Cheryl Miller - 9-17-2008

SACRAMENTO - A new threat to the courts' $5 billion construction plan emerged Tuesday when Gov. Arnold Schwarzenegger vowed to veto "hundreds of bills" if state lawmakers don't rework the $104 billion budget they had approved hours earlier.

Schwarzenegger said he would veto the three-months-late spending plan that he says contains "fake budget reform" and "a flawed rainy day fund." If lawmakers override his budget veto, the governor would retaliate by nixing a large number of the more than 800 bills heading to his desk, he said.

"The only power that I have as governor in this situation is looking at the bills very carefully, every bill, and see which bill will cost more money to the state or which bill is a job-killer," Schwarzenegger said. "I'm not saying every bill [will be vetoed]. I'm saying every bill will be evaluated and hundreds of bills will be vetoed."

Prior to Tuesday's budget meltdown the governor had indicated publicly and privately that he would sign Senate Bill 1407, which would authorize the sale of $5 billion in bonds to pay for upgrades and new construction at up to 40 courthouses.

But the bill's hefty price tag - the bonds would be repaid through $300 million in annual surcharges on civil filings, traffic infractions and criminal fines - would seem a likely veto target for a governor gunning for spending bills. The bill's author, state Senate President Pro Tem Don Perata, might also draw the governor's ire. Perata on Tuesday called Schwarzenegger's veto threat "good public relations but poor leadership."

William Vickrey, the state's administrative director of the courts, said he remains optimistic that the governor will sign SB 1407 if for no other reason than the positive impact a massive construction campaign might have on an ailing state economy.

"This is legislation he has championed," Vickrey said.

A one-year delay in starting construction on the courthouse projects could drive prices up by more than $500 million, Vickrey said, because of ongoing price spikes in building materials.

"I think the governor has been sensitive to the implications of the need to build smarter and faster," he said.

A number of other legal bills are at risk if the standoff between the governor and Legislature continues, including measures to expand dispute-resolution programs and to provide language interpreters in some civil cases.

Schwarzenegger's veto threat capped a couple of wild days of state budget activity that had seen the state Assembly finally approve a spending plan shortly before 2:30 a.m. Tuesday. The budget includes two dozen trailer bills; it was unclear Tuesday afternoon whether the governor would veto all of those measures as well or whether they would even survive on their own if the budget dies.

One of those trailer bills slightly expands the number of high-tech workers that companies can exempt from overtime rules. Silicon Valley companies, hit with a spate of recent multimillion dollar wage-and-hour class actions, lobbied hard for the legislation.

"This legislation contains key clarifications needed to preserve a creative, entrepreneurial workplace for technology companies and professional status for our employees - the engineers, programmers and analysts so critical to California's technology leadership," Jim Hawley, general counsel for the trade group TechNet, said in a prepared statement.

Labor and plaintiff lawyers blasted lawmakers for altering overtime policies in a late-night budget bill that didn't endure the usual vetting process. Some attorneys conceded, however, that the changes could have been far more sweeping.

"My sense is that industry was trying to get much more corrosive changes into law," said Jahan Sagafi, a partner with Lieff Cabraser Heimann & Bernstein.