Capitol Basement

Happy new year!

2009-07-01T14:32:43Z

California began its new fiscal year at midnight, and celebrated by taking billions in budget solutions off the table .

Capitol Weekly reports the standoff between Democrats and Gov. Scwharzenegger got a little expensive this morning. "The state Senate rejected three bills that would have lessened the state's immediate cash crush by billions of dollars in a surreal late-night session in which a packed Senate chamber quietly counted down the minutes to the new fiscal year, as Senate leader Darrell Steinberg's efforts to cajole Republicans came up empty.

"Republicans in the Senate, at the behest of Gov. Arnold Schwarzenegger, did not vote for the bills because Democrats and Republicans could not come to an agreement of a comprehensive $24 billion budget solution that the governor has repeatedly said he must have before signing any partial budget fixes.

"The bill's failure means that Controller John Chiang will begin issuing promisary notes to certain state vendors so that the state has enough cash on hand to meet debt service obligations and make education payments that are constitutionally required."

If you didn't stay up for the festivities, you can read the saga of the final moments of the last fiscal year, blow-by-blow, on Capitol Weekly's Twitter feed.

The LAT's budget team reports, "The state Senate, in late session, voted several times as midnight approached in a last-ditch effort to approve $3.3 billion in cuts to education and other programs and stave off, at least temporarily, the IOUs that California Controller John Chiang is set to begin issuing Thursday in lieu of some payments.

"Democrats had been hoping to use the funds to help defray the state's projected $24-billion deficit. But the money was allocated for the fiscal year that ended Tuesday, and after that it was too late to make the cuts.

"We have that duty to make sure that no one starves," state Sen. Jenny Oropeza (D-Long Beach) said as she pleaded with GOP senators for their votes.

"But Republican senators blocked the plan, which the Assembly approved last week. Schwarzenegger had vowed to veto the legislation because it did not meet his demand that any agreement close the state's entire deficit, an argument echoed by the Republicans in the Senate."

Dan Walters says he's seen this movie before. "The Capitol's budget game has evolved into a predictable pattern of political moves, one of which is a late-blooming demand for something not directly tied to the budget as a price for its enactment.

"Demanders, usually the governor or minority legislators, justify their genteel extortion on the grounds that without the leverage provided by the budget, the majority party would simply ignore them.

"That's why, for instance, the February budget deal included some hefty corporate tax breaks and a constitutional amendment demanded by Republican Sen. Abel Maldonado to create an open primary election system in California.

"The most recent political confrontation over the budget, which was still playing itself out late Tuesday, includes an 11th-hour demand by Gov. Arnold Schwarzenegger that Democrats agree to an overhaul of the state's pension system and health benefits for retired state workers."

The Register's Brian Joseph says there may be hope to avoid IOUs . "Senate Leader Darrell Steinberg, D-Sacramento, noted after the Senate’s unsuccessful session that State Controller John Chiang said he wouldn’t begin issuing IOUs until Thursday. Steinberg says he thinks that gives the Senate one more day to try.

The Wall St. Journal's Stu Wu pens what's known in the trade as a beat sweetener, scribbling a little valentine to Susan Kennedy.

"Republican Gov. Arnold Schwarzenegger, in his effort to end the partisan bickering that is pushing California to the brink of insolvency, is deploying Susan Kennedy, his cigar-smoking, paintball-playing Democratic chief of staff, to get the job done."

Because we all know that nobody heals partisan wounds like Susan Kennedy...

"The 48-year-old Ms. Kennedy has built a reputation as a pragmatic leader equally inclined to work with -- and lambaste -- lawmakers from both parties. Such a regard would have been unthinkable five years ago, when Republicans viewed her as a stereotypical Democrat -- a former director of the state party and top aide to Gov. Gray Davis who lives in famously liberal Marin County with her partner."

We won't share what the night birds in the Capitol were saying as they scrolled through the Susan Kennedy slide show late last night.

Oh, and if you want some more bad news, the state just lost another court case that says they're on the hook to reimburse transit agencies for millions of dollars borrowed during the last budget mess.

Well, it's not bad news if you're in transit, we suppose.

The LAT's Shane Goldmacher reports, "A state appeals court ruled Tuesday that California officials have illegally siphoned away billions of dollars from mass transit in the last two years to balance the budget.

"The decision by a panel of judges in the Third District Court of Appeal in Sacramento would put the state on the hook for $2.5 billion in transfers made in the last two years, said H.D. Palmer, a spokesman for the Department of Finance.

"Nearly $1 billion more in such transfers is included in the 2009-10 budget under consideration in the Legislature."

Steve Harmon takes a moment to profile the Legislature's two Republican leaders."One is a dairy farmer's son who once sold bull semen to pay for college. The other is a music professor's son who once researched earthquakes for Exxon.

The farmer's son, Sen. Dennis Hollingsworth, R-Temecula, is a darling of the right wing of the Republican Party. Assemblyman Sam Blakeslee, R-San Luis Obispo, the music teacher's son, is a favorite among environmentalists.

"They bring widely varying resumes to their posts as leaders of their respective Republican caucuses, but on taxes and their approach to solving the state's economic crisis, there is little that separates the two.

"They both fiercely oppose taxes and insist that the free market should lead the way out of the state's $24.3 billion deficit. That shouldn't be surprising, given how they came to lead their caucuses."

One passed the stopgap budget bills out of his house, while the other did the governor's bidding and plunged the state deeper into the budget morass...

Meanwhile, the feds are ready to take over our state parks , the Merc's Paul Rogers reports.

"The federal government is threatening to take possession of several of California's most prominent state parks — including Angel Island in San Francisco Bay, the top of Mount Diablo and four miles of beaches at Fort Ord Dunes near Monterey — if Sacramento lawmakers close them to balance the budget.

"That's the message from the National Park Service, which also has told Gov. Arnold Schwarzenegger that California will be blocked from receiving future money from the Land and Water Conservation Fund, the leading federal source of funding for parks, if it closes state parks now.

"The warnings came in a letter dated June 8 and obtained Tuesday by the Mercury News from Jon Jarvis, the Pacific regional director of the National Park Service, to Schwarzenegger."

Warning? Heck, unless we're missing something it sounds like a great way out for lawmakers. Send in the feds!

And finally, "As legislators battled over the state budget Tuesday, an independent commission voted to slash lawmakers' per-diem payments, car allowances and medical and other fringe benefits by 18 percent," the Bee's Susan Ferriss reports.

"The vote in Sacramento by the California Citizens Compensation Commissionfollows the board's vote last May to cut legislator and constitutional state officer salaries by 18 percent as of December 2010.

"The salary cuts could save an estimated $2.9 million a year. The non-salary cuts, which the commission wants to impose starting Dec. 1 of this year, would save an estimated $7.8 million over the next six years."

Ramrodded

2009-06-30T14:57:38Z

Well, this ought to make things easier. With the state facing a deadline this week to find a spending plan, the governor has announced at the 11th hour that he wants to reform the state's pension system first.

Ed Mendel reports, "Gov. Arnold Schwarzenegger, calling current benefits “unsustainable,” proposed a sweeping reduction in pension and retiree health benefits for new state workers.

"His plan would give new employees the same pensions received by state workers before a major benefit increase a decade ago, saving the state an estimated $74 billion over the next three decades.

"The new state workers would have to work 25 years, instead of 20, before receiving maximum retiree health coverage that would pay 85 percent of the average HMO premium, instead of the current 100 percent, saving the state $19 billion.

"The proposal by the Republican governor over the weekend is one of a series of “structural reforms” he is seeking as he negotiates with the Democratic-controlled Legislature to close a $24 billion state budget gap."

The Bee's Jim Sanders reports, "Senate President Pro Tem Darrell Steinberg said he is willing to consider pension changes but will not be ramrodded by the governor.

"The entire issue of pension reform deserves real consideration in the Legislature, but it's not right to jam it into a budget agreement in (the final) hours," Steinberg said.

Au contrair...

"Aaron McLear, Schwarzenegger's spokesman, said the pension and retiree health care proposals for future state workers were necessitated by Democrats' rejection of about $5 billion in program cuts sought by the governor.

"What the Democrats have said up to this point is, 'We don't want to eliminate (some programs targeted by Schwarzenegger), and we don't want to make them run more efficiently – what we want to do is raise taxes to pay for them.' And that's unacceptable," McLear said.

Meanwhile, the Legislature passed some veto bait for the governor as the deadline for IOUs approaches. "With only days before the state begins issuing IOUs, Gov. Arnold Schwarzenegger scolded Democrats Monday for "wasting time" on budget fixes he won't support while they accused him of making unreasonable demands," Shane Goldmacher reports.

"Democrats in the state Senate passed proposals to balance the state's books with the help of $2 billion in new taxes. But Schwarzenegger had already promised to veto the plan, which the Assembly approved Sunday night.

"I will never sign those kind of things, so why waste the time and why run out of time and then all of a sudden we have to hand out the IOUs?" Schwarzenegger told reporters.

"We are on the brink," said Sen. Denise Moreno Ducheny (D-San Diego) during the Senate floor debate. ". . . We're passing it to make sure that we've done our job," she said.

California will begin issuing IOUs for some of its bills Thursday, according to Controller John Chiang."

Capitol staffers have been notified that they will be among those not receiving pay if there is no budget in place by July 15.

The Chron's Kathleen Bender breaks down how the IOUs will work.

"Who will get them, how will they work and will you be able to use them to pay your bills?

"The state will continue making regular payments to schools (kindergarten through college) and to debt holders because the Constitution gives them priority.

"State employees, who received IOUs in 1992, will not receive them this time because a court found they violated labor laws. The state also must continue making regular payments to state employee and teacher pension plans, in-home supportive services and Medi-Cal providers.

"Without a budget fix, the controller expects to issue roughly $3 billion in IOUs and $11 billion worth of regular payments in July."

"Three California lawmakers want to give the Legislature a chance to reshape ballot initiatives before they're acted on by voters , a process that supporters say could result in fewer but better proposals reaching the ballot," AP's Steve Lawrence reports.

"Nobody can write a perfect initiative; nobody can write a perfect law," said Robert Stern, president of the Center for Governmental Studies, a Los Angeles think tank. "If the Legislature can work something out with (initiative) proponents, it will be a better-drafted measure."

"The three constitutional amendments, by Sen. Denise Ducheny, D-San Diego, Sen. Mark DeSaulnier, D-Concord, and Assemblyman Ed Hernandez, D-Baldwin Park, would reintroduce California to indirect initiatives.

"Those are initiatives that are sent to the Legislature for consideration and possible enactment or amendment after supporters gather a certain number of voter signatures.

"Eight states — Maine, Massachusetts, Michigan, Mississippi, Nevada, Ohio, Utah and Washington — currently have some form of indirect initiatives."

The LAT's Jim Tankersley says California will receive permission from Washington today to control tailpipe emissions from cars . "The Environmental Protection Agency will announce today that it is granting California's request to impose tough restrictions on greenhouse gas emissions from cars and trucks -- reversing the Bush administration's position and opening the way for the state to take the lead on global-warming policy.

"California developed the standards in 2004 but was barred from implementing them.

"EPA officials say granting California the waiver from federal standards gives the state wide latitude to promulgate stricter rules, restoring a 40-year interpretation of the Clean Air Act.

"It preserves California's role as a leader on clean air policy," particularly on motor vehicles, EPA Administrator Lisa Jackson said in an interview. "It feels good to know that we are able to move past -- address -- this issue, responding to the president's call."

And finally, from our Lost and Found files, "Bill Fulton doesn't remember losing his wallet, but its return helped him remember the past. The leather stayed smooth and the cowboy design unblemished. The zipper moved with ease. And when he looked inside, the contents brought back memories from 1946, when he apparently dropped the wallet behind the balcony bleachers in the Baker Middle School gym.

"Fulton's Social Security card and bicycle license, bearing the address where he lived during his teenage years, were positioned in their respective compartments, apparently untouched since the year after World War II ended.

"After that long, my gosh, it stayed in good shape," Fulton told the Baker City Herald. "It's hard to believe."

"Worker Nathan Osborne found the wallet — along with old homework, lost library books and a 1964 talent show program — while removing the bleachers for renovations on June 17. It was brought to Fulton's door the following day by Melanie Trindle, the Baker Middle School secretary."

Running in place

2009-06-29T15:02:46Z

"Exploiting a legislative loophole, Assembly Democrats late Sunday passed a tax increase and other fixes to bridge the state’s $24.3 billion deficit without a single Republican vote," Brian Joseph reports.

"Typically, tax increases and budget votes require a two-thirds majority. Since just over one third of the Assembly is controlled by Republicans, that means Democrats need at least a handful of GOP votes. But under the plan approved late Sunday, the Democrats were able to approve the tax increases and budget fixes, which come close to solving the entire deficit, on a simple majority vote.

"The State Senate is scheduled to vote on the same plan starting at 9:30 a.m. today."

Bloomberg's budget team reports ,"Democrats, who control the legislature, are at an impasse with Republicans and Schwarzenegger over whether to make up the difference with spending cuts or tax increases. Absent a fix by July 1, the state will begin issuing IOUs to pay bills.

“We are facing the real prospect of running out of cash here in California,” said Assemblyman Chuck DeVore, an Irvine Republican. “What we are dealing with here is an utter lack of compromise.”

Republicans argued that the measures violate California’s Constitution, which requires all taxes be approved by a two thirds vote.

The LAT's Shane Goldmacher reports, "Gov. Arnold Schwarzenegger has vowed to veto any budget package that includes tax increases, and he vetoed a budget last winter that contained a similar tax ploy.

"The move, coming as the state is days away from having to issue IOUs instead of paying its bills, is unlikely to do much to break the legislative logjam.

The plan, approved in a rare Sunday night session, would balance the budget with the help of more than $2 billion in new taxes on smokers, oil companies, drivers and homeowners. State Senate leaders said they would take up the bill today."

While the plan was debated on the floor, Bass was negotiating with the governor on an alternative.

The leader of the Assembly's minority Republicans, Sam Blakeslee of San Luis Obispo, said the proposal is illegal and Democrats would set back budget negotiations by passing it.

"It makes moving forward in a cooperative way more difficult when these types of drills are undertaken," he said.

This all comes a day after the governor laid out a new batch of budget demands.

"Gov. Arnold Schwarzenegger, seeking to conquer what could be the last budget crisis of his tenure, is engaged in a high-stakes negotiating strategy with lawmakers that could force him to preside over a meltdown of state government," the LAT's Halper and Rothfeld report.

"The governor readily admits that he sees the crisis as a chance to make big changes to government -- to "reform the system," he said Friday -- with proposals he has struggled to advance in the past.

Among them: reorganizing state bureaucracy, eliminating patronage boards and curbing fraud in social services that Democrats have traditionally protected. The governor also would like to move past the budget crisis to reach a deal on California's water problems that has so far eluded him.

"By agreeing to a partial budget solution such as one the Assembly approved Thursday, the governor would lose leverage to accomplish many of those things. Without the pressure of imminent insolvency, Democrats might be less likely to agree to his demands.

"But if his strategy fails, he could be blamed for unnecessarily subjecting state residents to misery."

George Skelton lays out his six rules for fixing the state. "Much repairing is needed," he writes. "Just don't tell me that California's budget can be fixed "once and for all" before the Fourth of July fireworks. If at least a patchwork budget isn't enacted by then, the state could explode into a grand finale."

We may be broken. But the LAT's Cathleen Decker reports California is no longer weird.

"The governor of South Carolina disappears and is thought to be hiking in the Appalachians. On Naked Hiking Day, no less. He turns up at the Atlanta airport and later admits spending the previous several days crying in Buenos Aires with a woman not his wife.

That followed close on the heels of the admission from a U.S. senator from Nevada that he'd had an affair with a campaign worker married to one of his aides. That followed the threat by the governor of Texas that it might consider seceding from the United States. That followed the governor of Illinois allegedly holding out for money as he decided whom to appoint to Barack Obama's former Senate seat. That followed the governor of New York consorting with a call girl.

"Tell us again: How is it that California is still seen as the kingdom of weird?"

"The state has offered up its share of celebrity officeholders. But Iowa sent Gopher from "The Love Boat" to Congress and Georgia forwarded Cooter from the "Dukes of Hazzard" -- and somehow those states managed to remain respectable. That is, to some extent, because the California stereotypes have been driven by perceptions of the populace, not the politicians."

Michael Gardner reports this year's budget may fundamentally alter the way Californians receive certain services. "Overshadowed by the more immediate budget crisis, Gov. Arnold Schwarzenegger and lawmakers are crafting separate plans to restructure state fire protection and water-delivery services across California.

"Desperate to save money and under intense pressure to shrink government, lawmakers have caught reorganization fever – evaluating offices that oversee everything from fishing to logging to boating.

Sen. Fran Pavley, D-Agoura Hills, one of the leaders of the reorganization drive, said deliberations are designed to “see what makes sense for the 21st century.”

What emerges could determine who controls two of the most vital public services the state provides. But major political fights loom, particularly for the water portion, given that even modest and inexpensive variations in the status quo can set off turf battles."

The Chron's Joe Garofoli writes about Democrats' favorite scapegoat for the budget mess . "About this time every year, as the Legislature and governor wrestle over how to pass the state budget, somewhere, somebody blames Sacramento's stalemate - and the state of the California's mediocre schools and crumbling roads - on Proposition 13.

"Californians will have the chance to debate Prop. 13 beginning next month, when the California Tax Commission is expected to issue a report on the state's tax system that participants say will include some game-changing proposals.

"Later this summer, the nonpartisan California Forward, which includes former Republican Secretary of State Bruce McPherson and former Democratic Assembly Speaker Robert Hertzberg, will issue recommendations on how local communities can have more power in the budget process."

Jim Sweeney reports that community college fees will spike by 30 percent, if things go according to plan in this year's budget.

"The increase would lift fees to $26 per unit, about $780 a year for full-time students. But most students would qualify for waivers, grants or enhanced federal tax credits that should cover all of their fees, state and college officials say.

"Unlike University of California and California State University students, who have endured a relentless run of tuition increases in recent years, those at the state's 110 community colleges have not seen fees raised in five years. That boost, also to $26, was rolled back to $20 in 2007."

The LAT's Carol Williams reports the conservatives on the U.S. Supreme Court are keeping a watchful eye on the famously liberal Ninth Circuit Court of Appeals.

"From prisoners' rights to environmental protection, laws set by the West's powerful appeals court were overturned in 15 of the 16 cases reviewed this term by the U.S. Supreme Court.

"The reversals affect a broad range of civil rights and business practices challenged in the nine states and two Pacific territories covered by the U.S. 9th Circuit Court of Appeals. The justices shot down four rulings seen as protecting nature against industrial hazards and five cases asserting claims by convicts that their rights were abused.

Judicial analysts attribute the high reversal rate at least partly to the 9th Circuit's reputation as a liberal-dominated bench, even though more recent conservative appointments have diluted that influence. Experts, including former law clerks, say the Supreme Court justices are more inclined to look over the shoulders of the 9th Circuit judges they suspect of favoring the underdog."

"Although the added $6 appears steep when measured as a percentage, it is much less than the doubling or tripling of fees that the nonpartisan legislative analyst suggested as a revenue-raising option."

"A prominent under-bite, scrunched face and floppy ears are the hallmarks of a winner. The winner of the World's Ugliest Dog Contest , that is.

"Pabst, a boxer-mix rescued from a shelter by Miles Egstad of Citrus Heights, Calif., won the annual contest on Friday at the Sonoma-Marin Fair in Northern California.

"Pabst's owner took home $1,600 in prize money, pet supplies and a modeling contract with House of Dog."

Beat it

2009-06-26T14:27:28Z

The bad news? Hey, we're all headed to budgetary hell in a handbasket? The good news? At least the Senate Republicans and the governor are back on the same page!

The LAT's budget team reports, "The state Assembly on Thursday approved $5 billion in budget revisions intended to keep California from having to issue IOUs next week, but Gov. Arnold Schwarzenegger quickly declared the package inadequate and vowed to veto it.

"Republicans blocked the measures soon afterward on the Senate floor. But Democrats said they would not abandon the effort to pass the package, which would cut billions from education, push some education costs into the future and defer other state expenses."

Can't we just figure out Abel Maldonado's price for his vote, and get on with this?

The San Francisco Chronicle's Capitol duo summarizes the frenzied day in Sacramento this way: "There was sweat - and even some tears - at the Capitol Thursday, but no progress on the state's fiscal crisis.

"Gov. Arnold Schwarzenegger squashed any hope the Democrats had of passing a partial budget plan designed to avoid IOUs next week.

"The current proposal in the Legislature amounts to nothing more than a piecemeal proposal and a second day of drills and if passed, I will veto it because it doesn't solve the problem," Schwarzenegger said in a statement.

The Press-Enterprise's Jim Miller reports, "Senate Republicans criticized the Assembly bills as inadequate and said the Legislature needs to solve the whole problem.

"I don't care what they did over in the other house. It's not right," said state Sen. Bob Dutton, R-Rancho Cucamonga, the Senate GOP's point man on budget issues.

"It's just two different strategies on how to solve the problem. They want to solve it all at once," said Kevin Jeffries, R-Lake Elsinore, of Senate Republicans. "The Assembly tactic is let's eat the elephant one bite at a time."

Mmmmm....Elephant.....

The Merc's Mike Zapler looks at what IOUs might actually mean for state vendors.

"Unless legislators quickly fix California"s $24.3 billion deficit, State Controller John Chiang says his office Thursday will begin issuing IOUs, or "registered warrants," to every company that does business with the state.

"The same goes for taxpayers expecting refunds. And agencies that provide services to California"s most vulnerable populations "” the poor, blind and elderly "” would have to find a way to keep benefit checks flowing.

"If you"re a college student expecting Cal Grant money, state officials say they hope to work with public universities to make sure students don"t suffer. Most other folks who get the IOUs would have to convince banks to cash them or simply make do until October, when state officials would make good on the paper promises."

John Myers and Anthony York break down the week's events in this week's podcast.

Capitol Weekly also has footage of this week's legislative smackdown between Anthony Portantino and Sen. Roy Ashburn . Click here to see the footage.

The Chron's Rachel Gordon says negotiators are trying to thwart a planned strike by BART workers.

"The lead mediator, Paul Roose, manager of mediation services for the California Department of Industrial Relations, was at the table four years ago during the last round of contract negotiations at BART, said department spokesman Dean Fryer. The unions requested mediation Wednesday and the district's negotiators agreed.

"The current contracts for the five BART employee unions expire at midnight Tuesday.

"Members of BART's largest union, Service Employees International Union, Local 1021, voted overwhelmingly Thursday to authorize its leadership to call a strike if deemed necessary.

"Members of two other big unions, Amalgamated Transit Union, Local 1555, and the American Federation of State, County and Municipal Employees, Local 3993, voted earlier this week in favor of strike authorization."

CalBuzz reports on a private poll that shows Jerry Brown with a 20-point lead over Gavin Newsom in a head-to-head race.

"Not only does Brown – who has yet to announce his candidacy — hold a 20-point lead more than a year before the primary, but among voters age 60 and older, the AG’s lead is 54-20 percent. And that matters because, as Moore told us: “The average age in the June 2010 Democratic primary electorate will likely be over 60.”

"As Calbuzz sees it, Newsom has a humungous challenge."

Marc Lifsher devles into the wild world of water softeners.

"The company behind the renowned "Hey Culligan Man!" advertising campaign of the 1950s has launched a political and public relations offensive to kill a bill targeting its signature product.

"That proposal would allow regulators to ban conventional water softeners that discharge salt into municipal sewer lines. The mineral makes it tough for sanitation districts to clean and reuse their sewage, which is an increasingly crucial source of irrigation water in drought-plagued California.

"The bill pits giant Culligan International Co. and smaller water-softener manufacturers and their dealers against a broad coalition of interests that includes California cities, water districts, big farming groups, chicken ranchers and even the golfing industry.

"It's a water-quality issue," said Mike McCullough, the director of environment and water resources for the Northern California Golf Assn. "If you have better-quality recycled water, obviously the turf can respond accordingly."

"But Culligan, based in Rosemont, Ill., contends that it's not to blame for California's water woes. It's portraying the legislation as a Big Government grab of private property."

And Dan Walters questions the usefulness of enterprise zones.

On June 10, the Public Policy Institute of California issued a report that was highly critical of California's "enterprise zone" program that gives tax breaks and other economic incentives for employers to establish new facilities in areas of high unemployment.

The 42 zones, established by local governments with state permission, cost local and state governments about a half-billion dollars a year in lost revenues but have "no statistically significant effect on employment," the PPIC study concluded.

"The state can ill-afford to continue the enterprise zone program without clearer evidence of its benefits or a well-defined plan to make it more effective," said Jed Kolko, co-author of the PPIC study."

In case you were wondering what the governor thought of the death of Michael Jackson , here's his statement:

“Today, the world has lost one of the most influential and iconic figures in the music industry. From his performances with the Jackson 5, to the premiere of the ‘moonwalk’ and ‘Thriller,’ Michael was a pop phenomenon who never stopped pushing the envelope of creativity. Though there were serious questions about his personal life, Michael was undoubtedly a great entertainer and his popularity spanned generations and the globe. Maria and I join all Californians in expressing our shock and sadness over his death and our hearts go out the Jackson family, Michael’s children and to his fans worldwide.”

"Sure, you may think the California Legislature spends a lot of wasted time on motions and resolutions. But it looks like we've got nothing on Louisiana. Somehow, even in California, we can't imagine Hurricane Chris getting invited to the Assembly floor to perform part of his hip-hop homage to Halle Barry. Of course, we've been wrong in overestimating the Legislature before, but it's worth a look at this bizarre legislative session to realize we're still a little ways from the bottom.

Countdown

2009-06-25T14:20:29Z

"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 IO Us.

"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.