U.S. Markets open in 2 hrs 44 mins

California lawmakers set to pass on-time budget

Judy Lin, Associated Press

SACRAMENTO, Calif. (AP) -- California lawmakers are expected to vote Friday on an on-time Democratic spending plan that includes a historic education funding shift to boost the fortunes of school districts with high numbers of poor and minority students while restoring some social services that fell victim to the recent recession.

The new $96.3 billion state budget negotiated by Gov. Jerry Brown and legislative leaders benefits from California's recovering economy and a tax increase approved by voters last fall. It contains a $1.1 billion reserve and pays down some of the "wall of debt" the state accrued during a series of budget crises marked by multi-billion dollar deficits.

Brown will get to claim success in holding the line on spending by demanding that his fellow Democrats use his more conservative revenue projection, rather than what he says are volatile capital gains revenues.

"Look, we have boom and bust; money comes in, money goes out," Brown said this week as he announced the compromise with legislative Democrats. "And I'm trying to be a good, prudent steward of the people's money."

The governor also secured more than $3.6 billion in extra money this year for a K-12 funding formula that will channel additional resources to school districts with high levels of low-income students, those with low English proficiency and foster children.

The governor hopes that redirecting state aid will correct decades of inequality between districts. But advocates for education reform worry that labor-friendly Democrats will avoid attaching rigorous oversight and accountability standards to help close the achievement gap.

"Absent dramatically stronger accountability requirements, it is unknown," what effect the money will have, said Sen. Mark Wyland, R-Escondido, vice chairman of the Senate Education Committee.

Brown said he will not reopen the budget for negotiation but Democratic leaders are hoping to secure additional spending in the new year, when they expect higher tax revenues.

"If there is additional revenue, we can either pay down debt more aggressively or look for other targeted investments to try to, again, make up for some of what has been lost over the last four or five years," Senate President Pro Tem Darrell Steinberg, D-Sacramento, said Tuesday.

Lawmakers have until Saturday to pass a balanced budget for the fiscal year that begins July 1. Democrats, who control the Assembly and Senate, need only a simple majority to pass a budget and can do so without Republican support.

Under the Democratic spending plan, the legislative leaders received funding for their top priorities, including mental health treatment, dental care for 3 million low-income Californians, welfare grant increases and initial funding for a middle-class college scholarship program.

While Brown and fellow Democrats have touted their plan for restoring financial stability, Republicans criticized the package for failing to address many of the state's long-term obligations, such as paying down pension and retiree health care liabilities, or setting aside money in a rainy day fund for the next bust.

They also say the state is no position to resume spending on mental health treatment, dental care for the poor or to increase welfare grants.

"We need to invest in growing the economy, not in growing welfare," Assemblyman Dan Logue, R-Marysville, said in a statement.

Brown was unable to persuade lawmakers to redirect some $750 million a year from the state's enterprise zones program to his proposed sales tax exemption on manufacturing and research and development, a credit for hiring the unemployed and an investment tax credit to encourage businesses to retain jobs.