California Lawmakers Terminate Schwarzenegger's Budget Plan

California's Democrat-controlled state Legislature has terminated the Terminator's plans to solve the state's fiscal crisis.

Gov. Arnold Schwarzenegger's double-barreled plan to borrow $15 billion through a bond issue and clamp a spending limit on the state went down to defeat last night as Democrats turned thumbs down on the plan.

According to Reuters, the governor wanted to put the bond and spending limit measures on the March ballot in order to help deal with the nearly $20 billion budget shortfall. The plan ran into a midnight deadline imposed by the secretary of state's office, which said it needed to have the plan in hand in order to prepare ballots for the March elections.

Democratic Sen. Don Perata told Reuters Friday: "The job was too enormous to be conducted in the period [the governor] gave himself. He has failed, but I think he was doomed to fail in the short period of time that he had."

The defeat was Schwarzenegger's first in his almost three weeks in office. He had previously made good on his campaign pledges to repeal a tripling of the state's car tax and a law granting driver's licenses to illegal immigrants.

The matter of an earlier bond issue program had come under fire from the Pacific Legal Foundation (PLF), which filed suit against a bond issue enacted under former Gov. Gray Davis. "The current bond scheme, signed into law by Gov. Davis, does not comply with the California Constitution," according to PLF Attorney Arthur Mark "The state Constitution requires that borrowing of more than $300,000 must be approved by the voters at the polls, except in case of war or insurrection. It does not permit the state to use major borrowing as a way to pay for government's general operating expenses."

A spokesman for a defiant Schwarzenegger vowed in the face of the defeat to press on. Rob Stutzman promised that the governor will put a spending cap on a November ballot. He added that the governor will also defend an already approved $10.7 billion deficit bond facing legal challenge, to ensure California does not run out of cash in June when $14 billion in short-term notes come due.

Deputy Finance Director Mike Genest told reporters earlier Friday that the administration would go ahead with the deficit bond lawmakers approved last summer under Davis. As of yet the Schwarzenegger administration has not explained what they would do if the lawsuit filed by PLF prevents the state from selling either bond issue.

"Today all we did is do the administrative function necessary to formalize and start the process of actually selling the bonds," Genest told reporters. "Now that we've done that, the lawsuit to prevent it is now going to actually kick in."

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