Breaking News: Arnold Releases Another Budget Proposal

In a news conference, a frustrated and angry Gov. Arnold Schwarzenegger blasted legislators of both parties for failing to reach a budget compromise ("shameful") and offered another budget proposal. This is unusual. California governors typically release two budget proposals -- one in January, and one in May. But the governor has put forward a compromise plan that includes a temporary sales tax increase -- violating his promise not to raise taxes -- in exchange for budget reforms. He said he was taking a risk: "I'm stepping over the line here," he said.

There was a take-it-or-leave-it feel to the session, which was cut short after four questions. He said it was time for budget "dialogue" to stop. "This is not part of the kabuki or anything like that," said the governor, all but demanding his proposal be passed.

Other highlights:

-Schwarzenegger admitted openly that his first attempt to fix the state's budget problem--the ballot measures Propositions 57 and 58, which were approved by voters in 2004--had been a failure. "This year is coming out clearly that our budget reform that we attempted in 2004 with Props 57 and 58 does not work," he said. 

-The governor's new budget proposal ramps up the size of the rainy day fund. 12.5 percent of general fund expenditures would be put into a budget stabilization account. That would give California the largest reserve in the country, if enacted. In boosting the rainy day fund, he appeared to drop the spending limit (based on an average of the spending increase in the previous 10 years) that had been attached to his earlier proposal At the least, there was no mention of it.

-He blasted Controller John Chiang for issuing paychecks to state workers without the governor's mandated reduction in their pay, a method Schwarzenegger embraced to save cash. "I'm upset about it, and I'm upset that he's not a team player," Schwarzenegger said of Chiang. The controller has argued that the state's computer systems make such a change in payroll impossible, and that such deductions could add to the state's costs when they are paid back.

-He said he would not attend the Republican National Convention if there is not a budget by then. Schwarzenegger is scheduled to speak on the opening night of the convention..

-He predicted that without compromise, the budget fight could go on forever. "We're going to sit here six months from now," he said, if legislators don't change their attitudes.

-He described Tuesday's Big 5 meeting (of the top two legislative leaders of each party, plus the governor), which ended with the Republican Assembly leader storming out, as very difficult. "Don't come to the table with the same stubborn position," he said, adding, "That's what happened yesterday at the Big 5."