California lawmakers reached an agreement with Governor Arnold Schwarzenegger over how to close a $26 billion budget deficit that pushed the most-populous U.S. state to the brink of insolvency.
The deal, reached by legislative leaders after two months of frequently acrimonious negotiations, would slash spending for schools, public works and welfare programs amid the longest recession since the 1930s. If approved by the full Senate and Assembly, the agreement will also siphon money from municipalities, force companies and individuals to pay income taxes sooner and make it more difficult to receive state aid.
“We came to a basic agreement, a budget agreement,” Schwarzenegger told reporters outside his office last evening. “This is a budget that has no tax increases and this is a budget that is cutting spending and it deals with the entire $26 billion deficit.”
The agreement promises to end a battle over the $100 billion budget that forced California to pay some bills with IOUs, pushed debt ratings on $72 billion of bonds closer to non- investment grade and threatened to further batter the state’s economy. It is the second time this year that the government redrew the budget amid job losses that pushed unemployment to 11.5 percent in May and declining incomes that lowered tax collections 15 percent from a year earlier.
Senate and Assembly leaders said they will seek to put the proposals to a vote by July 23. It would require passage of more than a dozen bills by a two-thirds margin. While Democrats control both chambers of the Legislature, they are six votes shy of such a supermajority.
Showing posts with label California. Show all posts
Showing posts with label California. Show all posts
Monday, July 20, 2009
Thursday, July 2, 2009
California in 'fiscal emergency'
Governor Arnold Schwarzenegger also ordered many state offices to close for three days each month until June 2010, with staff unpaid for those days.
California has been one of the US states hardest hit by the recession.
The moves comes after state legislators missed a 1 July deadline to approve a budget for the coming financial year.
State Controller John Chiang has said the failure to meet the deadline means the state deficit will increase by up to $6.5bn by September.
Mr Chiang told the BBC that many vulnerable people had been put in harm's way by the state's failure to agree the budget and to provide "essential dollars to help these people pay their rent, to put food on the table or to pay their utility bill".
He had earlier warned that drastic measures would have to be taken to conserve cash, including delaying payments to companies working for the state and to those relying on benefits and grants.
Under the emergency measures, some state offices will be closed on the first, second and third Friday of every month until June 2010, with staff not paid for those days.
Mr Schwarzenegger said in a statement that although the legislature had failed to remedy the budget problems, "solving the entire deficit" remained his "first and only priority".
"I will not rest until we get it done. I will not be a part of pushing this crisis down the road - the road stops here," he said.
The White House said it was closely monitoring the situation in the state.
source: BBC News
California has been one of the US states hardest hit by the recession.
The moves comes after state legislators missed a 1 July deadline to approve a budget for the coming financial year.
State Controller John Chiang has said the failure to meet the deadline means the state deficit will increase by up to $6.5bn by September.
Mr Chiang told the BBC that many vulnerable people had been put in harm's way by the state's failure to agree the budget and to provide "essential dollars to help these people pay their rent, to put food on the table or to pay their utility bill".
He had earlier warned that drastic measures would have to be taken to conserve cash, including delaying payments to companies working for the state and to those relying on benefits and grants.
Under the emergency measures, some state offices will be closed on the first, second and third Friday of every month until June 2010, with staff not paid for those days.
Mr Schwarzenegger said in a statement that although the legislature had failed to remedy the budget problems, "solving the entire deficit" remained his "first and only priority".
"I will not rest until we get it done. I will not be a part of pushing this crisis down the road - the road stops here," he said.
The White House said it was closely monitoring the situation in the state.
source: BBC News
Wednesday, July 1, 2009
California, other states face tough budget choices
SACRAMENTO, Calif. – The California Senate has shut down for the night after failing to approve a stopgap plan to stave off the need for IOUs and ease the state's $24.3 billion budget deficit.
Lawmakers there were among many around the nation who went up against a midnight deadline as the fiscal year ended for many states.
Legislators in more than a half-dozen states met in around-the-clock budget sessions as they struggled to avoid government shutdowns and other painful cuts, with the most dramatic negotiations unfolding in California.
The end of June marks the end of the fiscal year in many states, meaning lawmakers worked late Tuesday evening to pass budgets in a year that has seen the recession take a devastating toll on government finances.
In California, the budget mess threatened to cause fallout nationwide because of the sheer size of the state's economy. The Senate rejected three bills designed to save $5 billion, including $3.3 billion in education funding cuts that had to be enacted before the new fiscal year began Wednesday.
Senate President Pro Tem Darrell Steinberg, a Democrat, called Republicans' refusal to vote for the measures "an irresponsible position to take." At least two Republican votes were needed to put together the two-thirds majorities required to approve the legislation, which passed the Assembly last week with bipartisan support.
Arizona, Illinois, Indiana, Ohio, Connecticut, Mississippi and Pennsylvania were among the other states that raced against the clock to pass budgets — and avoid crippling consequences.
Faced with a budget stalemate, the Ohio House voted in favor of a seven-day spending plan that will allow the state to keep operating while budget talks continue, the first temporary budget Ohio has been forced to approve in 18 years.
Indiana narrowly averted a large-scale government shutdown after coming to terms on a budget, and neighboring Illinois was likely to begin the new fiscal year without any plan for paying its employees or delivering government services. Government won't shut down without a budget, but lawmakers are faced with the biggest deficit in state history.
In Connecticut, Gov. M. Jodi Rell signed an executive order to keep the government running when the new fiscal year begins Wednesday, without a two-year budget in place. While she contends the average taxpayer won't notice any change, leaders of cities and towns fear delays in state grants that fund everything from road repairs to local education.
In Arizona, House lawmakers approved nine bills late Tuesday night to implement most of a compromise budget negotiated with Gov. Jan Brewer. But they omitted two controversial tax proposals, including a sales tax increase that Brewer has insisted on. The Senate followed by giving the same Republican-drafted bills preliminary approval.
Pennsylvania faced the prospect of not being able to pay state employees if they cannot resolve an impasse. State workers will receive only partial pay on July 17 and July 24, after which paychecks will be withheld entirely until the impasse is solved. They will then be paid retroactively.
Gov. Ed Rendell said 10 banks and credit unions have agreed to help 69,000 state employees by offering them low- or no-interest loans and lines of credit.
In most states, the debate centers on whether states should be raising taxes to bridge the budget gaps. California Gov. Arnold Schwarzenegger said he wouldn't sign anything that raised taxes or fees beyond what he has already proposed.
"They should forget about that," he said, accusing Democrats of going through a "song and dance. Let's get to work, fix it."
State Controller John Chiang has said he would have to start issuing the IOUs on Thursday unless lawmakers took steps to stem the state's red ink by then.
Roughly $3 billion worth of IOUs will be issued in July unless a compromise on closing the deficit is reached quickly. They will be sent to state contractors, college students, welfare recipients, low-income seniors, the disabled and others who depend on or deliver state services. Counties will not get paid for social programs they administer.
Lawmakers there were among many around the nation who went up against a midnight deadline as the fiscal year ended for many states.
Legislators in more than a half-dozen states met in around-the-clock budget sessions as they struggled to avoid government shutdowns and other painful cuts, with the most dramatic negotiations unfolding in California.
The end of June marks the end of the fiscal year in many states, meaning lawmakers worked late Tuesday evening to pass budgets in a year that has seen the recession take a devastating toll on government finances.
In California, the budget mess threatened to cause fallout nationwide because of the sheer size of the state's economy. The Senate rejected three bills designed to save $5 billion, including $3.3 billion in education funding cuts that had to be enacted before the new fiscal year began Wednesday.
Senate President Pro Tem Darrell Steinberg, a Democrat, called Republicans' refusal to vote for the measures "an irresponsible position to take." At least two Republican votes were needed to put together the two-thirds majorities required to approve the legislation, which passed the Assembly last week with bipartisan support.
Arizona, Illinois, Indiana, Ohio, Connecticut, Mississippi and Pennsylvania were among the other states that raced against the clock to pass budgets — and avoid crippling consequences.
Faced with a budget stalemate, the Ohio House voted in favor of a seven-day spending plan that will allow the state to keep operating while budget talks continue, the first temporary budget Ohio has been forced to approve in 18 years.
Indiana narrowly averted a large-scale government shutdown after coming to terms on a budget, and neighboring Illinois was likely to begin the new fiscal year without any plan for paying its employees or delivering government services. Government won't shut down without a budget, but lawmakers are faced with the biggest deficit in state history.
In Connecticut, Gov. M. Jodi Rell signed an executive order to keep the government running when the new fiscal year begins Wednesday, without a two-year budget in place. While she contends the average taxpayer won't notice any change, leaders of cities and towns fear delays in state grants that fund everything from road repairs to local education.
In Arizona, House lawmakers approved nine bills late Tuesday night to implement most of a compromise budget negotiated with Gov. Jan Brewer. But they omitted two controversial tax proposals, including a sales tax increase that Brewer has insisted on. The Senate followed by giving the same Republican-drafted bills preliminary approval.
Pennsylvania faced the prospect of not being able to pay state employees if they cannot resolve an impasse. State workers will receive only partial pay on July 17 and July 24, after which paychecks will be withheld entirely until the impasse is solved. They will then be paid retroactively.
Gov. Ed Rendell said 10 banks and credit unions have agreed to help 69,000 state employees by offering them low- or no-interest loans and lines of credit.
In most states, the debate centers on whether states should be raising taxes to bridge the budget gaps. California Gov. Arnold Schwarzenegger said he wouldn't sign anything that raised taxes or fees beyond what he has already proposed.
"They should forget about that," he said, accusing Democrats of going through a "song and dance. Let's get to work, fix it."
State Controller John Chiang has said he would have to start issuing the IOUs on Thursday unless lawmakers took steps to stem the state's red ink by then.
Roughly $3 billion worth of IOUs will be issued in July unless a compromise on closing the deficit is reached quickly. They will be sent to state contractors, college students, welfare recipients, low-income seniors, the disabled and others who depend on or deliver state services. Counties will not get paid for social programs they administer.
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