Updated 2:50 p.m. Wednesday, June 24
The first of 20 bills aimed at solving the state's budget crisis was voted down, failing along party lines, as Republicans claimed the measure fell short of the amount of cuts needed to solve the problems faced by California.
Immediately after the conclusion of today's session, Republican legislators convened their party's caucus, presumably to discuss alternatives to the proposed measures.
State Controller John Chaing is ready to issue IOUs to state contractors if legislators don't solve California's $24.3 billion deficit.
Republicans have already indicated they will not approve any more tax increases, a move backed by Governor Arnold Schwarzenegger.
Local Assemblyman Cameron Smyth said a lot of work remains to be done, even though the window of opportunity is short.
"It was really frustrating (Wednesday's session) because here we are a week out from when the state is going to be facing even greater financial constraints. The Democrats just put up a political drill in form of a budget that they knew would not have the support of the legislature or the support of the Governor, in fact, not every Democrat voted for the budget. All that does is set us back a couple of days and these are days that we and the people of the state of California don’t really have.
Smyth said that negotiations will continue Thursday but he doesn’t expect any significant changes in time for a vote that day.
“Unfortunately we’ve had about a month to see how much trouble the state is in and 100 hours of testimony in conference committee and the Democrats will still not allow a budget vote that would be supported by both sides and the Governor.
Asked if another lockdown was anticipated to work out the issues, Smyth was optimistic.
“At this point, we haven’t started having those discussions, but as we get closer to next week’s deadline, we need to make tough choices. It’s tough, and it’s not going to be pretty, regardless, but it’s necessary. We have to fix the cash flow problem we have and if we don’t, well, a lot of people are going to suffer.”
Senator George Runner was also disappointed in the measure and voted against it.
“California has a $24 billion budget deficit and the voters were clear that the deficit must be closed without additional tax increases. This budget proposal failed to address the $24 billion problem and offered solutions relying on even more tax increases,” he said. “In that sense, this budget proposal turns a deaf ear to the clear message sent by the voters in the recent Special Election by raising taxes, and fails to close the deficit.
"Taxpayers have had enough. They want the Legislature to do its job: Close the $24 billion deficit without raising taxes, and do it now! I voted no today because this proposal ignores the will of the voters on both counts. It includes even more tax increases and it fails to close the $24 billion budget deficit.”
"Next Wednesday, we start a massively unbalanced spending plan and a cash shortfall not seen since the Great Depression," Chaing said in a press release. "The state's $2.8 billion cash shortage in July grows to $6.5 billion in September, and after that we see a double-digit freefall."
Using IOUs to pay bills has only been done once in California and was last done in 1992. Borrowing to cover cash deficits is commonplace, but Chaing said the shortfall was so large, IOUs were the only option. State employees cannot be paid with IOUs, due to a federal court ruling in 1996 that prohibits the practice.
Democratic leader Darrell Steinberg said that his party would not approve the elimination of health insurance for children, college tuition and services to the disabled and out-of-work.
"We will not, we will not eliminate the Health Families program, we will not eliminate CalWorks, we will not eliminate in-home care ... it's not going to happen," he told the Sacramento Bee.