ElCount
02-07-2009, 12:16 PM
California Out Of Cash, State Begins Issuing IOUs
SACRAMENTO (CBS 5 / AP) ―
Gov. Arnold Schwarzenegger and legislative leaders resumed closed-door talks Monday in an effort to close California's $42 billion budget gap, with employee furloughs just days away and taxpayer refunds already on hold.
The state also began paying for its bills with IOUs instead of checks on Monday, said state Controller John Chiang who indicated that he had no choice but to do so.
State leaders are trying to strike a compromise on an annual spending plan as California runs dangerously low on cash reserves. Officials have already missed a self-imposed Feb. 1 deadline for a budget deal.
The governor and lawmakers can't agree on a mix of tax increases and spending cuts to solve the deficit over the next year-and-a-half. They also disagree over whether the state should impose a spending cap and on elements of what they call an economic stimulus plan. Such a plan could include provisions for flexible work hours so businesses would save on overtime pay and regulatory rollbacks that Democrats fear will weaken existing environmental laws.
If there is no deal by Friday, state government workers will take their first furlough day. Schwarzenegger has ordered state employees to take two days off a month without pay through June 2010 to save about $1.4 billion.
"We're really hoping we can work out a compromise that helps the governor achieve the savings he wants while minimizing the disruption to state services and to the lives of the employees who provide the services," said Jim Zamora, spokesman for the Service Employees International Union, Local 1000, which represents the state's largest employee union with 90,000 workers.
Labor representatives said they intended to appeal a judge's ruling last week confirming that the governor has authority to reduce work hours during a fiscal emergency. Unions also were negotiating with the state to find an alternative to Schwarzenegger's order shutting down state government on the first and third Friday of each month.
The governor's office said some agencies, including the California Highway Patrol, Department of Parks and Recreation, and unemployment assistance at the Employment Development Department will remain open by allowing employees to take unpaid days off later.
Department of Motor Vehicles offices will close on the furlough days, but customers can go online for forms and to schedule appointments, DMV spokesman Mike Marando said.
California already has taken some steps to conserve cash. The state froze financing on thousands of public works projects, while the controller delayed an estimated $1.9 billion in payments to taxpayers who filed their returns and are owed refunds. He also imposed the same 30-day delay on payments to counties for welfare programs, vendor payments to state contractors and college tuition assistance.
In response, the state's two public university systems have stepped in with short-term financing so needy students can continue to attend class.
The University of California on Monday announced that the 10-campus system will use reserves to cover 46,000 students who receive Cal Grant state aid. Last month the California State University granted deferrals for 65,500 students receiving such grants.
"Many of these students rely on Cal Grants to cover the cost of their education, and are the first in their families to attend college," CSU Chancellor Charles B. Reed said in a statement. "We want to make sure these students can stay enrolled until the state has resolved the budget crisis."
Republican lawmakers, whose support is necessary to get the two-thirds vote required to pass a budget, have thus far resisted tax increases. Most have signed no-tax pledges and fear retribution from their own party.
In December, majority Democrats refused to give labor and environmental concessions that Schwarzenegger believed would accelerate construction on highway and toll-road projects. He subsequently vetoed their $18 billion package of spending cuts and tax increases, a plan Democrats said would have avoided the current cash crisis.
SACRAMENTO (CBS 5 / AP) ―
Gov. Arnold Schwarzenegger and legislative leaders resumed closed-door talks Monday in an effort to close California's $42 billion budget gap, with employee furloughs just days away and taxpayer refunds already on hold.
The state also began paying for its bills with IOUs instead of checks on Monday, said state Controller John Chiang who indicated that he had no choice but to do so.
State leaders are trying to strike a compromise on an annual spending plan as California runs dangerously low on cash reserves. Officials have already missed a self-imposed Feb. 1 deadline for a budget deal.
The governor and lawmakers can't agree on a mix of tax increases and spending cuts to solve the deficit over the next year-and-a-half. They also disagree over whether the state should impose a spending cap and on elements of what they call an economic stimulus plan. Such a plan could include provisions for flexible work hours so businesses would save on overtime pay and regulatory rollbacks that Democrats fear will weaken existing environmental laws.
If there is no deal by Friday, state government workers will take their first furlough day. Schwarzenegger has ordered state employees to take two days off a month without pay through June 2010 to save about $1.4 billion.
"We're really hoping we can work out a compromise that helps the governor achieve the savings he wants while minimizing the disruption to state services and to the lives of the employees who provide the services," said Jim Zamora, spokesman for the Service Employees International Union, Local 1000, which represents the state's largest employee union with 90,000 workers.
Labor representatives said they intended to appeal a judge's ruling last week confirming that the governor has authority to reduce work hours during a fiscal emergency. Unions also were negotiating with the state to find an alternative to Schwarzenegger's order shutting down state government on the first and third Friday of each month.
The governor's office said some agencies, including the California Highway Patrol, Department of Parks and Recreation, and unemployment assistance at the Employment Development Department will remain open by allowing employees to take unpaid days off later.
Department of Motor Vehicles offices will close on the furlough days, but customers can go online for forms and to schedule appointments, DMV spokesman Mike Marando said.
California already has taken some steps to conserve cash. The state froze financing on thousands of public works projects, while the controller delayed an estimated $1.9 billion in payments to taxpayers who filed their returns and are owed refunds. He also imposed the same 30-day delay on payments to counties for welfare programs, vendor payments to state contractors and college tuition assistance.
In response, the state's two public university systems have stepped in with short-term financing so needy students can continue to attend class.
The University of California on Monday announced that the 10-campus system will use reserves to cover 46,000 students who receive Cal Grant state aid. Last month the California State University granted deferrals for 65,500 students receiving such grants.
"Many of these students rely on Cal Grants to cover the cost of their education, and are the first in their families to attend college," CSU Chancellor Charles B. Reed said in a statement. "We want to make sure these students can stay enrolled until the state has resolved the budget crisis."
Republican lawmakers, whose support is necessary to get the two-thirds vote required to pass a budget, have thus far resisted tax increases. Most have signed no-tax pledges and fear retribution from their own party.
In December, majority Democrats refused to give labor and environmental concessions that Schwarzenegger believed would accelerate construction on highway and toll-road projects. He subsequently vetoed their $18 billion package of spending cuts and tax increases, a plan Democrats said would have avoided the current cash crisis.