Schwarzenegger signs California's family silver to help pay off debts

No American politician is getting into the recession-era spirit of cost-cutting more completely than the Californian Governor, Arnold Schwarzenegger, who is inviting citizens to raise dollars for the state by attending a garage sale of its property at the end of August. And who knows, he says: he may autograph a few of bits and bobs to sweeten the deal.

But such money-saving measures – items up for grabs range from office furniture to official cars – will soon be put in the shade: the Governor's pitch comes just as the state appears to be pulling itself from the brink of bankruptcy. He and party leaders in Sacramento have at last negotiated a budget deal that should close a $26.3bn (£16bn) deficit and put the state finances back on track, for now – at the cost of vast cuts to public services.

The draft budget, to be put to a vote in both houses of the state legislature tomorrow, is a painful prescription.

As well as cuts in spending, it includes steps to borrow and shift money to help plug gaps. However, it includes no tax increases and its final adoption this week seems likely. "All around I think it is really a great, great accomplishment," said Mr Schwarzenegger, comparing the negotiations to a Hollywood suspense film.

After earlier efforts to pass a budget failed, officials said that the state could go broke before the end of July and took the unusual and controversial step of printing IOUs for some state contractors and vendors.

While state governments all across the US have been struggling to balance budgets amid the toughest recession since the Second World War, the plight of California, the world's eighth largest economy, has been especially acute. Revenue from personal income tax plunged 34 per cent in the first half of this year. Aside from facing the prospect of running out of cash, it was further humiliated when its credit rating slipped towards junk status.

Mr Schwarzenegger first mentioned the state jumble sale earlier this month. He confirmed it on Monday using Twitter. Some items will be sold on the internet. He appeared to agree,with a suggestion from one of his Twitter followers that signing some of the items could increase their value. (He was once, after all, a Hollywood star.) "That's a great idea," he said.

Under the putative budget deal, public schools, universities and colleges will be bracing themselves for $9bn in cuts. Many state employees will be asked to continue taking three furlough days off a month without salary, equal to a 14 per cent pay cut. The prison system will see its budgets slashed by $1bn. However, an earlier proposal to sell off the San Quentin State Prison and the Los Angeles Memorial Coliseum penitentiary was not included in the deal.

The Governor will be permitted to sell other public properties, including the state fairgrounds. Some state parks will be permanently closed, though not as many as feared.

While the IOUs were still being issued yesterday, they would presumably be replaced by proper dollar payments to vendors and to some taxpayers as soon as Mr Schwarzenegger adopts and signs the new budget.

"This is, of course, one of the most difficult economic times to face our state since the Great Depression, so none of these were easy choices," said Sam Blakeslee, the Republican minority leader of the state Assembly. "I think we selected a path which will lead the state back to the point where we will be strong." The $26.3bn hole amounted to nearly 30 per cent of all spending from the state's general fund. "This is a sober time because there isn't a lot of good news in this budget," said the Senate majority leader Darrell Steinberg, a Democrat. "We have cut in many areas that matter to real people but I think we have done so responsibly."

Among those expected to be hardest hit by the budget are the state's poorest citizens who depend on state programmes to help them with health-care and schooling.

In a victory for Mr Schwarzenegger, the agreement includes provisions for new oil exploration off the coast near Santa Barbara which in theory could swell state coffers by $1.8bn a year once on stream. The move has been fiercely opposed by conservation groups and it will be the first time in more than 40 years that political leaders will have sanctioned new off-shore drilling operations in California.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
sportWWE latest including Sting vs Triple H, Brock Lesnar vs Roman Reigns and The Undertaker vs Bray Wyatt
Arts and Entertainment
Louis Theroux: By Reason of Insanity takes him behind the bars again
tvBy Reason of Insanity, TV review
Arts and Entertainment
Cassetteboy's latest video is called Emperor's New Clothes rap
videoThe political parody genius duo strike again with new video
Arts and Entertainment
tvPoldark, TV review
Have you tried new the Independent Digital Edition apps?
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: Junior Web Designer - Client Liaison

£6 per hour: Recruitment Genius: This is an exciting opportunity to join a gro...

Recruitment Genius: Service Delivery Manager

Negotiable: Recruitment Genius: A Service Delivery Manager is required to join...

Recruitment Genius: Massage Therapist / Sports Therapist

£12000 - £24000 per annum: Recruitment Genius: A opportunity has arisen for a ...

Ashdown Group: Practice Accountant - Bournemouth - £38,000

£32000 - £38000 per annum: Ashdown Group: A successful accountancy practice in...

Day In a Page

No postcode? No vote

Floating voters

How living on a houseboat meant I didn't officially 'exist'
Louis Theroux's affable Englishman routine begins to wear thin

By Reason of Insanity

Louis Theroux's affable Englishman routine begins to wear thin
Power dressing is back – but no shoulderpads!

Power dressing is back

But banish all thoughts of Eighties shoulderpads
Spanish stone-age cave paintings 'under threat' after being re-opened to the public

Spanish stone-age cave paintings in Altamira 'under threat'

Caves were re-opened to the public
'I was the bookies’ favourite to be first to leave the Cabinet'

Vince Cable interview

'I was the bookies’ favourite to be first to leave the Cabinet'
Election 2015: How many of the Government's coalition agreement promises have been kept?

Promises, promises

But how many coalition agreement pledges have been kept?
The Gaza fisherman who built his own reef - and was shot dead there by an Israeli gunboat

The death of a Gaza fisherman

He built his own reef, and was fatally shot there by an Israeli gunboat
Saudi Arabia's airstrikes in Yemen are fuelling the Gulf's fire

Saudi airstrikes are fuelling the Gulf's fire

Arab intervention in Yemen risks entrenching Sunni-Shia divide and handing a victory to Isis, says Patrick Cockburn
Zayn Malik's departure from One Direction shows the perils of fame in the age of social media

The only direction Zayn could go

We wince at the anguish of One Direction's fans, but Malik's departure shows the perils of fame in the age of social media
Young Magician of the Year 2015: Meet the schoolgirl from Newcastle who has her heart set on being the competition's first female winner

Spells like teen spirit

A 16-year-old from Newcastle has set her heart on being the first female to win Young Magician of the Year. Jonathan Owen meets her
Jonathan Anderson: If fashion is a cycle, this young man knows just how to ride it

If fashion is a cycle, this young man knows just how to ride it

British designer Jonathan Anderson is putting his stamp on venerable house Loewe
Number plates scheme could provide a licence to offend in the land of the free

Licence to offend in the land of the free

Cash-strapped states have hit on a way of making money out of drivers that may be in collision with the First Amendment, says Rupert Cornwell
From farm to fork: Meet the Cornish fishermen, vegetable-growers and butchers causing a stir in London's top restaurants

From farm to fork in Cornwall

One man is bringing together Cornwall's most accomplished growers, fishermen and butchers with London's best chefs to put the finest, freshest produce on the plates of some of the country’s best restaurants
Robert Parker interview: The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes

Robert Parker interview

The world's top wine critic on tasting 10,000 bottles a year, absurd drinking notes and New World wannabes
Don't believe the stereotype - or should you?

Don't believe the stereotype - or should you?

We exaggerate regional traits and turn them into jokes - and those on the receiving end are in on it too, says DJ Taylor