SAN FRANCISCO - California's budget impasse has broken new ground, as the state government entered September without a spending plan for the first time ever.
Lawmakers wrapped up their regular session Sunday - the deadline for passing bills - but are expected to remain in Sacramento this week attempting to pass a budget, despite earlier efforts that have clarified just how intractable the impasse is. Though late budgets have become the norm, lawmakers have never before failed to pass one before the session adjourned.
The passing of August also meant the passing of one of the deadlines that had been thought to have encouraged action on a budget - the deadline for placing measures on the November ballot, a necessary component of distinct budget reform proposals put forward by Republican Gov. Arnold Schwarzenegger and GOP lawmakers.
Secretary of State Debra Bowen announced Friday that it was too late to add anything else to the general election ballot, as county election officials need to begin printing ballots by the end of this week to send them to military and overseas voters.
Officials at the state treasurer's office, state controller's office, and the governor's Department of Finance said they are continuing to work together on plans for the state's upcoming short-term borrowing of about $10 billion for operating cash.
If a budget is in place, the state plans to issue revenue anticipation notes, as it usually does. But if there is no budget, it will issue revenue anticipation warrants, which will require credit enhancement since the state will not be able to show borrowers that it has a plan in place to pay the money back next year.
"We're going down parallel tracks laying the groundwork for both Raws and Rans at the same time," treasurer's office spokesman Tom Dresslar said yesterday.
The treasurer's office would issue Rans and the controller's office would issue Raws. Plans call for Goldman, Sachs & Co. and Banc of America Securities LLC to underwrite the issuance in whatever form it takes.
Department of Finance spokesman H.D. Palmer said yesterday that the most recent plans he has seen call for the controller's office to firm up bids on credit enhancement for the Raws next week, though all hope isn't lost for Rans.
"If we were able to get a good budget done in a timely manner, we still have the possibility of not having to do a Raw," Palmer said. "Given the current impasse here in Sacramento, people are going to have to get serious really soon."
At this point, both the Assembly and the Senate have voted on budgets. Both were put forward by the Democrats in control of each house, and both were defeated with unanimous Republican opposition, which meant that the budget proposals did not achieve the two-thirds vote needed for passage.
The Senate plan, which went up for a vote last week, had much in common with Schwarzenegger's most recent budget gambit, notably the imposition of a temporary sales tax hike.
Over the weekend, Senate Republicans said they had a budget proposal that would require no tax hikes, but did not present it as a detailed plan. Senate president pro tempore Don Perata, D-Oakland, said he would call the Senate into session every day this week to ask GOP lawmakers if they had a budget proposal in bill form.
Without a budget, much state spending, including debt service, continues automatically.
Exceptions include payments to agencies providing many health care and social services, $1.1 billion in K-12 school appropriations due Sept. 26, and $464 million in community college payments also due Sept. 26.
The state also will not be able to issue any bonds until a budget is in place, Dresslar said.
