It closes the $19 billion deficit, based on shaky assumptions. But the agonizing wait is over.
"I'm proud to say that we, Democrats and Republicans, fought through all of the minefields and all of the obstacles that were in front of us and we got the job done," said Schwarzenegger Friday.
Lawmakers were in session all night with much of the delay coming from the senate.
Three Democrats who can normally be counted on for "yes" votes were withholding theirs, mostly because years of cuts, including this year's $7.5 billion, were too much to stomach; $3 billion was cut from schools alone.
"It seems like there's no end in sight and at some point, you've got to say 'enough is enough,'" said St. Senator Leland Yee/D-San Francisco:
Last-minute favors and backroom deals also delayed the budget, with lawmakers trying to jam proposals through that affect only narrow interests.
A bill benefitting online travel sites by changing the way hotel taxes are calculated failed. So did a measure to ban the towing of the cars of sober illegal immigrants at DUI checkpoints.
But an environmental provision to help Pacific Ethanol, owned by a Schwarzenegger ally, passed. And San Diego got some redevelopment money that'll be used to help build a new stadium for the Chargers.
"Extracting favors for special interests at the end of the budget process is not good for government and it's not good for democracy," said Katie Fleming, a spokesperson for Common Cause.
The special favors angered some people who ended up on the chopping block, like low-income seniors who use in-home support services.
A 3.5 percent cut means fewer hours caregivers can spend at patients' homes.
"I'll be there alone a lot longer. That's what it means, and that's kind of scary," said Hene Kelly, an in-home service recipient.
Schwarzenegger used the line-item veto to veto another billion dollars out of the state budget.
The state controller will now analyze the state budget to see if there's enough money to pay $8 billion of overdue bills.
