California's Budget Battle Now Down to Endgame

Legislators, Governor Poised to Lock in $104.3 Billion Deal

The prolonged battle over California’s fiscal 2009 budget was nearing a close this week, as Gov. Arnold Schwarzenegger and state lawmakers appeared poised to complete an agreement that would avoid a threatened gubernatorial veto.

The Republican governor had vowed to reject a version approved by both houses of the Democratic-controlled legislature passed earlier in the week, saying it failed to create the kind of “rainy day” fund he has been seeking and would require either big tax increases or education budget cuts next fiscal year.

Faced with uncertainty that they could muster the votes to override the veto, the state’s four top legislative leaders agreed to changes in the $104.3 billion spending plan that, among other things, would set limits on when the state’s rainy-day fund could be tapped. At week’s end, the deal appeared...