SACRAMENTO — After trying for weeks to fix a state budget gone out of control, Gov. Arnold Schwarzenegger and state lawmakers stood frozen in conflict Wednesday with the state at the brink of a meltdown.
A day after the state Senate failed in a late-night bid to close part of a deficit now projected at $26.3 billion, California Controller John Chiang took steps to begin issuing IOUs today to tens of thousands of companies and individuals that are owed millions of dollars by the state.
Inside the Capitol, signs of a resolution grew faint. The governor declared a fiscal emergency, proposed suspending the education funding requirements of Proposition 98 and -- as union members protested outside the Capitol -- ordered state workers to take a third unpaid day off each month.
A meeting of Schwarzenegger and the state's top four legislative leaders ended abruptly within half an hour. Assembly Speaker Karen Bass (D-Los Angeles) charged out of the governor's office, clearly distraught, and walked briskly down the hall.
"He broke it. He should fix it," Bass said tersely, alluding to Schwarzenegger's refusal to accept a budget deal that would have averted IOUs but not closed the entire deficit. "Nothing more to say."
Chiang was set to print 28,742 IOUs starting at 2 p.m., said Garin Casaleggio, a spokesman for the controller. The initial warrants, which total $53.3 million, will go primarily to people who are expecting state income-tax refunds. The state last issued IOUs in 1992.
Republicans in the state Senate, acting with the governor's support, blocked $3.3 billion in cuts in a series of party-line votes before midnight Tuesday, a move that effectively forced the state to begin issuing IOUs.
But when he spoke to reporters Wednesday, Schwarzenegger blamed legislators for refusing to meet his terms, for wasting time they could have spent negotiating and for catering to special interests by resisting his proposed government overhaul. The governor said he would not sign legislation that is not urgent or related to the budget.
"Right now, in the midst of a budget crisis, they are debating about cow tails, and I think that this is inexcusable," Schwarzenegger said, referring to an Assembly committee hearing on a proposal to bar dairies from cropping bovine tails.
