Schwarzenegger risks IOUs, credit downgrades for budget, pension reform

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AP Photo/Rich Pedroncelli

Gov. Arnold Schwarzenegger discusses the legislature's failure to pass a state budget plan, during a Capitol news conference in Sacramento, Calif., Wednesday, Sept. 1, 2010. File photo.

Governor Arnold Schwarzenegger said Wednesday he'll go to the mat for budget and pension reforms — even if it delays the passage of a state budget and forces California to issue IOUs.

Governor Schwarzenegger said he's willing to risk the short-term fallout of a late state budget to get certain reforms included in that spending plan. Schwarzenegger wants legislators to cap state spending, change how the state taxes residents and reduce the state's pension costs. Changes the legislature's rejected.

"The legislature has done this year after year," said Schwarzenegger. "They don't come in to negotiate until July 1 and then they say, 'Look governor, we don't have enough time. We got to get this budget done – so let's not talk about the reforms. Let's not change anything. Let's just do the budget and get out of town.' Sometimes I did that. But you know something, the time is over now."

The governor said the reforms he’s fighting for will make California's future budgets far more manageable.

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