It seems that Schwarzenegger and the California state Democrats have reached a budget arrangement that will close the $26 Billion dollar budget gap (finally). The Wall Street Journal reports:

Under the plan, state lawmakers would cut $15 billion in spending. The rest of the gap would be filled by taking funds from local governments and through one-time fixes and accounting maneuvers. The deal must still be approved by rank-and-file legislators, who are expected to vote on it Thursday.

“We have accomplished a lot in this budget,” Mr. Schwarzenegger told reporters after lawmakers struck the deal Monday evening. “We dealt with the entire $26 billion deficit,” he said. . . . As of Friday, the state had issued 153,711 IOUs, worth a total of $682 million. The office of Controller John Chiang said it would need to evaluate the budget proposal before determining when it could stop issuing the warrants.

The good news is that most of this comes in the form of budget cuts and no tax increases. The bad news is that a lot of this is dealt with by borrowing from local governments, shifting funds around in various state accounts and accelerating the collection of other taxes. In other words, this might be a short-gap fix, but this compromise doesn’t really address the long-term needs of the state. The only long term solution is cutting back on social services, especially to illegal aliens and cutting taxes in order to attract new businesses and tax payers. Basically, do what Ronald Reagan did when he was the governor of your former glorious state (I’m from California and it will always have a tender spot in my heart, but I’d never move back).

Of course union members every where are already outraged by the budget compromise.

“It’s not a viable situation. As far as we’re concerned, we do not have a functioning state government,” said Sheila Jordan, superintendent of Alameda County schools, one of the state’s largest at about 225,000 students, which has already seen sharp cuts.

“Class sizes go up, programs are being shut down, there are not enough supplies. Wherever you look, whatever we’re doing, we’re cutting back enormously,” Ms. Jordan said.

Don’t let Ms. Jordan fool you, this is not about supplies and class sizes, this is about teacher salaries and protecting the union.