by Deacon Blues
At the end of June, the California State Assembly in a rare bipartisan move approved several pieces of an overall budget deal, only to see Governor Schwarzenegger and the California Senate GOP nix the deal because they said they'd rather have the state issue IOU's than accept less than everything they wanted.
That gross negligence may cost the Governor his stimulus money.
Gov. Arnold Schwarzenegger's budget package, which he has touted as a way to solve the state's entire deficit, has a glitch that may jeopardize $10 billion in federal stimulus funds for California's public schools, colleges and prisons.
Yup, the same package that he and his administration have demanded be approved as one package in a take-it-or-leave-it manner, is now fundamentally flawed and would cost the state $10 billion in blown stimulus money. Why? Because Schwarzenegger failed to approve the funding shifts and other manuevers pushed by the Assembly at the end of June to deal with the problem he faces now.
The flaw in Schwarzenegger's proposal centers on his plan to borrow $2 billion from local governments, which would then be used to pay for education. That move would free up $2 billion in the state's general fund, which carries the $26.3 billion shortfall.
California has done this in the past. But this year, such a maneuver would cause the state to break a minimum-funding rule set by the federal government when it awarded stimulus grants to states. The federal rule is designed to ensure that states use the dollars to stimulate their economies - not to replace dollars cut from their budgets.
Under the rule, California has to spend a certain amount of money on education from its general fund - and the scheme that shifts $2 billion from local governments to schools would reduce the state's education spending below the federal threshold.
Of course, Schwarzenegger had a chance to deal with this at the end of June and avoid the federal compliance problem, if he and his cigar-smoking dunderheads in the Senate GOP had listened to smarter people instead of stomping their feet at the end of June. But no.