Update 3:52 p.m.: Budget passes both houses of legislature

After an opening fiery partisan debate, California’s legislature approved a $96.3 billion budget bill Friday and lawmakers were zipping through more than 20 trailer bills that implement the plan.

Both houses approved AB110 on party-line votes: 28-10 in the Senate and 54-25 in the Assembly.

The budget included historic reforms to public school funding and $5 billion to repay debt the state owes, including $2 billion to public schools.

Republicans in both houses criticized the plan for failing to pay down more of the state’s debt and for keeping the state’s growing pension liabilities off the ledger.

Asm. Jeff Gorrell (R-Camarillo) said the plan relied too heavily on temporary taxes voters approved with Prop 30 and that it contains additional spending that will come back to hurt the state once the higher sales and income taxes passed by voters last fall expire.

"We will have to make cuts again," Gorell said. "With this budget, we have positioned ourselves perfectly to repeat the mistakes of the past."

In one particularly pointed exchange,  San Bernardino Assemblyman Tim Donnelly (R- Twin Peaks) said the budget doesn’t account for billions California owes the federal government for unemployment payments.

“If last year’s budget was a big fat lie,” he said, “this year’s budget is a big white lie.”

Assembly Speaker John Perez (D-L.A.) called the criticism “hollow rhetoric” that ignores how much of the state’s debt was incurred under Governor Arnold Schwarzenegger’s Republican administration. He said California’s situation has stabilized now that Democrats no longer need Republican votes to pass a budget.

“The beginning of responsible budgeting in this state came when we moved to a simple majority — consistent with 47 other states — to pass a budget and when we elected a governor who was not afraid to govern.”

The Democrats' budget boosts overall spending for public schools and directs more of it to disadvantaged students and districts where they comprise more than 55 percent of the student body.

The plan also increases funds to California’s public universities by $500 million, $15 million of  which is slated to expand UC Riverside’s medical school from a 2-year to a 4-year program.

Among the objections raised by Republicans and even some Democratic lawmakers was a funding shift agreed to by the governor that transferred $500 million from an account funded by industry fines that is supposed to pay for the state's efforts to reduce greenhouse gas emissions. The money instead is being lent to the state's general fund.

Similar internal transfers from years past have left the state owing billions of dollars from its general fund to a variety of state programs. Republicans said this budget makes too little headway in repaying that money and in addressing the state's longer-term debts, primarily pensions and retiree health care obligations.

Republican Sen. Ted Gaines, of Rocklin, also noted that the state will be challenged to pay for the governor's high-speed rail and water-delivery projects, which have a combined price tag approaching $100 billion.

He asked lawmakers to think of the long term "so that we can grow the economy fast enough so we can address the unfunded obligations that we have."

Update 12:14 p.m.: State Senate passes budget

The state Senate has passed a $96.3 billion Democratic spending plan amid sharp party divisions over whether it will lead to future problems for California's budget.

The Legislature has until midnight Saturday to send the governor a balanced budget, but the plan was expected to get majority votes in both houses on Friday.

It passed the Senate on a party-line, 28-10 vote, and was to be voted on later by the Assembly.

Republicans spoke against the plan, which was agreed to by the Legislature's Democratic leadership and the governor's administration earlier in the week.

They said it contained accounting gimmicks and failed to address some of the state's most pressing fiscal time bombs, including tens of billions of dollars in unfunded public employee pension liabilities.

Republican Assemblyman Jeff Gorell of Camarillo also said it contains additional spending that will come back to hurt the state once the higher sales and income taxes passed by voters last fall expire.

He says Democrats have positioned the state "to repeat the mistakes of the past."