LOS ANGELES – The deal to close California's $26 billion budget deficit included a plan to drill for offshore oil, drawing allegations that the fiscal crisis was used for a backroom deal following rejection of the idea by state regulators earlier this year.
Democrats agreed to Republican Gov. Arnold Schwarzenegger's request to expand drilling from an existing platform off Santa Barbara to generate a one-time $100 million advance royalty payment this fiscal year and an estimated $1.8 billion in royalties over 14 years.
It would be the first new offshore oil drilling on state lands in four decades since a blowout on a platform off Santa Barbara coated miles of ocean and shoreline and galvanized opposition.
Details of the agreement reached late Monday were scarce, but Lt. Gov. John Garamendi, chairman of the State Lands Commission, said Tuesday that the framework involved taking authority for approval of oil leases away from State Lands and giving it to a newly created panel.
"This is a play by the governor to have it his way," he said. "This is a sellout to the oil industry. They want to open the California coast to drilling, and this is the first step."
The lack of details on the agreement and the way it emerged in budget talks concerned Victoria Rome, deputy California advocacy director for the Natural Resources Defense Council.
"I think it should be very troubling to the public that a decision that was made through a public process in the light of day can be overturned by a few leaders behind closed doors," she said.
Schwarzenegger spokeswoman Lisa Page said the proposal would bring new revenues to the state, end oil drilling off Santa Barbara's coast and speed up the permanent removal of platforms there.
The governor's office said in a statement that the platform involved is already drilling in federal waters adjacent to state waters. It said the project maintains a moratorium on oil drilling "but takes advantage of a specific exemption that allows for new leases if oil is leaking from an existing state field into an actively producing federal field."
The drilling proposal has been percolating since 2008 when Plains Exploration & Production Co. of Houston announced a novel deal with three veteran environmental groups in Santa Barbara County.
The groups, including Get Oil Out!, agreed to promote the plan in exchange for money for the state, thousands of acres of land and Plains' commitment to cease operations countywide by 2022.
Garamendi said he opposed the plan in January because provisions for ending operations could not be enforced and because it would serve as a precedent for further drilling, encouraging the federal government to issue new leases off the California coast.
The $100 million would be a loan against royalties and would be repaid by deductions from future royalty payments to the state, he said.
Garamendi asserted that the sum was of minor usefulness in solving the budget problem.
"I think that this can easily be subtracted from the proposal without doing any harm to what is a terrible piece of work," he said.
Senate President Pro Tem Darrell Steinberg, D-Sacramento, said that under the budget agreement, a panel made up the state attorney general, the secretary of resources and the secretary of environmental protection would make a final decision on the project.
Steinberg said the state had run out of options and had to make a choice between a project that would generate about $100 million annually for the next 14 years, or to make deeper welfare and social service cuts.
"And, you know, that's a choice," he said.

Michael Endicott, resource sustainability advocate for Sierra Club California, said environmental standards and statutes should not be rolled back as part of the budget process.

"Eventually we'll be rebuilding and we'll be operating again, and those standards should be implemented again — that people worked long and hard to put in place in order to avoid problems," he said.

Endicott and Garamendi both said a better alternative would be an oil severance tax that other major producing states have. Their estimates of such a tax ranged from $800 million to $1 billion a year.

"California is the one large state that doesn't charge a fee for the extraction of oil," Endicott said.

Attorney Linda Krop, who represents the three Santa Barbara environmental groups, said they continue to support the agreement they negotiated with Plains but she had not yet consulted with them on the possibility of it being put before a new panel rather than State Lands.

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Associated Press Writer Judy Lin in Sacramento contributed to this report.

LOS ANGELES (AFP) –
A proposed plan to solve California's budget crisis would reduce the state's prison population by 27,000, it was reported Tuesday, as opposition to the new fiscal deal mounted.

The Los Angeles Times reported on its website that the budget deal, announced by California Governor Arnold Schwarzenegger and bipartisan lawmakers on Monday, would involve the early release of thousands of inmates.

The Times said the reduction would be achieved through a combination of measures including allowing prisoners to finish their sentences on home detention and creating incentives for completion of rehabilitation plans.

The prison inmate proposal would help save the state 1.2 billion dollars in the coming fiscal year, the Times reported.

Los Angeles County Sheriff Lee Baca meanwhile condemned the proposed state budget, telling the Times that cuts to local government would force authorities across the state to shut down jails or slash officers from street patrol.

"I think it is one thing to have a natural disaster... but it is another thing to have local cities and counties hit by a disaster predicated on the irresponsible actions of the state legislators," Baca told the Times.

California's fiscal woes have deepened as the state reels under the effects of the recession, which have sent unemployment and home foreclosures soaring and state revenues plunging to levels not seen since the 1990s.

The budget crisis has pushed the state to the brink of bankruptcy and forced California to start paying its bills with IOUs earlier this month.

The precise details of the budget -- designed to plug a 26.3-billion-dollar shortfall in California's finances -- have not been released. The budget plan is to be put before lawmakers in Sacramento for approval on Thursday.

However public employees and local governments voiced opposition to the proposed budget on Tuesday as details began to filter out.

Monday's deal reportedly allows for some 15 billion dollars in spending cuts, including slashing around nine billion dollars from schools, community colleges and state university programs.

It also slashes around 1.3 billion dollars from a state health care program for the poor as well around 124 million dollars from a scheme to provide health insurance to more than 900,000 children in low-income households.

"The budget revision that we are going to be voting on contains painful solutions for all Californians," California Assembly speaker Karen Bass said.

"For Democrats I have to tell you that many of the cuts that we have had to make, in another time we would have thought were unthinkable. But because of the unprecedented and ongoing recession we did not feel that we had a choice."

Although Democratic legislators have insisted future spending will return to previous levels when California's economy improves, sceptical union leaders urged the state assembly to reject the budget.

The leader of the California Federation of Teachers (CFT) responded to the budget with dismay.

"The priorities are wrong. Massive cuts to all levels of education while, at the same time, preserving unproductive corporate tax breaks, is a blueprint for further California decline," CFT President Marty Hittelman said.

The leader of the 340,000-strong California Teachers Association called on legislators to pass the budget while acknowledging that the cuts would see students return to school to find "fewer teachers, fewer course offerings and fewer resources."

Human Hair Wigs

Perukes or periwigs for men were introduced into the English-speaking world with other French styles when Charles II was restored to the throne in 1660, following a lengthy exile in France. These wigs were shoulder-length or longer, imitating the long hair that had become fashionable among men since the 1620s. Their use soon became popular in the English court. The London diarist Samuel Pepys recorded the day in 1665 that a barber had shaved his head and that he tried on his new periwig for the first time, but in a year of plague he was uneasy about wearing it:

Among women in the French court of Versailles in the mid-to-late 18th century, large, elaborate and often themed (such as the stereotypical "boat wigs") were in vogue for women. These wigs were often very heavy, weighted down with pomades, powders, and other ornamentation. In the late 18th century these wigs (along with many other indulgences in court life) became symbolic of the decadence of the French nobility, which only helped to fuel the French Revolution.

July 17 (Bloomberg) -- The 12 most vulnerable House
freshmen have raised more money in the first six months of the
year than they did in the comparable period two years ago when
they were challengers, Federal Election Commission filings show.

Among the dozen identified by Washington political analysts
Charlie Cook and Stuart Rothenberg as the first-termers most at
risk of losing their seats next November are Democratic
Representative Alan Grayson of Florida, who raised $348,058
through June 30; and Republican Representative Joseph Cao of
Louisiana, who has already taken in more money than he spent on
his 2008 campaign.

“This is when all of those guys are going to be the most
vulnerable, and everybody on the opposite side is going to be
after” them, said Democratic consultant Glenn Totten, who has
worked on many congressional campaigns. “You’re going to need a
lot of money to play the game.”

The $348,058 Grayson has raised through June 30 dwarfs the
$10,736 he took in during the same period two years ago, when he
was challenging incumbent Republican Ric Keller.

Grayson had $193,465 in the bank as of June 30 this year,
more than double the $82,916 he had during the same time in
2007. He poured more than $2.5 million of his own money into his
first race.

‘It is easier to raise money as an incumbent,” said
Grayson, 51, who represents the Orlando area.

Maryland Contest

Former county prosecutor Frank Kratovil, 41, raised $80,610
in the first six months of his campaign to capture a House seat
on Maryland’s Eastern Shore. Kratovil won, and this time around,
he has raised $651,293. He had $503,819 in the bank as of June
30, as compared with $74,480 two years earlier.

“We feel pretty good about where we are,” Kratovil said.

Republican Andy Harris, who ousted incumbent Wayne
Gilchrest in the primary and then narrowly lost to Kratovil,
raised $530,400 and had $210,349 in the bank as of June 30.

“The level of money needed for these campaigns is
overwhelming,” Kratovil said. “We’re going to have a battle.”

Cao ousted Democrat William Jefferson, who was under
indictment on bribery charges, last December. Jefferson went on
trial last month on charges that he accepted bribes to promote
business deals. As part of the investigation, $90,000 was found
in Jefferson’s freezer.

Cao raised had $223,131 to spend on his first election,
including a $68,219 personal loan that he later paid back. In
the first six months of his re-election campaign, he raised more
than double that, $536,357, and had $339,259 in the bank.

To contact the reporter on this story:
Jonathan D. Salant in Washington at
jsalant@bloomberg.net .