Thread: Budget impasse threatens Calif finances UPDATED

Budget impasse threatens Calif finances

By JULIET WILLIAMS, The Associated Press
8:29 p.m. July 16, 2009

SACRAMENTO, Calif. — Gov. Arnold Schwarzenegger and top lawmakers found themselves back at an impasse Thursday after they appeared to be edging toward a deal to close California's $26.3 billion budget deficit.

The latest dispute arose over education funding and prompted state Treasurer Bill Lockyer to issue a stern warning. He said further delays will threaten the state's ability to build schools, highways and levees.

Lockyer said the state's recent credit-rating downgrade could jeopardize its ability to secure financing for infrastructure projects, which would hurt businesses, local governments and ultimately, taxpayers.

"They didn't cause this mess. But they're paying for it," Lockyer said in a news release. "How much is enough?"

Lockyer called on Schwarzenegger and lawmakers to narrow their disputed issues and "stop using the budget negotiations to score points with political allies or against partisan opponents."

Schwarzenegger said Thursday that he and Democratic lawmakers are trying to get negotiations back on track after talks stalled a day earlier over education funding. At issue is how to repay schools some $11 billion once the economy bounces back.

"You know, negotiations stall and sometimes new things come up and one has to reassess, and then you continue on again," Schwarzenegger told reporters outside his Capitol office. "There's a will there in this building for both parties to get this done. I have not seen anything else, and so we are going to make an effort again to get it started again."

The governor didn't meet with Democratic lawmakers on Thursday, but his spokesman said a meeting might be called Friday.

Senate President Pro Tem Darrell Steinberg, D-Sacramento, and Assembly Speaker Karen Bass, D-Los Angeles, said they want to ensure that schools are repaid the billions of dollars they are losing as the recession erodes revenue coming to the state.

When the economy will recover and whether California's tax revenue will rebound to pre-recession levels are open questions. Lawmakers and governors may be fighting over school funding for years to come.

The Democrats said Schwarzenegger could guarantee future money for schools with a statutory change. The governor's administration disagreed, saying the changes sought by Democrats would require voter approval because they would alter Proposition 98, a ballot initiative that guarantees a minimum level of education funding.

"When times get better, we want to guarantee that education and kids get paid back the money that they are owed," Steinberg said.

Republican legislators said they wanted to concentrate on the current problem – the funding shortfall for the fiscal year that began July 1 – rather than future scenarios.

The attempts to close the massive deficit come as the state has begun issuing IOUs to contractors and government workers are being furloughed three days a month.

Without a balanced budget by late August, IOUs may have to be issued to state employees and contributions to the state pension funds may be jeopardized.

Because Republicans will not vote for further tax increases, the deficit must be closed with spending cuts and a variety of other measures.

Schwarzenegger and lawmakers are likely to cut about $15 billion in spending, including deep cuts to education, health care and welfare. State employees would have to accept pay cuts in the form of continued furloughs, while college students attending public colleges and universities will have to pay higher fees.

Republicans and Democrats differ over how to address the remaining $11 billion. It could include borrowing from local governments, asking taxpayers to speed up tax payments and using billions in federal stimulus money.

Schwarzenegger also wants to raise about $1 billion by selling a portion of the state worker's compensation insurance business.
–––
Associated Press Writers Judy Lin and Samantha Young contributed to this report.

(This version CORRECTS to say that state workers are being furloughed three days a month.)

http://www3.signonsandiego.com/stories/ ... dex=132846

Not everyone appears to believe a budget deal is imminent

July 16th, 2009, 2:21 pm
by BRIAN JOSEPH, Sacramento Correspondent

Despite talk last night that budget negotiations had stalled over education funding, Gov. Arnold Schwarzenegger continued putting on a happy face when he met with reporters today, saying that a deal appears just around the corner.

“(I) Think we can close outstanding items very quickly,â€

Ex-lawmaker's ideas added to tax report

SAN FRANCISCO – A commission weighing an overhaul of California's taxing structure agreed yesterday to consider proposals from a former Democratic lawmaker, a move that will head off a partisan fight, at least for the moment.

“Today was a big shift,â€