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Schwarzenegger Reconsiders Local Borrowing Plan

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Jun 13, 2009 1:26 pm US/Pacific

Schwarzenegger Reconsiders Local Borrowing Plan

ESCONDIDO, Calif. (AP) ― Gov. Arnold Schwarzenegger is rethinking his proposal to borrow $1.9 billion from city and county governments to help bridge the state's $24.3 billion budget gap.

A spokesman says Schwarzenegger will drop the idea only if lawmakers come up with enough spending cuts to cover the shortfall.

The borrowing has drawn criticism from municipal leaders who say crucial services would suffer. Budget negotiators say repaying the money with interest over three years would worsen the state's long-term financial problems.

Schwarzenegger said after a budget address in Escondido Friday that his finance department is looking for ways to replace any borrowing from municipalities. He says savings could come from cutting foster care services or state employee health benefits.

(© 2009 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)

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