Wednesday, July 01, 2009
Senate President Darrell Steinberg and Senate Republican leader Dennis Hollingsworth leave the California Senate chamber last night after failing to reach a budget agreement.
The combined efforts of Democrats and Rebublicans in the most recent round of negotations saw the state dig an even deeper budget hole, by some $2 billion, after yesterday's failure to cut education spending, the deficit now standing at more than $26 billion.
Naturally, state of fiscal emergency has been declared and a special session has been called for the legislature, this Sacramento Bee report providing the latest details.
Tuesday's failure to cut education spending and shift redevelopment funds expanded the deficit overnight because of the way school funding formulas are calculated.This really is a perpetual crisis.
Schwarzenegger plans to declare a new state of fiscal emergency today, launch another special session and propose additional program cuts to solve the larger deficit problem, spokesman Aaron McLear said.
Senate President Pro Tem Darrell Steinberg said Schwarzenegger's veto threat against a stopgap package to cut the 2008-09 education budget and delay IOUs "may be the most irresponsible act I have seen in my 15 years of public service. And for what? It's a monumental blunder."
But Schwarzenegger said Democrats instead were to blame for failing to compromise with him on a plan to solve the entire $24 billion deficit with enough spending cuts and permanent program reductions.
"The Legislature's latest proposal is no different than what Sacramento has been doing for the past two decades – kicking the can down the alley," McLear said in a written statement.
Absent a significant budget deal today, state Controller John Chiang has warned he must take the next step of issuing IOUs on Thursday to vendors who do business with the state, local governments and people who are owed tax refunds. Chiang said IOUs are necessary to preserve enough cash to meet constitutionally mandated obligations to schools and state bondholders in July.
Hallye Jordan, a Chiang spokeswoman, said the first batch to go out would consist of 28,742 IOUs, worth a total of $53.3 million, to taxpayers awaiting refunds.