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Governor Arnold Schwarzenegger´s budget is perilously linked to a variety of bond issues that could fail at the ballot box and in the Legislature.

And Wall Street analysts are warning today that such a failure would topple the governor´s financial rescue plan and further damage the state´s battered credit ratings.

The governor himself also wasted no time sounding the alarm. Before unveiling his spending vision for the 2004-05 fiscal year beginning July 1st, he urged Californians to help him through this year first.

He touted his $15 billion California recovery bond to “get rid of billions of dollars in inherited debt.” The budget proposed by Governor Schwarzenegger would have state colleges cut courses, limit financial aid, eliminate outreach programs and student fees would rise for a third year in a row.

Education is the single largest expense in the state budget, totaling about half of the state´s $99.1 billion spending plan.

Schwarzenegger announced Thursday that he had struck a deal with education to give K-12 schools about half of the increase they are owed under Proposition 98. hat was the voter-approved initiative that guarantees state spending on education.

At the university level, undergraduate fees would increase 10 percent and 40 percent for graduate students. The plan also lowers the amount of financial aid available to middle-income students.

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