Jun 30, 2009 8:41 am US/Pacific
California Likely To Run Out Of Money At Midnight
Lawmakers Face July 1 Deadline To Avoid Covering Debts With IOUs
SACRAMENTO (AP) ―
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The California Senate has approved a Democratic budget-balancing plan that faces a certain veto from Governor Schwarzenegger.
AP
A midnight deadline loomed Tuesday as California lawmakers and Gov. Arnold Schwarzenegger dueled over ways to cut into a $24.3 billion budget deficit or face having to issue IOUs to cover the state's bills.
Democrats lawmakers, the majority in both houses, tried two approaches Monday but both failed to draw Republican support.
Voting almost totally along party lines, the state Senate approved a package of bills featuring spending cuts and fee and tax increases to close the deficit.
But the Republican governor quickly promised to veto the legislation, saying he wouldn't sign anything that raised taxes or fees more than he has proposed.
"They should forget about that," he said, accusing Democrats of going through a "song and dance. Let's get to work, fix it."
Hours later, Senate Democrats put up three stopgap spending cut bills that passed the Assembly last week with bipartisan support.
But again Republicans refused to budge, saying the budget problems needed a comprehensive solution focusing on spending cuts.
Senate President Pro Tem Darrell Steinberg said Democrats would not accept the deep cuts in college aid, health care and welfare programs sought by Schwarzenegger.
State Controller John Chiang has said he would have to start issuing IOUs unless lawmakers act by the end of the fiscal year on Tuesday.
Without a compromise, roughly $3 billion worth of IOUs will be issued in July to everyone from contractors to welfare recipients.
Democratic Assembly Speaker Karen Bass and Steinberg accused the governor of using last-minute maneuvers to push a laundry list of policy reforms rather than addressing the budget gap.
"It's not the way to go about working with people," Steinberg said. "It's not the way to go about working with your partner."
Democrats want to solve the deficit by cutting spending by $11 billion, raising the vehicle license fee by $15 to keep state parks open and increasing taxes on tobacco products and companies that drill for oil.
Schwarzenegger has proposed more aggressive cuts of $16 billion, including dropping health care for 930,000 low-income children and eliminating the state's main welfare program.
He also would borrow $2 billion from local governments, take $6 billion from other government accounts, accelerate personal and corporate income tax collections, and cut state employee pay by another 5 percent.
(© 2009 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)
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