ARNOLD MAY SIGN BUDGET BY JULY 1 GOVERNOR, LEGISLATURE CLOSE TO DEAL.

Byline: David M. Drucker Sacramento Bureau

SACRAMENTO - Expressing confidence the job will get done, Gov. Arnold Schwarzenegger urged lawmakers Tuesday to pass a state budget in time to meet the June 30 constitutional signing deadline but left little room for negotiations and repeated his opposition to higher taxes.

The Republican governor dismissed Democrats' criticism of the deals he made with local officials and educators to save the state money now, saying the agreements will not be renegotiated - including one that cuts $680 million from California public universities next year.

``I'm confident that in a short period of time we will have a budget,'' Schwarzenegger said, describing the Legislature's progress as an encouraging improvement over previous years.

``You have to understand: This is a miracle,'' he told reporters during a Capitol news conference. ``Because when you look at the history of this budget they've dragged into September. That's what they're used to. And now all of a sudden you're talking about June.''

The Legislature failed to meet its constitutional deadline for passing a budget by midnight Tuesday just as it has for the past two decades.

But legislative leaders insisted they will deliver a budget for the governor to sign before the 2004-05 fiscal year begins July 1.

Also on Tuesday, Schwarzenegger confirmed that his administration is close to signing new revenue-generating gaming compacts with at least four American Indian tribes that have Las-Vegas style casinos. In addition, he announced his opposition to a November ballot measure that would allow a select group of card clubs and race tracks in heavily urban areas to install slot machines.

Budget impasses have become commonplace in Sacramento. The current year's budget was not signed by former Gov. Gray Davis until Aug. 2, and last year's budget was not inked until Sept. 5, 2002.

On Tuesday afternoon, Schwarzenegger and the four top legislative leaders - dubbed the ``Big Five'' - met for the first time as part of the current budget talks. Despite unresolved differences, Democratic and Republican leaders emerged from the discussion optimistic that a budget will arrive on Schwarzenegger's desk before June 30.

``We're as close as one can be to putting a deal together,'' said Assembly Speaker Fabian Nunez, D-Los Angeles. ``It seems to me that in the next couple weeks, we'll have a budget.''

In remarks made during his news conference, the governor indicated his desire to impress upon lawmakers the need for a timely budget that preserves the deals he made with groups that agreed to spending cuts in the next fiscal year in return for more money in later years.

Schwarzenegger made pre-emptive budget deals with officials of the California State University and University of California systems, coalitions representing local governments and K-12 public education, state trial courts and the Howard Jarvis Taxpayers Association, which dropped its legal challenge to the administration's plan to issue pension-obligation bonds in exchange for a promise to pursue pension reform.

``We stay with those deals. There will be no changing of those deals,'' Schwarzenegger said.

State Senate President Pro Tem John Burton, D-San Francisco, took issue with that statement, and said upon exiting the Big Five meeting that all of his deals are subject to legislative approval.

``He also, I believe, understands that the Legislature has the right to accept, reject or modify any proposals made to us by anybody - whether it's the governor or anyone.''

Lawmakers have voiced disagreement with the deal on higher education which would result in enrollment caps, less money for outreach programs and tuition hikes - although enrollment funding would increase beginning in 2005-06 as would the amount of money the state's two university systems use to fund their overall operations.

Democratic leaders emerged from the Big Five meeting determined to get the governor to give in on that point.

State Treasurer Phil Angelides slammed Schwarzenegger for asking students to contribute to solving the state's budget problems without asking the wealthiest 1 percent of Californians to do the same, and unveiled a radio ad that began running Tuesday in the Sacramento market.

It was recorded by Randy Jackson, a judge on TV's ``American Idol,'' and urges voters to pressure Schwarzenegger to restore funding for higher education.

``For me, this investment in higher education is the most critical pivot point in this budget,'' Angelides told reporters during a morning news conference, when asked if such funding should take precedence over restoring cuts that would affect health care and welfare programs for the poor.

Republican leaders appear unequivocally supportive of Schwarzenegger. They complimented him for calling a Big Five meeting and complained only slightly of the Legislature's inability to meet the June 15 deadline - a fact they blamed on majority Democrats.

David M. Drucker, [phone]

david.drucker(at)dailybulletin.com

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