Arnold Schwarzenegger says Democrats are wasting time on flawed budget plans

SACRAMENTO —  With only days before the state begins issuing IOUs, Gov. Arnold Schwarzenegger scolded Democrats Monday for “wasting time” on budget fixes he won’t support while they accused him of making unreasonable demands.

Democrats in the state Senate passed proposals to balance the state’s books with the help of $2 billion in new taxes. But Schwarzenegger had already promised to veto the plan, which the Assembly approved Sunday night.

“I will never sign those kind of things, so why waste the time and why run out of time and then all of a sudden we have to hand out the IOUs?” Schwarzenegger told reporters.

“We are on the brink,” said Sen. Denise Moreno Ducheny (D-San Diego) during the Senate floor debate. “. . . We’re passing it to make sure that we’ve done our job,” she said.

California will begin issuing IOUs for some of its bills Thursday, according to Controller John Chiang.

Democratic leaders used a series of legal maneuvers to push the levies through without the GOP votes normally required to raise taxes. The package includes a tax increase of $1.50 per pack of cigarettes, a new 9.9% extraction tax on oil companies, a $15 vehicle license fee surcharge to fund state parks and a new charge on homeowner insurance premiums to pay for emergency response systems.

Schwarzenegger has drawn several lines in the sand: He says he will not raise taxes, wants to address California’s entire projected $24-billion deficit at once and wants a number of fundamental changes to state government.

That stance does not sit well with the majority Democrats.

“I’ve never quite heard of a negotiating strategy that says, ‘I want $24 billion my way, and I want all my reforms over the next 37 hours,’ ” Senate President Pro Tem Darrell Steinberg (D-Sacramento) said in an interview Monday. “That’s not helpful.”

Steinberg said Democrats would be willing to meet Schwarzenegger “more than halfway,” even on a deficit-reduction plan without taxes. No such plan has been publicly released by the Democrats.

Steinberg, meanwhile, was pressing Senate Republicans on Monday evening to agree to cut roughly $3 billion from education and push other education costs into the future. The Senate planned to meet into the night to consider that proposal, which was approved last week on a bipartisan vote of the Assembly but blocked by Republicans in the Senate.

Schwarzenegger has promised to veto that plan as well, calling it a “piecemeal approach.”

It must be signed into law by midnight tonight or the potential savings expire with the end of the fiscal year.

Meanwhile, some looming budget cuts were already being prepared. Regulators on Monday voted to freeze enrollment, starting in mid-July, in Healthy Families, the state’s decade-old health program for the poor.

The decision could deny coverage to nearly 350,000 children around the state over the next year if money cannot be found to enroll them.

Advocates hope that the state’s First 5 program, which collects nearly $600 million each year in tobacco taxes for children’s programs, can ride to the rescue. In December, First 5 provided $17 million in funding to help the Healthy Families program stave off cuts.

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shane.goldmacher@latimes.com

Times staff writer Eric Bailey contributed to this report.