Businesses in L.A. and statewide dodged a bullet last week, largely avoiding direct hits from the sweeping budget cuts proposed by Gov. Arnold Schwarzenegger to plug a $14.5 billion deficit.

In fact, business groups generally applauded Schwarzenegger’s $141 billion budget, calling it a fiscally responsible approach to the soaring deficit.

“Overall, we are pleased that the governor is pursuing the tack of reducing government expenditures to bring the budget into balance,” said Michael Shaw, assistant state director for the National Federation of Independent Business.

Faced with flattening revenues as the state’s housing crisis has started to spread into other sectors, Schwarzenegger declared a fiscal emergency and proposed across-the-board spending cuts of 10 percent from projected 2008-09 spending levels. Factoring in automatic cost of living and caseload increases, if all the cuts are enacted, real spending in 2008-09 would decline 3 percent to 4 percent from the current fiscal year, according to Schwarzenegger’s administration.

Few if any of these cuts directly impact businesses, except for some state contractors and for businesses that depend on quick turnaround time for required state permits and case resolutions. But even that failed to generate much concern. “Sure, there is a potential for delays, but in the larger scheme of things, it’s far more important to be fiscally responsible,” Shaw said.

Of more concern are calls from Democrats and various interest groups to increase taxes and end scores of tax credits that benefit various businesses and have been labeled by some “corporate tax loopholes.” Schwarzenegger has so far held firm, though some pundits are suggesting some of the cuts the governor has proposed are so politically unpalatable that he may be laying the groundwork for some tax increases.

“As we head into budget negotiations, we are concerned that pressure will build to end some of these tax credits, and that could increase costs to business,” Shaw said.

Also of concern: increases in user fees, such as permit or license applications that businesses are required to obtain from state agencies. Increases in fees only require a majority vote of the Legislature, while tax increases require a two-thirds vote.

The biggest share of the budget cuts in Schwarzenegger’s proposal falls on schools and social services, which together comprise nearly two-thirds of the state budget. Higher education alone faces a $1.1 billion reduction from projected 2008-09 spending levels.

While businesses rely on well-trained applicants coming out of the state’s college and university systems, there was little immediate reaction to these cuts from business groups.

Amidst all the gloom, some businesses even stand to benefit from the budget morass. As a way of saving dollars for the state, Schwarzenegger has proposed public-private partnerships on major construction projects, which could mean lucrative opportunities for private sector contractors.

Public-private partnerships can also take other forms. For example, in his budget proposal, Schwarzenegger suggested that to help pay for new courthouses the state consider locating rent paying law offices there.