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California forges ahead, budgetless

Legislature closes with no fiscal plan

SACRAMENTO, Calif. – As the Legislature lurched to its close Sunday with no budget in place, California toppled its own record for fiscal dysfunction.

Never in recent memory has August ended without a spending plan, so the state is now thrust into uncharted territory.

Gov. Arnold Schwarzenegger’s administration has been preparing a blueprint for keeping the state afloat through the autumn. The governor told Fresno Bee editors last week that he would wait until winter to sign spending bills into law, if necessary, to get what he considers a decent budget.

That means one with a mechanism to limit future spending; with temporary taxes to help wipe out the state’s $15.2 billion in red ink; and without the multibillion-dollar borrowing from local government and transportation accounts that some lawmakers appear to favor.

Others in the Capitol say the stalemate really could last into next year, leaving the incoming class of legislators, many of whom will be rookies elected in November, to solve the problem. Meanwhile, hospitals, community colleges, day care centers and other facilities dependent on state funds go without the money they need to operate.

“There is no victory for anybody when we … have no budget,” said Mike Villines, of Clovis, leader of the Assembly’s Republicans. “I don’t think Californians are sympathetic.”

With the deadline for legislative business passed, lawmakers no longer can work on regular lawmaking business. But they’ll still be tethered to Sacramento as they wait for their leaders to strike a budget deal.

The governor’s office held a meeting last week with two former state finance directors and former Senate Republican Leader Jim Brulte, seeking advice on how to make it to November or beyond without a budget.

The group, according to some participants, discussed the state’s options for getting cash once it runs out in a month or so; whether the governor has the authority to release emergency funds to health clinics and other programs; and how California will be able to repay arrears on state services once a spending plan is in place.

Meanwhile, differences endure. Republicans unveiled a spending plan Saturday that would rely on borrowing against the lottery and on deep program cuts. A vote on their proposal is expected soon, although it has no support from Democrats.

“There is no doubt in my mind that the silent majority does not want taxes,” Villines said.

Democrats and the governor say closing the budget gap without new levies would cripple state services. Republicans blocked the latest proposal that included them – along with the spending restraints promoted by the governor – in the state Senate on Friday.

“We compromised more than we thought prudent,” said Democrat Don Perata, Senate president pro tem. “We are done.” According to people involved in confidential budget talks, Democrats in the Assembly have been looking for ways to raise taxes without Republican votes. California requires a two-thirds majority to pass a budget or raise levies; in the existing Legislature, that means two GOP votes in the Senate and six in the Assembly.

As the standoff continued, some Californians had begun paying the price. Earlier in the summer, checks stopped going to thousands of health care clinics, nursing homes, child care facilities and other providers of government services. The longer the delay, the more dire their financial situation.

By the end of September, according State Controller John Chiang, $12 billion in payments will not have been made.