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The Daily News of Los Angeles
Jun 30, 2005

by Harrison Sheppard & David M. Drucker

STATE BUDGETEERS TO MISS DEADLINE AGAIN

SACRAMENTO, CA -- Barring a miraculous end to political gridlock, the constitutional deadline for a new state budget will come and go tonight, and California will start the new fiscal year without a spending plan - for the 16th time in the past 20 years.

And with the public growing increasingly unhappy with the governor, the Legislature and the direction they are taking the state, critics are lining up and ready to pounce even as state employees and vendors start worrying about how long it will take to get their checks.

"These guys in Sacramento can't do anything on time except cash their paychecks and per diems," said Jamie Court of the Santa Monica-based Foundation for Taxpayer and Consumer Rights.

"The paychecks for state employees and for contractors shouldn't be part of this chess game. It's a tragedy - and if it goes on too long, the state's credit rating will suffer."

Democratic leaders have scheduled a legislative vote on their latest budget plan for today. It is almost certain to fail to get enough Republican support to generate the necessary two-thirds approval.

For Assembly Speaker Fabian Nunez, D-Los Angeles, the latest Democratic budget plan appeared to be a take-it-or-leave-it offer, with little room for new compromise.

"Short of giving the governor his May revise and putting that up for a vote, this is probably the best thing you're going to get,'' Nunez said. "I don't think the Republican legislators want a budget; I can tell you that. They think if they hold it up, it will create more leverage for the governor in the fall elections."

Today is the constitutional deadline for the governor to sign the budget for fiscal year 2005-06, which will begin Friday.

The most recent, and only, budget vote was held June 15, the deadline for legislative passage, when it failed to garner a two-thirds majority in either house, dying 47-32 in the Assembly and 25-13 in the Senate.

Government watchdogs on the right and left weren't buying the excuses of elected officials from either party. They were saying Schwarzenegger, as well as Democratic and Republican legislative leaders, should find a way to do their job and pass a budget that is balanced, fiscally responsible - and on time.

Bill Hauck, president of the Sacramento-based California Business Roundtable, said budgets that run a few days or even a week late don't necessarily cause problems. But he said California's penchant for late budgets presents a picture of political instability to the national business community that discourages companies from setting up shop in the Golden State.

"With respect to business expansion inside or outside of California, the lack of fiscal stability is a real problem," Hauck said. "It's also pretty clear that the high-(paying) jobs also tend to be mobile and can go elsewhere."

Since 1978, the Legislature has met the June 15 deadline for budget approval just four times, with a governor meeting the June 30 signing mark nine times.

The latest Democratic proposal that Nunez presented Wednesday contains several concessions toward the revised budget proposal Schwarzenegger released in May, while increasing education spending and reducing future deficits.

But the governor's finance director, Tom Campbell, said the latest Democratic plan still commits too much one-time money to ongoing programs, which could subject the state to runaway deficits like those that plagued Sacramento in recent years.

"In the long term, we have no assurance that our budget problems won't come roaring back,'' Campbell said. "We have not found a middle ground yet, but I'm hopeful that it might be that we can.''

One Democratic concession is to repay $525 million of the $1.2 billion borrowed from local governments, as Schwarzenegger originally proposed.

Democrats had proposed waiting to repay the entire debt next year, but they now agree with the governor's plan to pay some of it early. Part of this money would come from $390 million in additional state tax revenue forecast recently by the state Department of Finance.

Meanwhile, state Controller Steve Westly warned that a budget impasse, if extended through July, could spell disaster for public elementary schools, high schools, community colleges and other services that rely on payments from Sacramento. In jeopardy: $770 million earmarked for schools and vendors doing business with the state.

"The longer we go without a budget, the more pain will be felt around the state - in our schools, colleges and businesses,'' Westly said.
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Contact the author Harrison Sheppard at: (916)446-6723 or harrison.sheppard@dailynews.com

STICKING POINTS

The state is not expected to have a budget when the new fiscal year begins Friday. Here are a few key differences between Gov. Arnold Schwarzenegger and legislative Democrats.

WHAT ARNOLD WANTS:

--Shift $469 million in teacher pension costs to local school districts.

--Cut $408 million in employee compensation.

--Cut $200 million in wages for In-Home Supportive Services.

WHAT THE DEMOCRATS WANT:

--Don't shift teacher pension costs; instead defer $235 million in past-due Proposition 98 funding.

--Cut only $40 million in employee compensation.

--Restore IHSS funding.



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