Schwarzenegger signs late, $145B budget

California Gov. Arnold Schwarzenegger signed a $145 billion state spending plan Friday, two months late and $700 million lighter than the legislature approved.

Billions of dollars in payments to schools, hospitals, state contractors and social service agencies had been held up after the last fiscal year ended on June 30 and the new one began on July 1 without a budget.

Schwarzenegger's office said the spending cuts fulfilled a promise to Senate Republicans to help end one of the longest budget stalemates in 30 years.

"Some things are worth fighting for, and a good budget is one of those things," the Republican governor said. He noted that the state's deficit had been $16 billion when he took office in 2003.

Before signing the new budget on Friday, Schwarzenegger used his veto power to trim the spending plan and temporarily eliminate the state's operating deficit. Republicans considered Schwarzenegger's promise to eliminate the operating deficit as a victory, but the most conservative among them warned that the cuts would at best provide only temporary relief.

California still faces multibillion-dollar deficits through 2011, and depressed housing and credit markets threaten to erode state tax revenues even further.