 billion in reserves and $2.8 billion in debt prepayments and repayments.

It's looking as if the budget votes will occur late tonight. The Assembly has a briefing scheduled for reporters at 2 p.m. The Department of Finance will follow up at 3 p.m. The Assembly convenes at 7 p.m.