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Big State Surplus Allows Governor To Reduce Debt Borrowing

Sacramento, CA — Governor Arnold Schwarzenegger is proposing a $115.7 billion state budget that includes $4 billion in previously unanticipated revenue.

Schwarzenegger´s revised budget plan, which was released Friday, provides more money for transportation and local governments but little of the extra funding schools say they deserve.

The plan proposes to use about $230 million of the unanticipated revenue to reduce class size in the state´s worst performing schools.

The governor also wants to provide $57 million more to create incentive pay for teachers who work at underachieving schools and for teachers who improve student test scores.

Thanks to an improving economy and a successful tax amnesty program, Schwarzenegger has been able to close the gap without nearly as much borrowing and at the same time restoring some of the cuts made in the previous budget.