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Schwarzenegger, California Legislature Reach Budget Compromise - 2003-12-12

California Governor Arnold Schwarzenegger has reached a compromise with legislators over the state's fiscal crisis. The California assembly passed the measure Thursday, and the state senate began debating it Friday. The issue is the first test for the new state official.

Mr. Schwarzenegger, a Republican, was elected October 7 in a recall election that ousted Democrat Gray Davis. Voters looked to the action star to solve California's serious fiscal problems.

Thursday, the governor and Democratic-controlled legislature passed the first hurdle in reaching a solution. The assembly overwhelming approved the governor's recovery plan and sent it to the state senate for approval.

The centerpiece of the bill is a $15-billion bond that will cover California's immediate debt. The state must repay the money within 15 years.

Democratic assembly member Jackie Goldberg says the compromise will pay the state's current debt and provide a surplus fund for emergencies.

"Do I think it's elegant and perfect? No," he said. "But it does the three things that the governor wanted. He wanted a rainy day fund. It gets him that. He wanted a cap on spending. It doesn't give him a cap on spending, but it says you can't spend more than you take in. That's a cap on spending in this state."

The measure also authorizes the crucial bond issue, although it must be repaid sooner than the governor had wanted.

Some of Mr. Schwarzenegger's fellow Republicans, including assembly member Greg Aghazarian, were hoping for stricter limits to prevent a return to deficit spending.

"It's not close to what we would like, obviously, but we want to support the governor," he said. "So that's the real question, how can we best make sure that we don't get back here again."

Democratic assembly member Sarah Reyes says Mr. Schwarzenegger is learning how things are done in politics.

"He's now learning how to negotiate with the other side of the aisle, and I'm just glad to say that we have a product today of those negotiations," he said.

If the California senate approves the recovery package, it will go before the voters for final approval in March.