Legislature fails to pass budget again

Despite aroundtheclock legislative sessions, Democrats and Republicans could not agree on stopgap measures to ease the $24billion budget deficit. Legislators had hoped to reach a compromise and avoid issuing IOUs to college students, lowincome seniors, the disabled and others who depend on or deliver state services.

The inability to meet the fiscal year-end deadline—midnight, June 30—and avoid a government shutdown was one of a series of failures between the two parties to adopt a budget solution that Gov. Arnold Schwarzenegger would sign into law.

State Controller John Chiang said he will begin issuing IOUs today.

Schwarzenegger has repeatedly vowed to veto any plan that did not solve the entire $24-billion budget shortfall or that included any new taxes, said a spokesperson in state Sen. Fran Pavley's (DAgoura Hills) office Tuesday.

Pavley, in a statement to The Acorn last week, said the Democratic Senate supported Assembly Bill 180, a measure that cut $11 billion to state programs and was one of a package of bills that would have bridged the budget gap.

"Not a single Republican voted in favor of the bill, which contained only cuts and no revenue increases," Pavley said. She added that the Republicans who voted against the budget plan did not present any plan of their own.

Pavley said if two Republicans had voted for the stopgap measure, the Legislature would have had additional time to work on a "broader solution."

By June 30, Democrats had given up on AB 180 and tried to pass a $3.3-billion measure to avoid issuing IOUs—at least for a few weeks—but again did not receive Republican support.

Republicans see the situation differently. Media reports have said that Schwarzenegger wants the entire budget crisis fixed at once, rather than taking a piecemeal approach that he believes might allow lawmakers to avoid tough decisions in the future.

Schwarzenegger is proposing a variety of structural reforms, including reducing state pension benefits for new employees, online enrollment for the state's health insurance for the poor—which would save money by reducing the need for state employees—measures to prevent fraud by inhome caretakers and reforming the state's welfare program. These measures are estimated to save the state $2 billion.

State Sen. Tony Strickland (R-Thousand Oaks) said AB 180 amounted to "accounting gimmicks, funding shifts and using fuzzy math."

"Most of the cuts were backfilled from the federal government—there were no reductions in spending," Strickland said. "The governor, along with the Senate GOP, said we don't need to kick the can down the road and have a budget that spirals out of control."

Strickland likened the state's need to cut the budget to measures families must take when money is short.

"There is no reason why the government shouldn't do the same thing," he said.

"The Senate Republicans, along with the governor, think higher taxes will cost jobs," Strickland said. "And California has the highest unemployment since the Great Depression. GM is closing its plant in California because it costs so much more to do business here."

In addition to the $11 billion in cuts proposed in AB 180, another package of bills crafted by a joint legislative conference committee that would have saved $10 billion was rejected.

The Democrats' final $2 billion, which together with the other bills would have closed the budget gap, called for an increase in the tobacco tax and a tax on oil production similar to 22 other oil-producing states.

Strickland said the oil tax would be passed on to the consumer.

"At a time when hardworking families are having a tough time making ends meet, they shouldn't have to decide between a gallon of milk and a gallon of gas."

In a June 24 Senate floor speech, Pavley said, "California is the one state that does not charge oil companies a dime to extract oil." The tax is 25 percent in Alaska, she said.

The bill also included a $15 surcharge on motor vehicle registrations. The money from the tax would save state parks from closure, prevent 1 million children from losing their health insurance and ease the cuts to education, Pavley said.

"As a former teacher, it is especially difficult for me to vote for deep cuts in education, but we have no choice," Pavley said in an e-mail.

"We're in the middle of a national and global recession. California has experienced the biggest drop in its revenue in state history. We have really run out of options."

At press time Wednesday, legislative sessions were continuing in Sacramento.