Los Angeles, CA June 27, 2009
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California Going Broke
By Kevin Yamamura and Steve Wiegand
Published: Saturday, Jun. 27, 2009
Gov. Arnold Schwarzenegger plans to furlough state workers an additional day each month starting in July if lawmakers do not send him an immediate solution for the entire $24 billion budget deficit, he said Friday.
The Republican governor framed the additional furlough day as an effort to preserve cash as the state faces the prospect of issuing IOUs starting Thursday to vendors and low-income disabled and elderly residents.
"It's clear that if the Legislature does not send a full budget solution to my desk by June 30, California will face an extreme cash-flow problem that will threaten our ability to pay for vital services," Schwarzenegger said in a statement. "I cannot force the Legislature to act, so I must do what is in my power as governor to conserve cash so that the state can continue to operate."
The state would save about $61 million in cash in July alone with an additional furlough day - and $184 million with all three days of unpaid leave, according to the Department of Finance.
But Hallye Jordan, spokeswoman for Democratic state Controller John Chiang, said the cash shortage for July is currently pegged at $2.78 billion, and that the savings from one day's furlough would not provide enough savings to avoid having to issue IOUs in July.
The Legislature and the state judiciary are exempt from the governor's furlough plan because they are separate branches of state government. An estimated 15,000 employees who work for constitutional officers, such as Chiang or Attorney General Jerry Brown, also have avoided furloughs because the question of whether Schwarzenegger can compel them to do so is tied up in court.
In downtown Sacramento, state workers greeted news of a third potential furlough day with a mix of anger and resignation late Friday afternoon.
Some said they'd have to scale back or cancel summer vacations and cut back on food, entertainment and just about all big expenditures that they make.
"It will seriously hurt if it goes through," said Robinson, a Davis resident, interviewed at a downtown bus stop.
"My wife's a teacher, and she was just notified that she's going to get a pay cut of about 5 percent. … I'm wondering if I will be able to feed my family on this sort of arrangement," added Robinson, the father of two middle schoolers.
Legislative Democrats and Assembly Republicans, perhaps recognizing that the two parties are unlikely to resolve their overall differences by Tuesday, approved the $5 billion package this week as a stopgap solution. But the Senate GOP blocked the plan, with backing from Schwarzenegger.
The governor and Senate Republicans generally agree with the guts of the $5 billion proposal, but they say they oppose it because it is a piecemeal approach that further delays the overall budget solution.
The governor demanded Friday that lawmakers bridge the entire $24 billion budget gap by Tuesday - the end of the fiscal year - in order to avoid IOUs and, now, a third furlough day.
"It is irresponsible for the Legislature not to deal with the whole $24 billion," he said. " … The controller has made it very clear that we are running out of cash and therefore we cannot make any payments. This would be unfortunate. We should do everything we can to solve the budget. We have five days now."
"While we all understand that everyone in government must sacrifice during this time, the governor's proposal is an unfair burden on those who contribute so much to the betterment of our state," Evans said.
"The governor needs to stop issuing threats and he needs to govern," Walker said. "Using his employees as pawns is not the way to go. There are other suggestions we have made where he can capture cash."
Lawmakers moved no closer Friday to solving the state deficit and adjourned until Sunday. Schwarzenegger is scheduled to meet today with Democratic leaders.
In the Assembly, Democratic leaders went through the motions of voting again on a bill containing $11.4 billion in spending cuts that had already been rejected Wednesday by Republicans who wanted deeper cuts. The bill was again shot down.
The GOP senators also flexed their ability to block any bill requiring a two-thirds approval by rejecting measures that would have accelerated income tax collections and increased enforcement of other tax laws; and would have imposed a surcharge on property insurance policies to fund state emergency response programs.
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