California’s fiscal 2008-2009 budget is a month and a half late today. Negotiations continue between legislative leaders and Gov. Arnold Schwarzenegger.
They have less than two weeks to come up with a budget in time to avoid an issue of revenue anticipation warrants that would increase the state’s cash-flow borrowing costs for the current fiscal year, according to Tom Dresslar, a spokesman for state Treasurer Bill Lockyer.
“The current thinking is that Aug. 12 is the date when we would have to proceed full speed ahead” with a Raw issue, Dresslar said yesterday.
Lockyer would prefer to issue to issue the $10 billion of short-term debt as revenue anticipation notes because they would garner lower interest rates and would allow the state to forgo the purchase of an expensive credit enhancement facility.
But the state cannot issue the Rans until it has the “revenue certainty” that a budget would provide, Dresslar said.
California faces an estimated $15 billion budget deficit for the coming year. The Republican governor has proposed a combination of spending cuts and lottery bonds to close the gap, while the Democratic majority would prefer a combination of tax increases and smaller spending cuts to balance the budget. GOP lawmakers oppose tax hikes and are pushing for budget reform that would limit spending growth in the future to prevent future deficits.
Lockyer says the governor’s lottery bond plan would not provide the revenue certainty that would avoid a Raw issue because it would require a vote of the public.
California budgets require approval by a two-thirds majority in the Legislature, resulting in frequent budget impasses. The state has only passed budgets by its June 15 constitutional deadline four times in the past 20 years. Last year’s budget was not approved until Aug. 24.
Schwarzenegger increased pressure on legislators yesterday by signing an executive order that would lay off as many as 22,000 temporary state workers, cut wages for 200,000 state workers to the federal minimum wage of $6.55 an hour, and prohibit overtime.
“Our state faces a looming cash crisis,” Schwarzenegger. “It’s my responsibility to make sure that the state keeps running and that we continue to pay our bills.”
State Controller John Chiang has said he does not intend to implement the pay cut for state workers. Schwarzenegger said he would go to court to force Chiang to comply with the executive order if he does not comply.