SACRAMENTO—Gov. Arnold Schwarzenegger will line-item veto hundreds of millions of dollars in state spending this morning as he signs a budget package aimed at bringing California's deficit-riddled books into balance.
State lawmakers passed the spending package after an all-night session last week. They made deep cuts across all state services, especially in the biggest areas -- education, healthcare, prisons -- and also relied on billions of dollars in accounting maneuvers and borrowing.
"That effectively wiped out the state's reserve," said Schwarzenegger spokesman Aaron McLear. "The governor will be making cuts to the state budget to build up that reserve as much as possible."
Further cuts to education funding threaten to run afoul of federal guidelines and state law. Deeper prison reductions are politically unpalatable. So health and welfare advocates are bracing for even more cuts.
Anthony Wright, executive director of Health Access, an advocacy group, lamented that the budget plan as is would already "be the biggest rollback of coverage in state budget history."
McLear said Schwarzenegger would not veto enough spending to reach the full $1.1 billion.
"There are few choices left," McLear said. "Obviously the cuts are going to be very difficult."
Since July 2, California has issued 201,783 IOUs worth $1.07 billion instead of paying some bills, according to Garin Casaleggio in the state controller's office.
Once the budget legislation is signed, California finance officials must sell the proposal to Wall Street to begin the flow of routine borrowing and stop issuing IOUs. That process will lask least a week, the controller's office estimates.