The measure limits legislative spending by requiring the State to spend less than it collects in General Fund revenues. It further requires the creation of a 5% reserve to be used during future economic downturns.

The proposal also requires adoption of a balanced budget and allows the Governor and the Legislature to make midyear adjustments to the State budget during fiscal emergencies.

At the request of Governor Schwarzenegger, the package also included placing a $15 billion general obligation bond on the ballot for approval by the voters. The bond restructures current State debt.

On bipartisan effort toward reform:

“These reforms are a product of the bipartisan budget group that I joined in February. As a group, we authored the first measure to make these meaningful structural budget changes. The components of the final plan closely resemble ACA 1 X5, the bipartisan reform proposal I authored with fellow Democrats and Republicans. While this is a good step toward solving California’s fiscal problems, we still have a lot of work to do.”

“I’m so pleased that the Governor and both parties were able to come together to create meaningful budget reform. I joined the group with the hope that we could create the kind of positive changes we took action on last night. I will continue working to improve California’s fiscal situation both today and in the future.”

On budget reserve, responsible spending, and balanced budget:

“California should never have to contend with the massive budget deficits we are grappling with these days. I believe that limiting legislative spending and requiring the creation of a substantial reserve will help avoid irresponsible budgeting and unacceptable deficits in the future.”

On Proposed General Obligation Bond

“While I would have preferred a bond that was going to be paid off sooner, this one-time deficit bond is significantly shorter and less expensive than the Governor’s original proposal. That’s part of compromising, you don’t get everything you want. I think we should give the voters an opportunity to decide this matter.”

The budget reform measure (ACA 5 X5) was approved unanimously by the Assembly and the bond (AB 9 X5) passed overwhelmingly on a 65 to 13 vote. The State Senate is scheduled to consider both measures today. Upon signature of the Governor, voters will have an opportunity to ratify these proposals on the March 2nd primary ballot.