California budget stalemate sets up fiscal calamity
The Associated Press
SACRAMENTO ” After a frustrating holiday weekend that failed to yield one more vote to end California’s budget stalemate, legislative leaders say they will put tax increase provisions in the budget plan up for a vote Tuesday.
Meanwhile with the state’s finances running dangerously low, Gov. Arnold Schwarzenegger is scheduled to begin layoff proceedings for 20,000 government workers. The state also plans Tuesday to halt all remaining public works projects, potentially putting thousands of construction workers out of jobs.
“We are dealing with a catastrophe of unbelievable proportions,” Sen. Alan Lowenthal, a Democrat from Long Beach and chairman of the Senate transportation committee, said Monday.
Senate leader Darrell Steinberg announced late Monday that lawmakers had failed to find the final vote in his chamber as Republicans refused to support tax increases. He called a session for Tuesday and said he would put the tax provisions of the budget proposal up for a vote, even if they would not pass.
Steinberg warned lawmakers to bring their toothbrushes, saying they would not leave until that vote was secured.
“One member,” Steinberg said. “One more member to put the interest of the state ahead of ideology and ahead of any parochial concern.”
Like other states, California faces plunging tax revenue that has imperiled state services. The proposal put before lawmakers this weekend was negotiated by Schwarzenegger and the four legislative leaders and appeared to have support of the required two-thirds majority in the state Assembly.
However, it was falling one Republican vote short in the Senate, a situation that had not changed throughout a weekend marked by long hours and uncertainty over the state’s future.
The plan includes $15.1 billion in program cuts, $14.4 billion in temporary tax increases and $11.4 billion in borrowing. The package also would send five ballot measures to voters in a special election to be held May 19.
The stalled effort prompted Schwarzenegger to make good on an earlier promise to begin the layoff process for thousands of state workers.
The governor had delayed releasing the notices on Friday when it appeared lawmakers would pass a compromise plan to close the state’s $42 billion shortfall. But with marathon weekend sessions failing to produce the necessary votes, Schwarzenegger’s spokesman said the administration had no choice.
“In the absence of a budget, the governor must do everything he can to cut back on state spending,” spokesman Aaron McLear said.
The notices will start going out Tuesday to 20,000 workers in corrections, health and human services and other agencies that receive money from the general fund. Administration officials are seeking to eliminate up to 10,000 jobs as part of the governor’s order to cut 10 percent from the government payroll. The procedure to lay off a large number of state workers takes about six months.
On Monday, Schwarzenegger’s finance director warned that a state board will freeze even more public works projects unless the Legislature approves a budget quickly.
The Pooled Money Investment Board on Tuesday is expected to shut down 276 critical projects worth $3.6 billion, along with 98 transportation projects funded from voter-approved bonds worth $1.8 billion.
The combined $5.4 billion freeze would affect 91,800 California jobs. Some 2,000 infrastructure projects are already on hold because the state lacks the money to pay for them.
Despite the warnings of impending fiscal calamity, most rank-and-file Republicans have refused to agree to higher taxes. Republican lawmakers blamed Democrats for years of overspending.
“You’re not going to go back to the people’s pocketbooks to fuel that spending,” said Sen. Dennis Hollingsworth, R-Temecula.
During a lively floor session Monday night, Sen. George Runner, R-Lancaster, defended his colleagues’ stance against tax hikes and said his constituents were pleading with him to vote no on the budget proposal.
He accused Democrats, who hold majorities in both houses, of using the recession to drive an agenda of tax increases.
“You want this emergency,” Runner said, drawing jeers from Democrats in the chamber. “Listen, you may not like to hear what we have to say, but it’s what we believe.”
Steinberg, the Senate president pro tem, acknowledged that tax increases were difficult for all lawmakers to swallow but said the Legislature had no choice.
“Nobody likes that idea, but remember the reason we are in this crisis is because we are in a national and international crisis,” he said. “California’s revenue is estimated to drop over $30 billion between 2008 and the middle of 2010, and so there isn’t a choice but to make deep cuts, painful cuts, but also to raise some taxes temporarily to get through these difficult times.”
California lawmakers spent the President’s Day holiday as they had Valentine’s Day, locked in a frustrating search for one more vote to end the state’s budget impasse.
Lawmakers broke the record for longest legislative session in state history over the weekend before disbanding Sunday night. The Assembly was at one point in session for 30 hours.
“This is absolutely ridiculous for this to go on any longer,” said Assembly Speaker Karen Bass, D-Los Angeles.
Getting the final vote out of a Republican senator continued to be problematic. One moderate Republican, Sen. Abel Maldonado, criticized Senate Minority Leader Dave Cogdill for failing to make sure he had enough votes from his caucus.
Maldonado, of Santa Maria, was thought to be one of the GOP lawmakers who would vote for the budget, but so far he has been a holdout.
His critical address on the Senate floor lambasted Democrats for failing to implement some of the reforms he has sought in recent years, such as cutting off all pay to lawmakers when they fail to pass a budget by the constitutional deadline. His comments seemed to suggest that he would not support the proposal in its present form.
“Tomorrow when they put up the votes, the votes are not going to be there,” he said.
The proposed tax hikes include an increase of 1 cent on the dollar in the state sales tax, a 12-cent-a-gallon hike in the gasoline tax and a boost in vehicle licensing fees.
The measure also includes a one-time, 5-percent income tax surcharge for taxpayers who owe money to the state at the end of 2009. The surcharge would drop to 2.5 percent if California gets its expected share of money from the federal stimulus bill.
Many of the tax hikes would remain in effect through the 2013-14 fiscal year if voters approve a cap on state spending during the May special election. That deal is designed to limit labor unions’ opposition to the spending cap, which was sought by Republicans as part of the budget negotiations.
The budget plan is designed to close California’s deficit through June 2010 if voters also approve a number of related measures at the ballot. Those include the spending cap, a plan to sell bonds based on future lottery proceeds and approval to shift money from accounts for mental health and child-development programs.
The state controller already has delayed refund checks owed taxpayers and payments to state vendors because of the state’s revenue shortage. Absent a plan soon, the state will have to issue IOUs.
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