Arnold, Dems End Budget Impasse

(AP)  Gov. Arnold Schwarzenegger and legislative leaders have agreed on an estimated $103 billion budget for California, ending a 26-day standoff and overcoming a rift that widened after the Republican governor ridiculed state Democrats as "girlie men."

While the agreement reached Monday still needs approval from two-thirds of the Legislature, lawmakers are expected to embrace the compromise spending plan. A vote is expected later this week.

With billions of dollars in borrowing and one-time savings, the plan contains little of the cuts the governor wanted in January — but Schwarzenegger shrugged off criticism, saying the process has produced a fair and workable plan.

"We were shooting for doing the best job for the people of California, and I think we have accomplished that," Schwarzenegger said at a late night news conference that capped an arduous day of almost nonstop negotiations.

The month-long impasse had hurt much of the bipartisan goodwill that marked the first months of Schwarzenegger's administration and proved to be the one area where the governor's exuberance and charm failed to deliver a swift victory. A promise to achieve an on-time budget was one of the few major priorities the governor has stumbled on in his first year.

"I said many times, when I was lifting weights and shooting for a 500-pound lift and maybe ended up at 495 — I was still happy to get it done," he said.

Indeed, Republicans point out that the budget imposes no new taxes and may bring future savings through changes in the way the state does business.

Democrats, on the other hand, got Schwarzenegger to back away from deep cuts to health and welfare programs by using billions of dollars in loans and one-time savings to close a spending gap estimated in January at US$17 billion.

The two sides have agreed on reforming local government financing — an issue that had stalled negotiations for much of the last month.

The agreement ends what has been Schwarzenegger's rockiest patch in office and help heal the wound caused earlier this month when the Republican governor, frustrated by the negotiations, ridiculed Democrats as "girlie men" beholden to special interests.

By Tom Chorneau