GOVERNOR REVISING BUDGET FOR EVERY GENERAL-FUND DOLLAR, 44 CENTS WILL GO TOWARD PUBLIC EDUCATION.

Byline: David M. Drucker Sacramento Bureau

SACRAMENTO - Gov. Arnold Schwarzenegger today will unveil a revised budget that allocates almost half of general-fund revenues to public education and seeks to reduce borrowing while whittling down a multibillion-dollar deficit.

Administration officials said Thursday 44 cents of every general-fund dollar is being allocated to K-12 schools and community colleges, with an undisclosed amount of money being reserved for some form of merit pay for public school teachers. The increase goes beyond the $50 billion Schwarzenegger proposed for schools in January.

Also, 1.6 cents of every general-fund dollar will be allocated to transportation. The governor has already announced a plan to spend $1.3 billion of the approximately $2.5 billion in unanticipated tax revenues on traffic-relief projects in the 2005-06 fiscal year.

``If anyone is trying to make the claim that this budget is favoring transportation at the expense of education, I think this comparison fairly puts that argument to rest,'' Schwarzenegger's chief budget spokesman, H.D. Palmer, said.

Schwarzenegger will also propose reversing an environment-related cut he recommended in January, and ask the Legislature to approve $12.6 million in funding for the Carl Moyer Program, which uses state money to reduce air pollution.

The program pays to remove polluting vehicles from the road and upgrade to current environmental standards old diesel truck engines and agriculture equipment that belch dirty exhaust into the air.

Schwarzenegger, saying he is being responsible with taxpayer dollars, is expected to propose reducing the amount of money the state would borrow via Proposition 57 deficit-recovery bonds as it attempts to maintain spending while plugging a budget gap that has been estimated at around $8.6 billion.

``It is wrong for our state to continue spending more money than it takes in,'' he said this week.

Democratic leaders remain critical of the Republican governor's budget - which will increase from the $111.7 billion plan unveiled in January - saying it does not spend enough money on the Proposition 98 funding guarantee for education or health care and welfare services for the disabled, elderly and poor.

Assembly Speaker Fabian Nunez indicated a budget is unlikely to reach Schwarzenegger's desk by the June 30 constitutional deadline if he declines to loosen the reins on spending on such programs.

``We're pleased that the governor has reversed his position and joined us in making transportation funding a priority,'' Nunez, D-Los Angeles, said in a statement released by his office late Wednesday.

``We are hopeful that this is a sign he will also abandon his cuts to education, as well as to programs for seniors and the safety net, and make next year's deficit smaller. If that's the case, we will have an on-time budget on his desk in a matter of weeks.''

Schwarzenegger Press Secretary Margita Thompson dismissed criticism of the administration's fiscal decision-making, spending on public education, transportation and health and human services for the needy. All increase in the governor's budget blueprint.

``The governor was elected to get the state's fiscal house in order,'' Thompson said. ``You need to balance the books so you can rebuild in future.''

David M. Drucker, [phone]

david.drucker(at)dailybulletin.com