California Closes Its $26 Billion Budget Gap

The deal was reached late last night in Sacramento between Governor Schwarzenegger and four  key members of California’s legislative body.

California has been in a budget deadlock since February following an impasse between the Democrats, the Republicans and the Governor.

The Golden State was forced to issue IOUs to creditors two weeks ago. The deal reached will avoid a financial meltdown, but closing the enormous budget gap will have dire consequences for education and social services across board.

Considering that Governor Schwarzenegger and Republicans lawmakers refused to raise taxes, the only option to balance the budget was for Democrats to concede & agree on a plan to cut $15 billion out of the budget.

The budget for schools and community colleges will be cut by $6 billion, the one for California State University will drop by $ 3 Billion and the State prison budget will be cut by$ 1.2 billion.

Beside the cuts in education, the new budget deal cuts  Medical, the state health program for the poor, by $1.3 billion. The drastic budget cuts will be a tough remedy for a lot of Californians to swallow, especially for the poor & the middle class relying on social services.

In order to raise state revenue, Governor Schwarzenegger also proposed to increase offshore oil drilling in the area of Santa Barbara despite resistance from some Democrats and environment groups.

Governor Schwarzenegger made the following statement after reaching the deal:

“As you can see, we came to a basic agreement and obviously we are very happy. We’ve accomplished a lot and I want to thank the legislator leaders for hanging in there. It was like a suspense movie.”

A vote by the California legislature is expected on Thursday, the budget requires a 2/3 majority vote in both Houses of the California legislature to pass.