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Lawmakers See Slim Chance of Meeting Budget Deadline

A deal by Sunday seems impossible. Davis thinks July 1, when painful costs kick in, is doable.

June 11, 2003|Evan Halper and Nancy Vogel | Times Staff Writers

SACRAMENTO -- California lawmakers threw up their hands Tuesday and acknowledged there is little chance they will make the June 15 constitutional deadline for passing a budget that would rescue the state from its $38-billion shortfall.

Some staff members involved in the process said that at this point -- five days before the midnight Sunday deadline -- it would be impossible to have a spending plan ready for a vote, even if legislative leaders were making progress. And there was no sign of that Tuesday.

"I think it's extremely unlikely we are going to get a budget by the deadline," said Assemblyman Keith Richman (R-Northridge), who has been working with Democrats on potential budget solutions. "I don't think that the difficult decisions that need to be made are being made."

The sentiment was echoed by seven other lawmakers who are key players in the budget debate.

"It has turned into a political crisis that has implications for a meltdown," said Assemblyman Mark Ridley-Thomas (D-Los Angeles.)

The only official to publicly express confidence in breaking the partisan deadlock was the governor.

"Ask me whether or not we get a budget in by July 1, and I am optimistic we will," Gov. Gray Davis said, referring to the start of the new fiscal year. "This will affect not only who gets funded in the upcoming budget, but how people view California as a place to live, work and invest. There are a lot of eyes on us and we have to rise to the challenge."

But Davis acknowledged that little progress was made at a private meeting Tuesday with top legislative leaders.

Minutes after the meeting began, an agitated Senate President Pro Tem John Burton (D-San Francisco) shouted loudly enough that his voice was heard through a wall, and then he stormed out of the room. Burton would say later only that he was feeling ill.

The inability of lawmakers to make progress on the budget will bring a heavy price tag today, as the state sells $11 billion in short-term loans just to generate enough cash to keep government operations running through August. The state's weakened financial standing will result in borrowing costs as high as $270 million -- enough to pay 5,000 teachers for a year.

In years past, the June 15 deadline has come and gone without approval of a budget partly because the state Constitution does not provide any consequence for missing the date. Lawmakers say the more genuine deadline for action is July 1, when state workers' salaries, vendor bills and other government expenses could stop being paid in full if a budget has not been signed into law.

But this year, the stakes for the early deadline are higher because Wall Street is looking for a sign that California lawmakers are serious about bringing the budget into balance.

At a closed-door caucus lunch, Republicans were warned yet again that straying from the party's anti-tax stand could damage their political careers. Last week the threat was made by Senate GOP leader Jim Brulte (R-Rancho Cucamonga). This time a more subtle warning came from a caucus guest, Stephen Moore, president of Club for Growth, a political action committee based in Washington that spent $338,000 to help defeat Republican Mike Briggs of Clovis in his run for Congress last year. Briggs was one of a handful of Republican assemblymen who voted with Democrats for a tax increase shortly before his run for Congress.

"I said we've got the knives out for any Republicans who would agree to raise taxes and vote with Gray Davis," Moore said of his presentation.

Democrats said they would go on the offensive today by releasing a report from a series of town hall meetings on the budget that they have held around the state. Their finding: Voters would rather see modest tax increases than drastic cuts in education, aid to the poor and disabled, and Medi-Cal. The meetings, however, were organized by Democrats who invited supporters to attend.

Previous budget proposals put on the table by both parties have relied on about $10 billion more in loans from New York to roll the deficit over into the next five years.

A representative from one major bank reiterated that, without a new tax, the money for rolling over the deficit might not be there. That banker's institution and others have already put that in writing to the governor. Republicans have accused those banks of bluffing, and say that other institutions are ready to lend the state money without a new tax.

"If those other banks put their position in writing, fine, let's talk about it," the banker said. "So far we haven't seen that."

Assemblyman Tony Strickland (R-Moorpark) said it would be better to blow the budget deadline than fold on taxes. Democrats "have to come to the realization that a tax increase will not happen in California," he said.

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