More budget hokus pokus from Sacramento

Accounting tricks, optimistic projections, and more federal money than has been promised - it all adds up to the budget deal that state lawmakers are expected to be voting on. Of course, given the size of the deficit and the amount of tax revenue coming in, they didn't have much of a choice. The budget plan:

--cuts spending by $7.5 billion, less than the $12 billion sought by Schwarzenegger and Republicans lawmakers.

--counts on California getting $5.3 billion in federal funds for welfare, education and prison costs instead of the $3.4 billion that the governor had estimated in May. (No explanation on how that's going to happen.)

--avoids elimination of California's main welfare program, as well as child care for 140,000 children of low-income families.

--lowers school spending by $3 billion, though more than half of that cut would involve deferring payment of certain school bills until the following fiscal year - essentially an accounting trick.

--provides the University of California and California State University with $200 million to compensate for cuts made last year.

--uses rosier tax-revenue forecasts from the state's Legislative Analyst's Office than those used by Schwarzenegger in May.

--picks up $1.2 billion that the state will save by suspending a business tax credit that lets companies count part of one year's losses against future earnings.

--borrows $2.8 billion from internal state accounts.

--allows companies to avoid paying a 20 percent penalty when they understate their tax liability by more than $1 million. This would cost the state $132 million a year.

--sets in motion pension reform by proposing to roll back pension benefits for new state employees to 1999 levels (no change for folks currently in the system, which is where the problem really lies). Also eliminates pension spiking in the last year of employment.

--proposes a ballot initiative that would ask voters to require a rainy-day fund.

Here's the 8-page summary from the Budget Conference Committee and here are stories from Bloomberg and the LAT.