Frustration marks ongoing Capitol budget stalemate

The war of words between Gov. Arnold Schwarzenegger and Republican legislative leaders escalated again Wednesday, as the frustrated governor once again called for immediate action to address the state’s budget crisis.

Schwarzenegger lashed out at lawmakers for their inaction, while legislators said the governor was disengaged and posturing for the cameras.

The governor voiced his frustration at the Legislature’s failure to act. “If that’s not a shameful performance, I don’t know what is,” Schwarzenegger said, speaking of the Legislature’s inability to reach an agreement. “The Legislature is acting as if we have $30 billion in surplus.”

Senate Republican leader Dave Cogdill, R-Fresno, said the governor’s Wednesday press conference amounted to more political posturing from the governor. “Bullying the legislature to adopt tax hikes won’t make the ticking clock the Governor unveiled today go away, in fact it will only make our budget problems worse,” said Cogdill. “Raising taxes doesn’t solve the underlying problem of California’s budget, which is the state spends more than it takes in.”

The governor, in his comments, said the Legislature was simply “playing chicken” with the budget. He also said he was frustrated that Republicans had showed up to Big 5 negotiations unprepared, sparking the ire of Assembly Republican Leader Mike Villines, R-Clovis.

“Let’s be clear – Republicans have always entered budget negotiations with Democrats and the governor fully prepared and fully engaged.  For more than a year, we have offered countless proposals both publicly and privately – including specific budget reforms to help us live within our means, specific economic reforms to promote job creation and specific government reforms to ensure our tax dollars are spent more efficiently.”

As the state continues to wrestle with a budget gap that could approach $40 billion, California’s state workers are once again in the crossfire.

Gov. Arnold Schwarzenegger is once again threatening layoffs of state employees to help bridge the state’s budget gap, and help California cope with its cash crisis. Layoffs are one of the tools the governor has at his disposal that would not require action by the Legislature.

Unions say the administration must notify them up to two months before any workers lose their jobs. And thus far, they have not received any formal notice from the administration.

“There is a process for layoffs,” said Yvonne Walker, president of SEIU Local 1000 which represents state workers. “But as a union, we don’t get to decide whether the state lays off people. We make sure it’s done fairly and try to offer alternatives (but) … realistically, we don’t have the ability to stop a layoff if it comes.”

The Schwarzenegger administration has said they are bracing for deep cuts in light of the staggering $40 billion figure, and that those cuts will likely include layoffs of state workers. But no details on any such plan have been hammered out.

For months, administration officials have been warning that the state could run out of money as early as February. In a letter sent to legislative leaders last week, Finance Director Mike Genest warned the state could begin delaying payments to contractors and paying others with IOUs.

“It now appears certain that available cash reserves from all sources will fall below the cash cushion target of $2.5 billion in February and that the state will begin delaying payments or paying in registered warrants in March,” Genest wrote.

The state has used IOUs only once since the Great Depression. Gov. Pete Wilson issued them during the recession of 1992, when state lawmakers could not reach a quick budget agreement.

The budget is more than $14 billion out of whack in the current fiscal year, according to numbers cited by the governor Wednesday. “Moveover,” wrote Genest, “given conditions in the economy, it is likely that the magnitude of the shortfall for this year will increase. Thus, the governor’s budget will include additional solutions to address the shortfall.”

If no deal is reached by Jan 10, administration officials say the budget plan for the 2009-10 fiscal year will be based on the assumption that lawmakers  will not be able to come up with a plan of mid-year cuts and/or revenue increases to address the problem. That could leave a hole of more that $30 billion in the budget.

“It’s going to be the most draconian budget in history,” warned one administration source.

“This is serious,” said SEIU’s Walker, who said she remains hopeful new revenues will be part of the final agreement. “I think it requires everybody to bring their most serious ideas. I can’t tell you how angry I am at the Republicans who signed the no-tax pledge. The state is in the worst financial crisis we’ve seen in decades, and they are taking options off the table.