Reporting from Sacramento — State leaders will forfeit more than $3 billion in potential budget cuts when their fiscal year ends at midnight if lawmakers and the governor fail to resolve their dispute over how to end California's financial crisis.
The state Senate is planning to remain in session until then in a last-ditch effort to pass the cuts, which would stave off, at least temporarily, the IOUs that officials are set to begin issuing Thursday in lieu of some bill payments.
Democrats have been hoping to use the $3.3 million to help defray the state's projected $24-billion deficit. But because the money is part of the current fiscal year, their opportunity to cut it ends tonight.
But Republican lawmakers have so far blocked the plan, which mostly consists of education cuts and which the Assembly passed last week. And Gov. Arnold Schwarzenegger has said he would not sign such a "piecemeal approach" to balancing the budget, a message he reiterated this afternoon.
"It will be vetoed without any doubt," the Republican governor told reporters.
Amid the friction, a state panel that sets compensation for elected officials this morning cut car allowances, health coverage benefits and tax-free living-expense payments for California legislators.
The 18% benefits reduction by the California Citizens Compensation Commission follows a salary cut of 18% enacted previously to affect lawmakers elected after this year. The decrease in benefits, however, will take effect Dec. 1 of this year and save $1.2 million annually.
"The state of California is in dire straits, and we have to do our bit to adjust the benefits to help with the budget problem," Chairman Charles Murray said after the commission's 5-0 vote, which came despite the panel's lawyer advising that it did not have the authority to reduce the living-expense payments.
That action, if it stands, would cut the $36,000 tax-free annual expense benefit by about $6,480 a year.
The state also pays $350 in monthly car costs. The commission's action would cut that by $63, which lawmakers who drive state-purchased cars in their districts would have to absorb.
The state has spent $3.2 million during the last three years buying cars for legislators, covering gas cards and paying to repair the vehicles when they break down or are damaged in accidents.
