SAN FRANCISCO — California lawmakers were unable to agree on a deal to close the state’s $24 billion budget deficit last night.
The failure to act before the fiscal year closed at midnight makes the deficit problem even harder to solve, because all the proposals on the table involved more than $3 billion in budget cuts attributable to fiscal 2009.
With the fiscal year over, those cuts are off the table.
The three measures needed to enact the fiscal 2009 cuts required two-thirds votes in the Legislature to take effect immediately as urgency bills.
The legislation to provide the 2009 cuts had cleared the Assembly on a bipartisan vote. But Republicans in the Senate, backed by GOP Gov. Arnold Schwarzenegger, refused to provide the necessary votes last night as the clock ticked toward midnight, saying they would only vote for a full package to solve the entire deficit.
Without making the 2009 cuts, the state constitutional formula for education spending in fiscal 2010 also moved higher, according to published reports, adding to the degree of difficulty in closing the budget deficit.
“It is without question the most irresponsible act I have seen in my 15 years of public service,” Senate president pro tempore Darrell Steinberg told the media after midnight. “It is a major blunder.”
Because the state is in position to run short of cash by the end of this month, Controller John Chiang is planning to issue registered warrants, or IOUs, to some creditors starting tomorrow.
By issuing IOUs to vendors, local governments, and taxpayers owed refunds, Chiang plans to preserve cash for creditors with constitutional or legal priority, including bondholders.
Steinberg said he would call the Senate back into session today to keep looking for a solution.
