The Recorder
By Cheryl Miller
August 21, 2008

SACRAMENTO — Gov. Arnold Schwarzenegger on Wednesday endorsed Democratic proposals to slash $257 million from the judicial branch as part of a larger compromise spending plan aimed at ending the budget impasse.

The governor's plan (.pdf) would postpone funding — for the second time in two years — for improvements to California's beleaguered conservatorship system. It would delay the appointment of 50 new trial court judgeships to July 2009. It would force the judiciary to rely heavily on reserve accounts to pay its bills. And it would cut the judiciary's annual budget-boosting growth rate, costing the trial courts $56 million.

Schwarzenegger also wants overtime laws relaxed so employees can work four 10-hour shifts a week without earning overtime. The governor's plan says nothing, however, about easing meal break rules — something business groups have lobbied hard for but labor unions and employment lawyers have fought this budget season.

Schwarzenegger said he hopes the proposal, which includes a new mix of budget cuts and a temporary one-cent sales tax increase, will entice feuding Democrats and Republicans to finally pass a budget. The 2008-09 spending plan, mired in a $17.2 billion deficit, is now two months overdue.

"It's for me to show, look, I've been against certain things but I'm stepping over the line here, and I am doing things in order to get it done," said Schwarzenegger, who for months has insisted that he would not support a tax increase. "It's a way of compromising."

Legislative Democrats have proposed higher corporate and income taxes to close the budget deficit, but Schwarzenegger said that a three-year sales tax increase is a better idea.

"We've hit that income tax thing now to death," he said. Higher income taxes "are going to run [the wealthy] out of town with their money."

The cuts to the judiciary mirror those recommended by majority Democrats during budget hearings this summer, a Department of Finance official said Wednesday. Officials with the Administrative Office of the Courts say the judicial branch should be able to endure the cuts without significantly harming court operations — but only if they're temporary.

"If we have to consider making permanent cuts that are in the magnitude of those being made this year, that would be problematic," said Donna Hershkowitz, the AOC's assistant director of governmental affairs.

The cuts amount to roughly 12 percent of the judiciary's general fund budget.

The governor's plan received a chilly response from lawmakers on both sides of the aisle Wednesday.

"This proposal is what the governor should have proposed in May, not late August," said Assembly Speaker Karen Bass, D-Los Angeles.

Schwarzenegger's compromise plan insists again that the Legislature give him authority to make unilateral mid-year budget cuts when revenues slip. But majority Democrats have balked at the idea.

Legislative Republicans criticized the governor's sales tax plan.

"Substituting one tax increase for another is not a bipartisan compromise, nor will it solve our long-term budget problems," Assembly Minority Leader Mike Villines, R-Clovis, said in a news release.