Top California lawmaker aims to tap rainy-day funds

By Jim Christie

SAN FRANCISCO (Reuters) - A top California lawmaker on Tuesday countered Gov. Arnold Schwarzenegger's budget plan that would slash spending and scrap various programs to fill a $24.3 billion gap with a proposal that requires spending cuts but also taps reserves to help narrow the deficit.

Revenues of the most populous U.S. state have plunged amid recession and rising unemployment, swelling the budget gap and forcing state officials to agree to some form of austere budget for the fiscal year beginning in July.

Schwarzenegger, a Republican, has urged dramatic spending cuts that would include eliminating the state's welfare program, a proposal too severe for Democrats who control the state's Legislature.

They agree there is a need to pare spending but would use rainy-day funds to keep the welfare program and other human-services programs in business, State Senate President Pro Tem Darrell Steinberg told reporters.

"The purpose of a rainy-day fund is to provide reserves for a rainy day," Steinberg said. "It is thunder and lightning in California right now."

Steinberg would cut $13 billion in spending and use up to $4 billion of the estimated $4.5 billion reserve that Schwarzenegger has in his budget plan to help fill California's budget shortfall.

Additionally, Steinberg said he aims to have a budget through the Legislature by the end of this month and that it would not include borrowing $2 billion from local governments as Schwarzenegger's plan proposes.

"We are not going past July 1. We're getting it done. We have to," Steinberg said.