ON-TIME BUDGET NO SURE THING SNAGS COULD STILL THWART ARNOLD'S PLANS.

Byline: Harrison Sheppard Sacramento Bureau

SACRAMENTO - Gov. Arnold Schwarzenegger remains adamant that the Legislature pass the state's first on-time budget in 18 years, but, with little more than a week to go before the June 15 legal deadline, he faces tough battles on many fronts.

Schwarzenegger negotiated budget deals with constituency groups first, rather than legislators, offering them short-term pain for long-term promises of stability, in an effort to pressure Democratic legislators into accepting his proposals.

As legislators have pored over the budget line by line, they have made clear the governor still has to cut a deal with them.

``I think those agreements will be taken into account, but we'll have our own negotiations with the governor,'' said Sen. Wes Chesbro, D-Santa Rosa, chairman of the budget conference committee.

On higher education, in particular, Democrats are threatening to block some of Schwarzenegger's proposed cuts, which they say threaten to deny higher education to qualified students for the first time in decades.

Other areas of disagreement include his deal with local governments, cuts to health and human services and his plan to issue pension obligation bonds.

Some legislators have also talked about holding up the budget to pressure the governor on the issue of driver's licenses for immigrants, although that idea has lost momentum recently.

If legislators block the governor's higher education cuts, analysts said, some of his other compacts with constituency groups could be jeopardized.

``The compacts are a double-edged sword,'' said Barbara O'Connor, director of the Institute for the Study of Politics and the Media at California State University, Sacramento.

``You can pre-empt a lot of lobbying if the compact holds. This (higher education) is the first one that's starting to unravel, and it's unraveling for a whole set of (reasons). But if he loses this one, the others are likely to unravel, too.''

The Legislature's constitutional deadline for passing a budget is June 15, and the governor's deadline for signing it is June 30. The last time the Legislature met its deadline was in 1986, and the last time the governor met his was in 2001.

Schwarzenegger has said he remains optimistic the budget can be passed on time, according to administration officials.

But this year there may be additional consequences to a late budget, adding to the pressure on state officials, according to taxpayer advocates.

Last year, the Howard Jarvis Taxpayers Association won a California Supreme Court case which said that, if the budget is late, the state will have to restrict spending on most of its general-fund programs and pay its employees only the federally-mandated minimum wage.

That means a delay by the Legislature past June 30 without an interim spending plan could lead to a near-shutdown of state government, said Jarvis president Jon Coupal.

``The consequences of a budget stalemate are far more serious this year than they've ever been in previous years.''

While the Legislature's technical deadline is June 15, some lawmakers are looking more toward the end of the fiscal year.

``I think the real deadline is June 30,'' said Assemblyman Darrell Steinberg, D-Sacramento, chairman of the Assembly Budget Committee. ``That's the real deadline. I'm not going to make predictions. We're going to work hard at it, and approach it in good faith, do the best we can.''

However, H.D. Palmer, spokesman for Schwarzenegger's Department of Finance, said the governor believes the Legislature should act by June 15 as legally required.

Sen. Tom McClintock, R-Thousand Oaks, one of the state's most fiscally conservative legislators, said he thinks the state will perpetually have late budgets until there are fundamental changes, including restoration of a tough spending limit that was state law from 1979 to 1990 and restoring the governor's authority to make mid-year cuts.

``I've lost a lot of money over the years betting on when the Legislature is going to produce a budget,'' McClintock said. ``I think the prospects are better now than they have been in many years, but don't forget the Legislature hasn't met its constitutional deadline since 1986.''

Harrison Sheppard, [phone]

harrison.sheppard(at)dailynews.com