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Assembly approves most of state budget, which now goes to governor

July 24, 2009 |  3:21 pm

The state Assembly this afternoon approved all but two budget pieces, worth $1.1 billion, of a package that would nearly close the state’s deficit, as lawmakers rejected a plan to borrow transportation money from local governments and one to allow new oil drilling off the Santa Barbara coast.

A hitch over that and education legislation delayed the Assembly in completing its work after a grueling all-night session.

 The Senate approved the budget package shortly after 6 a.m. Assembly members ratified a plan to borrow nearly $2 billion from local government property taxes, to be repaid within three years.

But they declined to approve the bill that would have provided $1 billion a year for two years by borrowing local transportation funding. Legislative aides said the loss of that funding would mean the budget would have a smaller cash reserve.

Gov. Arnold Schwarzenegger may also use his line item veto power to make additional cuts to make up for it. The rejection of the oil bill will mean the budget is an additional $100 million short. It was unclear how the money would be made up.

The governor, who is expected to address reporters after the Assembly finishes voting, will not make a decision on signing the budget bills before early next week because his office must review them, aides said. By 6:30 a.m., the Senate had moved in a slow and painstaking fashion through about 30 separate pieces of legislation in the package to close the historic budget shortfall that has forced the state to send IOUs to residents and businesses.

At one point before dawn, it appeared the budget package was in danger of failure, as legislative leaders struggled for votes on all of the provisions to raid local government funding. But after some arm-twisting by Senate Leader Darrell Steinberg (D-Sacramento) and Minority Leader Dennis Hollingsworth (R-Murrieta), a number of lawmakers from both parties voted for those provisions and the Senate was able to finish its work.

 “We don’t know whether or not we will be back at this,” Steinberg told his colleagues, looking visibly relieved. “We probably will, but I must tell you, we can change California…. We can find common ground more often than not…. Let’s turn this place around.”

-- Michael Rothfeld and Patrick McGreevy in Sacramento