California’s budget crisis deepens after lawmakers miss deadline

By allowing the fiscal year to end without trimming $3.3 billion from the 2008-09 education budget, lawmakers and Governor Schwarzenegger lost the chance to cut spending in a manner considered crucial to bridging the $24 billion deficit.

Instead, Senate Republicans, Democrats and the Governor remained in a political standoff over other parts of the budget, particularly how much to slash health and welfare programs.  As a result, Capitol Weekly reports the standoff got a little more expensive this morning. “The state Senate rejected three bills that would have lessened the state’s immediate cash crush by billions of dollars in a surreal late-night session in which a packed Senate chamber quietly counted down the minutes to the new fiscal year, as Senate leader Darrell Steinberg’s efforts to cajole Republicans came up empty.

“Republicans in the Senate, at the behest of Gov. Arnold Schwarzenegger, did not vote for the bills because Democrats and Republicans could not come to an agreement of a comprehensive $24 billion budget solution that the governor has repeatedly said he must have before signing any partial budget fixes.

“The bill’s failure means that Controller John Chiang will begin issuing promisary notes to certain state vendors so that the state has enough cash on hand to meet debt service obligations and make education payments that are constitutionally required.”

Schwarzenegger plans to declare a new state of fiscal emergency today, launch another special session and propose additional program cuts to solve the larger deficit problem, spokesman Aaron McLear said. The new deficit number will be roughly $26.3 billion, about $2 billion higher than the governor’s May budget, according to Schwarzenegger’s Department of Finance. 

If you didn’t stay up for the festivities, you can read the saga of the final moments of the last fiscal year, blow-by-blow, on the Sacramento Citizen’s Twitter feed.

UPDATE:  According to the San Jose Business Journal when readers were asked to name who is most responsible for the state’s fiscal crisis about 42 percent of those responding to the Business Pulse survey blamed the Democrats for the stalemate concerning the state’s $24.3 billion budget deficit.

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