Defeat is sharp rebuke to governor, Legislature Bitter defeat: Voters send strong message to governor, Legislature

A voter marks his ballot in the basement of City Hall in San Francisco on Tuesday, May 19, 2009. A voter marks his ballot in the basement of City Hall in San Francisco on Tuesday, May 19, 2009. Photo: Paul Chinn, The Chronicle Photo: Paul Chinn, The Chronicle Image 1 of / 8 Caption Close Defeat is sharp rebuke to governor, Legislature 1 / 8 Back to Gallery

California voters soundly rejected a package of ballot measures Tuesday that would have reduced the state's projected budget deficit of $21.3 billion to something slightly less overwhelming: $15.4 billion.

The defeat of the measures means that Gov. Arnold Schwarzenegger and the state Legislature will have to consider deeper cuts to education, public safety, and health and human services, officials have said.

Propositions 1A through 1E - which would have changed the state's budgeting system, ensured money to schools in future years and generated billions of dollars of revenue for the state's general fund - fell well behind in early returns and never recovered.

The only measure that voters approved was Proposition 1F, which will freeze salaries of top state officials, including lawmakers and the governor, during tough budget years.

In a written statement Tuesday night, Schwarzenegger said that he believes Californians are simply frustrated with the state's dysfunctional budget system.

"Now we must move forward from this point to begin to address our fiscal crisis with constructive solutions," the governor said.

Senate President Pro Tem Darrell Steinberg, D-Sacramento, said voter rejection of the propositions reflects the fact that people are facing difficult economic times and he is prepared to return to the budget negotiating table today.

"We're going to get right to work ... and finish by June 30," before the new fiscal year begins, he said. "It's not going to be a long, hot summer."

Opponents of the measures on Tuesday labeled the package as "flawed proposals."

"The governor and the Legislature must develop budget solutions that put California on a real path to fiscal stability," said Lillian Taiz, president of California Faculty Association.

The six ballot measures stemmed from a budget deal Schwarzenegger and legislative leaders brokered in February to close a nearly $42 billion budget shortfall through June 2010.

Budget fixes included $17 billion in cuts, more than $12 billion in temporary tax increases, reliance on billions of dollars in federal economic stimulus funds - and asking voters to approve ballot measures to generate more revenue for the cash-strapped state.

Despite all that, California's budget fell deeper into deficit as a result of plummeting revenue and rising costs. With the ballot measures trailing in polls, Schwarzenegger last week announced the state's shortfall could grow to $21.3 billion this summer if voters reject the measures.

His critics accused Schwarzenegger of using scare tactics on the eve of the special election, but the governor argued that Californians had to know what the consequences would be before they voted.

Three of the propositions - 1C, 1D and 1E - would have had immediate impact on the state's budget by raising nearly $6 billion in the new fiscal year that begins July 1.

Prop. 1B would have ensured that schools would get more than $9 billion beginning in the 2011-12 fiscal year, but it would have become valid only if voters also approved Prop. 1A, which Schwarzenegger promoted the most.

Prop. 1A represented the elusive budget reform Schwarzenegger has sought since he was elected more than five years ago. It would have limited spending and created a rainy-day fund while extending the recently enacted tax increases from two years to four.

The measure's spending limit was aimed at getting Republican backing for the budget compromise, which included temporarily increasing vehicle license fees and taxes on sales and income.

But even that wasn't enough to get the plan through the state Senate, resulting in the addition of Prop. 1F, the pay freeze.

Last week, while unveiling the grim prospects for the state budget, Schwarzenegger insisted that the ballot measures are not about him but about the future of the Golden State.

"It's about California's future and California's legacy. It's not about me or any legislator," he said Thursday, adding that the combination of the ballot measures' passage and his budget solutions would put California back on track for a "slow and steady march back to prosperity."

Schwarzenegger tried to build a broad coalition of proponents of the measures, but he did much of the heavy lifting, helping to raise more than $15 million for the "yes" campaign. The proponents of the measures together raised a total of about $29 million.

The opposition, made up mostly of anti-tax groups and some labor unions, raised about $5 million.

The complexity of the ballot package created unlikely allies for both sides. Schwarzenegger was on the same side as the California Teachers Association. The measures' opponents included anti-tax groups, unions and advocates for the poor who often are at odds over state budget priorities and policies.