Sacramento Fails to Pass Budget by Deadline, Hello IOUs & Hello Larger Deficit
State employees and members of the Service Employees International Union protested against Gov. Arnold Schwarzenegger's furloughs and pay cuts to state employees during a demonstration at the Capitol on Tuesday (AP Photo/Rich Pedroncelli)
Happy New Fiscal Year! To no surprise of anyone, the state once again failed to pass the budget revision before today, the beginning of the 2009/2010 fiscal year. That means 28,742 payments, many of them tax refunds, totalling $53.3 million will be sent out tomorrow as IOUs, costing the state $3.4 billion over the next 30 years due to higher interest rates.
A new fiscal year without a budget also means the budget deficit increases from $24 billion to about $26.3 billion. Governor Arnold Schwarzenegger reportedly plans to declare a new state of fiscal emergency today, proposing additional program cuts.
Additionally, Schwarzenegger today plans to sign an executive order that would force 200,000 state workers to take yet another furlough day, their third, each month. That equals out to another 4.6% pay cut.
Democrats had tried to smooth over the budget by passing a stopgap package that would ward off IOUs temporarily. But Schwarzenegger kept to a recent theme, vowing to deny any budget solution that did not solve the entire budget, not pieces put together. “As I promised, I just vetoed a partial budget fix,” he twittered. “Now we can get to work on solving the whole problem.”
Senate President Pro Tem Darrell Steinberg called said the veto "may be the most irresponsible act I have seen in my 15 years of public service. And for what? It's a monumental blunder."
Schwarzenegger would not budge. “It's almost 10 and they r still running drills upstairs. Trying 2 pass the same bills I vetoed hours ago. We need 2 solve entire deficit,” he twittered again.
Outside the capitol, state employees and union members protested Schwarzenegger’s budget and other mantra, the refusal to allow any new tax and increases, including ones on cigarettes, oil and a $15 annual vehicle license registration fee to fund for state parks in their entirety. “A fair and balanced budget does not mean, cut, cut, cut,” a sign held by a protester read.
Beyond the walls of the the capitol, decisions made by an appeals court and a state panel also added to the budget fray.
“District Court of Appeal said that since 2007, gasoline-tax funds intended for mass transportation had been improperly diverted by the governor and lawmakers to cover other expenses,” reported the LA Times. That accounts for about $1 billion in the current proposal ($3.5 in total), but the governor’s administration, wanting to balance the budget with public transit money, said they’ll appeal the decision.
Earlier in the day, the California Citizens Compensation Commission cut car allowances, health coverage and tax-free living-expense payments for legislators by 18%, saving the state $1.2 million a year.
The budget standoff and more non-events will continue this week.