California seen missing budget deadline again | Politics | Reuters

California seen missing budget deadline again

SAN FRANCISCO (Reuters) - Barring a miracle, California lawmakers will miss their June 15 deadline for passing a balanced budget -- a staggering challenge with the state facing a $24.3 billion shortfall amid the worst drop in state revenues since the Great Depression.

Observers of the most populous U.S. state's political scene laugh at the idea of a budget deal by Monday.
"It's about as likely as me being named MVP of the Stanley Cup final," said Dan Schnur, director of the Unruh Institute of Politics at the University of Southern California.

Lawmakers have in prior years routinely disregarded the deadline. How their two chambers are looking to solve the current budget mess point to another blown deadline.

Democrats who control the legislature are not on the same page on how to fill the budget gap, though they dislike Republican Governor Arnold Schwarzenegger's plan, especially its proposal to eliminate the state's welfare system.

He also has proposed filling the gaping budget hole for the fiscal year beginning on July 1 with steep spending cuts, layoffs and furloughs of state employees.

Citing the state's weak economy and double-digit unemployment rate, the movie star-turned politician has ruled out new taxes, which has raised his standing with the legislature's unruly and anti-tax Republican minority.

Schwarzenegger on Wednesday sounded like congressional Republicans of the 1990s by threatening a government shutdown. He said it is an option if lawmakers steer toward an emergency loan to help keep the state's finances afloat rather than concentrate on closing the budget shortfall.

"What we need to do is just to basically cut off all the funding and just let them have a taste of what it is like when the state comes to a shutdown -- grinding halt," Schwarzenegger told the editorial board of the Los Angeles Times.

DEMOCRATS UNDER PRESSURE

Schwarzenegger also urged Democrats to ignore lobbying by their union allies against sharply lower spending levels to help balance the state's books.

"Do they want to protect the workers that provide the services, or do they want to protect the people that get those services? The choice is up to them," he said.

His blunt talk came as the Service Employees International Union launched an advertising campaign against his budget plan, a threat to many of its 700,000 members in the state.

Other groups that stand to lose under his plan, including local governments fearing its proposal to borrow $2 billion of their money, are stepping up lobbying against it. Democratic leaders especially are feeling the heat.

"They're caught between satisfying the ideological needs of their members' funders and the need to work toward a budget compromise," Schnur said. "Republicans also feel the same pressure from their members' funders, but it just so happens it's the Democrats turn to face it in public."

State Senate President Pro Tem Darrell Steinberg has said spending cuts are inevitable, but he opposes Schwarzenegger's plan for scrapping state programs. Instead, he wants to tap reserves in the governor's plan to maintain the programs -- an idea State Treasurer Bill Lockyer, also a Democrat, dislikes because he wants a healthy reserve to help assure investors the state can pay the $7 billion to $9 billion in short-term debt his office assumes the state must sell.

Assembly Democrats have yet to unveil their budget concept. Members expect to swallow spending cuts but are discussing possibly raising revenues, most likely through fees of various kinds. That would rankle Republicans and invite the effective veto their numbers give them on spending plans.

Without Democrats unified, Monday's deadline will pass without a budget, and Schwarzenegger will increasingly brandish sticks at them because "There aren't any carrots left," said Republican political consultant Wayne Johnson.

"If there aren't enough dollars to go around, somebody has to decide who gets a check and who doesn't," Johnson said. "The situation isn't going to get any better."