California: On hold budgetary plan approval
The debate on a plan to close the budget deficit California and prevent state funds run out on Thursday did not return results in the legislature, where both houses underwent version of Democrats to vote.
Two other things were clear: The differences between Republicans and Democrats will be difficult to solve;and in the absence of a spending plan for next week, the state will not have enough funds to operate.
Both chambers began their sessions early in the morning, but before the rejection of Republican proposals to cut about $ 11 billion state budget and raise nearly $ 3 billion in some taxes, were postponed before noon.
Republicans reject any increase in tax and prefer that the deficit of more than $ 24 billion is eliminated only with cuts.
They do not want an incomplete or made in different periods solution.
Even those Republican members of the Senate who voted for taxes last February were reluctant.
“Months ago, I accepted taxes as part of the solution. Now, do not think it’s fair to continue increased taxes and put more burden on Californians,” said Sen. Roy Ashburn.
“Counting the cuts that we are proposing, (Democrats) have approved $ 37 billion in recent months, affecting every program and service. Now, we will not let programs like Healthy Families, CalWORKs or Cal Grants are eliminated . we are not willing to pay that price, “he said Democratic leader Darrell Steinberg Senate.
Meanwhile, protesters surrounded outside the Capitol during the debate, with banners against cuts to public education, health programs, and salaries to state employees.
The mayors of several cities in California also expressed their rejection of proposals that revoked part of the income that local governments receive from gasoline taxes to finance road projects such as street maintenance.
Meanwhile, the comptroller John Chiang sent a letter to lawmakers warning that without approval of a spending plan before the end of the fiscal year (June 30), will be forced to send IOUs instead of paychecks from 2 July.
“Next Wednesday, we will begin the fiscal year with an incredibly unbalanced budget and a lack of funds we have not seen since the Great Depression,” Chiang said in the letter.
As a result, payments to public schools, social services, scholarships, jails, prisons, contractors, and employees of state and legislature may not be issued.
Chiang said one option to cover the lack of funds is to borrow from investors. However, Gov. Arnold Schwarzenegger said he will not accept such action by the interests involved borrow this genre.
A state without money to pay
According to the chief financial officers of the state, California will run out of cash to cover their daily expenses unless lawmakers approve a balanced budget.
Governor Schwarzenegger has warned that the government “will stop completely” and the comptroller Chiang describes the situation as a “total failure”.
July 28 is the deadline for the supposed economic cataclysm in California. But what will happen five weeks later it is less clear than these statements suggest.
California government will not stop working completely: The police still monitor the roads, prisoners will be under surveillance and firefighters will be ready to act.
But many of the services that work with state money, such as road projects and community clinics should be stopped or reduced.
Counties have no money to develop a large number of programs, college students who depend on state grants must pay their own fees or leave school.
But how it was that California got to this point? The state budget system was overfished for years of overspending, then he came the recession and caused a big drop in sales and income taxes.
The result: California’s general fund, the main bank account of the state, has projected a deficit of $ 24.300 billion for the fiscal year beginning July 1.
End of July cash flow will be less than what you pay if lawmakers do not approve a balanced budget, either by reducing expenses, increasing taxes or both.
Even since September, California could have a debt of $ 6.500 billion.
In February, Schwarzenegger and the legislature adopted a budget for the new fiscal year that was supposed could stabilize the precarious financial health of California until mid-2010, but a sharp drop in tax revenue caused it to unbalance the budget within weeks .
For example, the income tax income fell 34 percent in the first five months of the year compared with the same period last year.
Schwarzenegger hopes that the threat of total debt pressure on lawmakers to quickly reach an agreement on the budget. Recently he rejected the proposal Chiang driver for a more expensive loan that could finance all operations in California while negotiations on the budget.
The governor told the Los Angeles Times that the loan would only lawmakers to postpone the most difficult decisions.
He said he would rather “let them try what happens when the state stops completely.” He then revised his statements and said the government “will stop by itself.”
They issued promissory notes to cover wages
California cover from next week wages of contractors IOUs, announced on Thursday the state comptroller.
Recognizing a new legislative gridlock to pass a budget from the first day of the next fiscal year, July 1, Chiang said his office will issue promissory notes from Thursday 2 July.
The fiscal year 2008-2009 “ends Tuesday of next week with a deficit of $ 24.300 billion;. On Wednesday began the following year with the deficit No money to pay,” he said.
The comptroller said California last February and had to use some IOUs for lack of cash also during a period of stagnation budget approval of the legislature.
This time however “the lack of resources is five times higher” than in February, according to Chiang.
Officially, according to separate statements from the governor himself Schwarzenegger and the comptroller and treasurer, Bill Lockyer, California is experiencing the greatest shortage of liquidity in its modern history.
California’s budget, the eighth largest economy in the world, was about $ 140 billion 18 months ago. From then to date it has been reduced three times to reach $ 76 billion, but still has a deficit of $ 24.300 billion.
Schwarzenegger blames the global economic crisis, saying that “in the last 18 months the world’s wealth has fallen by a third,” although in every public presentation paraphrases “The Terminator” tape to ensure that California’s economy “back”.
Both the Republican governor and his party’s caucus in the legislature argue that California should stick exclusively to the resources now – $ 76 billion dollars and cut all spending that is not essential.
But Republicans propose to eliminate, among others, health programs for two million children, assistance to blind people and people with AIDS and Alzheimer’s.
Health services further reduce by one third the poorest, close nursing homes, including elderly patients, reduce multimillion sums to education and eliminate state scholarships to the best students, among other cuts.
“What we observe is what kind of community we want to live: in a community that helps children and the elderly or in a community that throws everyone to jail to beg , ” he told Notimex Latin Congresswoman Norma Herrera.
The day before the Democratic caucus presented a counter-proposal that includes $ 11 billion in cuts, as a gesture of goodwill to the Republican caucus agreed to increase taxes on the sale of cigarettes, alcohol, older companies and those earning more half a million dollars in California.
But Republicans ignored the share of taxes: “You bring us a problem of $ 24 billion with a solution of 11 billion,” said Sen. Ray Ashburn.
The governor and his party refuse to eliminate tax exemptions and increase business corporations, for example, under the argument that will move the state and increase unemployment which now reaches 11.5 percent.
Before the legislative stalemate, the comptroller said that from next week will use the notes that will be effective in October deadline. Get a copy of pdf file here hush hush pdf free.