SACRAMENTO - Gov. Jerry Brown signed the budget into law Thursday on time and balanced, but without fanfare.

The terse signing ceremony, on the final day of the fiscal year, capped a long and arduous path to closing a $26.6 billion deficit that will mean significant cuts in government services and no tax extensions.

Brown was flanked by Assembly Speaker John Perez, D-Los Angeles, and Senate Leader Darrell Steinberg, D-Sacramento, who pushed through the $86 billion budget on a newly allowed majority vote by Democrats after negotiations with Republicans failed.

"This is an honest but painful budget that returns California's General Fund spending to levels unseen since the 1970s," Brown said in a statement.

"We've cut our deficit by $15 billion and achieved financial balance this year," he added. "This is a huge step forward. But California's long-term stability depends on our willingness to continue to pay down debt and live within our means."

Belt tightening and painful retrenching will reach across the state. The poor, elderly and disabled will take a huge brunt from billions of dollars in cutbacks; universities and colleges are bracing for hundreds of millions of dollars in cuts that will force higher tuitions and tighter enrollment standards; dozens of state parks are targeted for closure.

Though schools maintained the same level of funding as last year - $49 billion - the state deferred $3 billion in payments to schools, and may require further cuts if projected revenues don't materialize.


The budget assumes $4 billion in additional revenues - on top of $6.6 billion of extra cash that came into the state's coffers from upper income earners' taxes.

If the revenues do not materialize by the end of the year, a "trigger" mechanism will require the state to make as much as $2.5 billion in cuts early next year - including $1.5 billion for schools.

The Democratic-controlled Legislature had to weather a veto and state Controller John Chiang's decision to withhold legislators' paychecks, which ultimately saved taxpayers nearly $600,000.

Lawmakers lost about $5,000 each in pay, but cobbled together a revised budget less than two weeks after the veto.

"Today's signing marks the conclusion of one of the more memorable budget processes in recent memory," Perez said in a statement. "Democrats have made the tough decisions necessary to help get control of our finances by eliminating more than 75 percent of our structural deficit."

Perez vowed to "continue to press the case for new revenues."

Democrats and labor leaders are expected to pursue new initiatives to raise taxes, which won't likely be limited to the extension on sales, income and vehicle taxes sought by Brown. Labor and other groups have raised the possibility of putting forward taxes on the wealthy, oil companies and others.

The governor tried for nearly a half year to bring Republicans along on his plan to extend taxes. A handful of Republicans had been in talks over possible rollbacks to pensions, regulations and a cap on spending, but an agreement was never reached.

In fact, many were happy that a deal was not struck because it meant that taxes would drop back to pre-2009 levels July 1, the first day of the new fiscal year.

Assembly Republican Leader Connie Conway, R-Visalia, claimed credit for blocking tax extensions.
"We are here to celebrate the fact that Independence Day is coming a little early for taxpayers this year,"

Conway said at a news conference at a Sacramento Ford auto dealer. "It's in the form of much needed tax relief and it's a result of Assembly Republicans standing together to protect the only special interest group we represent, and that's the hard working taxpayers.

"Democrats and the tax and spend lobbyists have been pressuring all of us greatly to raise taxes by $58 billion, but despite their efforts we kept politicians out of their wallets."