Governor sounds off on budget

Gov. Arnold Schwarzenegger delivered sharp words in San Francisco about the stalled passage of a state budget, which has municipalities delaying spending locally.

As the Legislature was taking up the issue of how to close a $19 billion budget deficit, the governor was in The City, talking to business leaders about what’s at stake: education, welfare programs and social services.

In Schwarzenegger’s speech at the San Francisco Chamber of Commerce CitySummit event Tuesday, he said the budget plans were, at the very least, a starting point for clean negotiations. The Republican governor’s plan, which includes $12 billion in cuts, and the Democrats’ plan, which includes a combination of tax increases and cuts, failed in votes in both houses of the Legislature on Tuesday.

It was the 62nd day without a state budget, a delay that has already cost the state $3 billion, Schwarzenegger said. And while Democrats lament his plan for more service cuts, including the welfare-to-work program that affects more than 1 million residents, Schwarzenegger says it is the other party that is throwing away money by refusing cuts and then delaying the budget.

“It’s important to know they have wasted an extraordinary amount of money on so many things,” Schwarzenegger said. “For instance, not making the midyear cuts that I asked them wasted $2.8 billion.”

He took an even harsher tone when talking about pension reform, the cornerstone of his proposal to revamp the state’s finances. The governor has been unwavering on his refusal to sign a budget without a massive reform to pensions, which he says are eating up much-needed revenues.

Pension reform has become a controversial debate in cities across the state, including in San Francisco, where voters in November will decide whether to force city workers to pay more into their pensions.

Pension reform is just a portion of the budget crisis, the governor said. At a time when California is still facing a 12 percent unemployment rate, stimulating the economy and providing incentives for business to expand is key to jump-starting the economy, he said.

“This year is all about jobs, jobs, jobs,” Schwarzenegger said.

While the state hashes out a budget deal, cities await the news. In San Francisco, Mayor Gavin Newsom put a stop on some department spending, anticipating deep cuts from the state, according to the Mayor’s Office.

“We’ve planned for a worst-case scenario from the state and are already preparing to make tough spending decisions down the road based on what emerges from Sacramento,” said Newsom spokesman Tony Winnicker.

esherbert@sfexaminer.com

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