"As Controller John Chiang
warned Wednesday that he is preparing to issue billions
of dollars in
IOUs because California is running out of money, a Democratic plan to
close the state's $24 billion deficit failed in both houses of the
Legislature ," The Merc's Mike Zapler reports.
"That outcome was widely expected, and it
triggered Sacramento's latest sprint to avoid insolvency. Facing a
crucial July 2 deadline, Democratic and Republican leaders began
what's
expected to be a feverish round of negotiations over
the next several
days to bridge a roughly $2 billion to $3 billion gap between the two
parties.
"Legislators appear to have no choice but to find a
compromise soon. California is on course to run short
of cash July 28;
a budget package must be adopted by next Thursday,
the controller
warns, in order to secure short-term loans to pay California's bills
before the cash crunch arrives.
"Chiang said the state will issue
$3.4 billion worth of IOUs starting next week if a budget
isn't passed.
They will go out to agencies ranging from the Student
Aid Commission,
which provides Cal Grants to college students, to the
Department of
Social Services, which disburses cash aid to welfare
recipients, the
blind and other disabled people."
The LAT's budget team reports, "Republicans in both houses voted against the measure , even though it
consisted of government cuts normally embraced by the
GOP and did not
include $2 billion in Democrat-endorsed tax hikes on the oil and
tobacco industries. They were joined by two Democrats
in the Senate and
one in the Assembly.
"Democrats vowed to fight on, but resolution of the
crisis is expected
to require closed-door meetings between legislative leaders and Gov.
Arnold Schwarzenegger.
Senate President Pro Tem Darrell Steinberg (D-Sacramento) said his
house will meet every day, if necessary, until a budget
is approved. He
also challenged Republicans to produce an alternative
plan to bridge
the budget gap."
And here, we thought the record from last year wasn't going to get played anymore...
Jim Miller says the state is getting ready for IOUs.
"California
Controller John Chiang warned Wednesday that the state
would issue IOUs
for the first time in 17 years starting next week unless the
Legislature starts fixing an estimated $24 billion budget shortfall.
"The state now
is on pace to run out of money by July 28. Treasurer Bill Lockyer and
Chiang -- both Democrats -- and Schwarzenegger have called on lawmakers
to fix the budget by the end of June to allow enough
time to arrange
short-term loans."
"Chiang's IOU announcement adds another level of urgency in
the
standoff. The state has not issued IOUs since 1992. Chiang's office
delayed
some payments during a cash crunch earlier this year
but the problem is
much worse now, his office said.
"We need to conserve cash in order to make all the payments
at the end of July," controller's spokeswoman Hallye Jordan said.
Bond holders, schools, and some other state programs
get first dibs
on state money. The state cannot issue IOUs to state
employees because
of a court ruling after the 1992 IOUs."
And in more good budget news, Marc Lifsher reports,
"Gov. Arnold Schwarzenegger's plan to raise $1 billion by selling part
of the state's scandal-plagued workers' compensation insurance company
is running into strong flak from small-business advocates, the
insurance industry and the state's elected insurance commissioner.
"The
governor wants to help reduce a $24-billion budget deficit by giving
private insurers a chance to buy about half of customers' policies at
the government-controlled State Compensation Insurance Fund.
"Opponents got a powerful new voice Wednesday when Insurance
Commissioner Steve Poizner warned that "a hasty or ill-considered sale
could wreak havoc on the already volatile workers' compensation market."
The
commissioner also released a list of 18 legal, financial and technical
questions that he said should be answered before a
sale takes place."
Democrat Noreen Evans and Republican Roger Niello discussed
the state of the state budget on Capitol Views, the new public affairs show from Capitol
Weekly and the Cal Channel . You can watch the budget discussion here (beginning at about the 15 minute mark).
CW's Malcolm Maclachlan reports that the Bay Area Council
is looking to pass off the responsibiity of the constitutional convention
drive.
"Citing political pressures, the business group pushing
the idea of a constitutional convention for the state
has begun efforts to hand off that effort to an independent
committee.
The Bay Area Council has been championing the idea
since last August. More recently, they have found themselves
embroiled in a contentious debate over whether a convention
should be allowed to consider the property tax limits
in 1978’s Proposition 13. This question culminated in an early June conference
call with anti-tax groups who threatened to derail the effort.
“We don’t want to get electrocuted on one of third rails of
California politics,” said John Grubb, a spokesman for the Council. “We want a neutral process to determine what will be
in the constitutional convention.”
CW's John Howard tells about a big-money, but little-covered Capitol fight between lawyers and accountants, that could have wide-ranging political implications.
"One of Sacramento’s most lucrative lobbying contracts – it was nearly
$1 million annually during 2007-08 -- is up for grabs, as the major
accounting firms’ prepare for a political and regulatory battle. The
dispute between accountants and attorneys is reverberating
in the Capitol and lobbying community, and looms as
a potential issue in the 2010 race for state attorney general.
"At issue is whether the accounting profession played
a role in the meltdown of California’s subprime mortgage market. Assemblyman Pedro Nava,
D-Santa Barbara, the chair of the Assembly’s banking committee, already has held two public hearings
on the role of accountants. More hearings are scheduled,
and he has been urged to use subpoenas and depositions
– an unusual step in the Legislature."
Meanwhile, CW handicaps the speakership fight to come. The top five: Kevin DeLeon, Anthony Portantino, Fiona Ma, John Perez
and Felipe Fuentes.
Looks like Rocky Delgadillo is just about officially ready to
jump back into the attorney general's race.
"Los Angeles City Attorney Rocky Delgadillo says he
is considering a second run for state attorney general
next year.Delgadillo
made the announcement Wednesday at City Hall as he
prepares to leave
office next week after serving the maximum two four-year terms.
Delgadillo, who says he opened a campaign committee,
lost to Attorney General Jerry Brown in the Democratic
primary in 2006."
"Many California businesses could soon face the nation's first state fee
for emitting greenhouse gases , under a proposal state air quality
regulators will discuss today," the Chron's David Baker reports.
"The fee - about 12 cents per metric ton of carbon dioxide - is not
designed to penalize emissions. Instead, it would pay
for creating and
enforcing the state's global warming regulations, the result of
California's landmark 2006 law to fight climate change.
"If approved by the California Air Resources Board,
the fee would not
apply to every California business or industry. Oil
refineries, cement
factories and electric utilities would bear most of
the cost, with a
typical refinery paying an estimated $1.3 million per year.
"The fee would raise a total of $51.2 million for each of the next
three years, but eventually drop to $36.2 million. Most of that money
would stay with the air board, which develops most
of California's
climate change policies.
And from our We Don't Even Know Where to Begin Files , "Police say a California man donning a bustier and watching
porn on a
computer in an apartment complex gym was arrested after
officers found
drugs in his backpack.
Sgt. Todd Bullock says 45-year-old Stephen Murdoch of Tustin was
arrested early Tuesday after a security guard spotted
him in a workout
room that was supposed to be closed and locked.
When police
peered inside, they saw Murdoch -- also in a miniskirt, fishnet
stockings and heels -- hiding behind exercise equipment and watching an
adult film on a laptop.
Officers noticed Murdoch was sweating
profusely and talking quickly. They arrested him on
suspicion of drug
possession after allegedly finding marijuana, methamphetamine
and pipes in his bag.
