California's historic 64-day budget deadlock ended early Wednesday when Gov. Pete Wilson and the Legislature approved a compromise plan that slashed school spending and made deep cuts across state government to close a $10.7 billion shortfall.
Wilson signed the $57.6 billion budget at 1:45 a.m. PDT, moments after the Legislature passed the education measure and a package of 13 other bills to implement the austere spending plan.The budget contains no general tax increases, relying entirely on spending cuts, fee increases and accounting transfers to close the shortfall.
"It is a budget that I could have signed two months ago," a weary Wilson told reporters at a crowded pre-dawn news conference in his Capitol office. "I hope that this marks an era of fiscal respon-sibility."
The compromise will allow the Golden State to start paying its bills in cash instead of IOUs, and unlock paychecks for thousands of state suppliers who have not been paid since the fiscal year began July 1 without a budget.
"There should never ever again be anything like this period," Wilson said. "It has resulted in needless pain and suffering - inexcusable pain and suffering - and it simply should not happen again."
Lawmakers and the governor had disagreed on how much to spend on schools, which are guaranteed roughly 40 percent of the state's general fund under a 1988 voter-approved initiative called Proposition 98.
Ultimately, Democrats and Republicans agreed to cut school spending by $899 million this year, and loan schools $862 million from future budgets to maintain annual funding at last year's level of $4,185 per student.
Wilson insisted the loan was not a mechanism to allow the state to engage in deficit spending. The governor, who repeatedly vowed to veto any budget that contained deficit spending, said the loan must be repaid in future budgets.
The Legislature passed a final version of the budget Saturday, but Wilson refused to sign it until lawmakers approved a series of bills to implement the most-controversial spending cuts.
For three days, the governor and lawmakers remained locked in a stalemate over efforts to prevent the school cuts from being overturned in court if angry educators file suit.
Wilson insisted on inserting a "poison pill" that would suspend Proposition 98 if a court ruled the loan arrangement was illegal.
Democrats agreed to a conditional suspension of Proposition 98 in exchange for a promise by Wilson to guarantee per-student funding would not drop for two years.
Wilson and his chief adversary, Assembly Speaker Willie Brown, D-San Francisco, also agreed that neither side would use the Proposition 98 vote in fall campaigns against incumbent legislators who supported the plan.
Lawmakers from both parties were worried that a vote to suspend Proposition 98 - even conditionally - would be seen by the public as a vote against schools.