Budget-Busted Calif. Welcomes $timulus

The President's $787 billion plan for boosting the economy will help state and local governments struggling to pay their bills. Of the stimulus, $144 billion, close to 20 percent, will go to them. For states like California, the money can't come soon enough.


It may look sunny in California, but there are stormy days ahead, CBS News correspondent Bill Whitaker reports.

After a three-month marathon budget session - the last push had legislators sleeping at their desks - no agreement on how to close a gaping $41.6 billion deficit. The impass has brought construction projects to a halt, state workers are being laid off.

"If we do not pass this budget and tax increase today, the California dream will turn into the California nightmare," said state Sen. Alan Lowenthal, D-Long Beach.

With Democrats seeking tax increases, Republicans spending cuts, the only relief on the horizon is the federal economic stimulus money.

"Around $9 billion will go to the state, and that will make a difference when it comes to state expenditures, but of course it doesn't address our budget issue," said David Crane, a senior economic advisor to Gov. Arnold Schwarzenegger.

California is by far the worst, but 46 states face serious budget shortfalls. All 28 Democratic governors and four Republican governors, including Charlie Crist of Florida, welcomed the stimulus money.

"This is not about partisan politics," Crist said. "This is about rising above that."

But for other GOP governors, it's problematic. While all have shovel-ready projects, some have philosophical objections.

Alaska's Gov. Sarah Palin, Haley Barbour of Mississippi and Bobby Jindal of Louisiana say they might not take the money.

"I've got grave concerns about the amount of money being spent in Washington," Jindal said.

Texas Gov. Rick Perry is mulling it over.

"In Texas, we actually know it's a good idea to look a gift horse in the mouth," Perry said.

Minnesota's Tim Pawlenty says he doesn't like the package, but with a $5 billion deficit, he'll take the money.

"Minnesota, paying way more into the federal government than it gets out - it's okay for us to accept our share," Pawlenty said.

In California, taking the federal dollars is the one thing the Republican governor and almost every other politician can agree on.
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  • Bill Whitaker

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