ALAMEDA, Calif. — The good news: two California leaders are on record saying when they will be ready to get the state budget done. The bad news: it’s after the November election.
And that raises the specter of the state once again having to pay many bills with IOUs, as it did last year, warned state Controller John Chiang.
Four weeks into the fiscal year, no budget is in sight.
Speaking to a business audience Monday in Los Angeles, Gov. Arnold Schwarzenegger repeated earlier warnings that he will not sign a budget unless it includes reforms to state employee pensions, the state tax system, and a new budget rainy-day fund.
At first, he told the Los Angeles Chamber of Commerce audience that “it will take another few weeks to get a budget done.” Speaking to reporters outside afterward, Schwarzenegger extended the timeline.
“It could actually drag out until the next governor gets into office,” he said.
Schwarzenegger is termed out of office after November’s election. He will be replaced by either Republican Meg Whitman, the former eBay executive, or Democrat Jerry Brown, the state’s former governor and current attorney general.
The Republican governor’s threat prompted a tit-for-tat response from the Senate’s top Democrat, President pro tempore Darrell Steinberg.
“If the governor continues to insist on granting billions in corporate tax cuts financed by drastic cuts to public education and programs for working mothers and their children, I am prepared to grant his wish by waiting for the next governor,” he said in a statement.
The controller issued his own warning Monday, saying that continued budget delay will render the state unable to pay some bills and further damage its credit ratings.
“Every passing day of political paralysis leads us closer to a completely avoidable fiscal meltdown,” Chiang said in a statement.
Absent an “honestly balanced” budget, Chiang said he would have to start issuing IOUs to some creditors by late August or September to ensure California has enough cash for payments that enjoy higher levels of legal protection, including debt service.
Schwarzenegger proposed a budget that closes a shortfall of almost $18 billion with no tax increases, using wholesale cuts to social programs and the state’s welfare program.
Leaders of the Democratic legislative majorities insist on preserving welfare programs. They have been pushing proposals to increase taxes and, in the case of the Assembly, borrow money.
The GOP minorities are standing behind the governor’s no-new-tax budget, and they have effective veto power, because passing a budget requires a two-thirds vote in each house. That means Democrats cannot pass a budget without Republican votes.
A measure on November’s ballot, Proposition 25, would revise that rule, allowing budgets — but not new taxes — to pass on majority votes.
Schwarzenegger said Monday that he does not like that idea.
“If you do the budget with a simple majority, you know, again, there is one party that will make all the decisions,” he said.
Steinberg, not surprisingly, thinks majority vote budgets are a good idea.
“It works well in the 48 states that use it,” he said. “Why the governor opposes eliminating budget dysfunction in California defies explanation.”