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California lawmakers pass budget deal

By Michael Martinez, CNN
California Gov. Jerry Brown had veteod an earlier budget plan, forcing lawmakers to craft a new bill.
California Gov. Jerry Brown had veteod an earlier budget plan, forcing lawmakers to craft a new bill.
  • California lawmakers pass main portions of budget deal
  • The state's $26 billion deficit would be cut to $5 billion under the proposal
  • The plan calls for massive cuts to human services, education and courts
  • Democrats and the governor drafted the budget deal over Republican objections

(CNN) -- California lawmakers passed a budget bill Tuesday night that will reduce the state's monetary shortfall from $26 billion to $5 billion, officials said.

Both houses of the state's legislature passed the main portions of the budget after hours of committee meetings.

The Senate was still grappling with the education section of the deal late Tuesday, but the measure was expected to pass early Wednesday and go on to Gov. Jerry Brown for his signature.

"Democrats in the California State Legislature made tough choices and delivered an honest, balanced and on-time budget," Brown said in a statement. "(It) contains painful cuts and brings government closer to the people through an historic realignment. Putting our state on a sound and sustainable fiscal footing still requires much work, but we have now taken a huge step forward."

The deal, brokered by the governor and Democratic leaders over Republican objections, calls for massive cuts: $5 billion to health and human services, $1 billion to the corrections department, $650 million to the University of California system, another $650 million to the California State University system and hundreds of millions to the court system, officials said.

Brown warned it contains "tough decisions," but said "we have a very good plan for the budget."

The proposal also assumes $4 billion in additional revenue from a rebounding economy. That estimate is based on the state seeing that amount of additional revenue in the fiscal year ending this month, Brown said.

But if the recession-stressed economy falters and those revenues don't materialize over the next year, additional cuts will be enforced -- including eliminating a week from the school year and cutting the state funding for local school busing programs, according to Alicia Trost, press secretary for Senate President Pro Tem Darrell Steinberg.

Democrats were confident that the budget would be approved Tuesday, since the party controls both the Assembly and the Senate, and under a voter-approved measure last year, legislators can now pass a budget with a simple majority -- no longer needing a two-thirds majority, Trost said.

The proposal called for $85.9 billion in spending, down from $91.4 billion, Trost said.

Republicans criticized the budget measure. They had sought a spending cap, public pension changes and regulatory reform.

The proposal is a shift for Brown, who has said for months that the state's $26 billion budget gap should be addressed with a mix of spending cuts and extensions on taxes that are scheduled to expire Friday. He also was determined to fulfill his pledge to put the extension of personal income and sales taxes before the voters.

But Brown could not convince four Republicans to join him so he could get the tax extension on the ballot this fall. A budget containing a tax hike needs the support of two-thirds of lawmakers.

Still, Brown and fellow Democrats plan to put a tax measure on the ballot in November 2012 through a voter initiative -- bypassing the requirement for Republican consent -- and those funds would address the remaining deficit, Trost said.

In their criticism, Republicans accused the Democrats of being compromised by special interests such as public employee unions.

"While Democrats may still use legally questionable maneuvers to raise taxes, the simple truth is because of Republicans' resolve, temporary tax increases will expire this Friday and the average California family will save nearly $1,000 per year," said Assembly Republican Leader Connie Conway.

"Californians deserve a government that understands that money belongs to the people, not the government," she said. She added that Republicans' "steadfast opposition to higher taxes has helped remind Sacramento tax-and-spend liberals of the need to live within our means."

The latest proposal was put together less than two weeks after Brown vetoed a budget approved by the legislature, saying it was chock full of gimmicks and contained legally questionable maneuvers.

Lawmakers had raced to pass a spending plan by June 15 to meet a voter-imposed deadline that required the legislature to pass a balanced budget or forfeit their pay.

However, state controller John Chiang determined that the budget was actually unbalanced. So lawmakers, who earn $95,291 a year and $142 per diem for each day they are in session, have gone without pay since mid-month.

CNN's Kim Hutcherson contributed to this report