Reporting from Sacramento — State lawmakers and Gov. Arnold Schwarzenegger, facing a budget deficit of more than $24 billion, prepared to go back to work this morning with one last chance to avert the issuance of IOUs after a late-night session ended in gridlock.
The state Senate is set to convene at 10 a.m., and Schwarzenegger is expected to lay out his plans in advance of Thursday's deadline, set by Controller John Chiang, for giving out IOUs in lieu of payments owed by the state.
"We have one more day," Senate President Pro Tem Darrell Steinberg (D-Sacramento) said.
But aides to the lawmakers and governor said they had an even larger shortfall to address after Republican state senators blocked a last-ditch effort Tuesday night to slice $3.3 billion, mostly from education.
Those proposed cuts, which were approved by the state Assembly last week on a bipartisan vote, were to have affected the fiscal year that ended on Tuesday. The opportunity to make the reductions expired at the stroke of midnight, after the package failed in a series of party-line votes, with one GOP senator abstaining.
Schwarzenegger had promised to veto the bills unless they were accompanied by a complete plan to balance the budget. Steinberg, saying Republican lawmakers had taken their direction from Schwarzenegger in voting it down, accused all of them of "the most irresponsible act I have seen in my 15 years of public service."
Officials said the failure to make the cuts means the state will now owe several billion dollars more to schools in the coming fiscal year because the state's complex education financing formula is based on the previous year's appropriation.
"It does make the problem bigger - there's no question about it," Senate Republican leader Dennis Hollingsworth of Murietta said, blaming the Democrats for failing to offer a plan that tackles California's full deficit without raising taxes. "We're not interested in partial solutions."
Thousands of state workers, whom the governor has targeted for a third unpaid day off every month, were preparing to show up outside the Capitol today to protest those plans and his proposed budget cuts, according to the Service Employees International Union, which represents them.
