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Schwarzenegger to veto deficit-cutting plan that involves public-transit funds

March 16, 2010 | 11:17 am

Gov. Arnold Schwarzenegger said in a letter to legislative leaders Tuesday that he will not sign legislation that would have cut $1.1 billion from California’s deficit largely by reducing funding for public transit.

The linchpin of the proposal passed by lawmakers was a complicated change in the way gasoline is taxed.

The veto announcement, which comes after Schwarzenegger vetoed the other largest piece of lawmakers’ deficit-cutting package last week, means that Capitol politicians are essentially back at square one in terms of tackling the state’s estimated $20-billion deficit.

Schwarzenegger said he would reject the gasoline tax plan passed by lawmakers because it differed from the proposal he first suggested in January. Specifically, Schwarzenegger's plan would have lowered gas taxes by 5 cents per gallon. The plan Democrats pushed through the Legislature would keep gas taxes at their current level.

Democratic lawmakers said the they doubted oil companies would pass along to consumers the savings projected by the governor. The Democratic plan had left some money in the state budget for public transit. The governor's plan eliminated it entirely. The governor also pressed lawmakers to pass more of his job-creation package, which includes tax breaks for home buyers, businesses and the “green tech” sector.

Senate leader Darrell Steinberg (D-Sacramento) has scheduled a 1 p.m. news conference to discuss the governor’s veto.

-- Shane Goldmacher in Sacramento