California budget compromise takes from the poor, gives to the rich

In his 2008 state-of-the-state speech on January 8, Schwarzenegger proposed substantial cuts on education, health, emergency services, and veteran services to make up the bulk of the deficit, then expected to come in at $14 billion. The Governor also demanded the power to impose budget cuts in the middle of a fiscal year, a budget cap and a rainy day fund. A portion of tax receipts would be set aside during boom years in anticipation of recessionary years.

The Governors speech last January officially opened up the debate on the budget. California Democrats control 60 percent of the legislature and Republicans control 40 percent. California law requires a two-thirds majority to pass the budget. This means that the final budget cannot be approved without the votes of both Democrats and Republicans.