SACRAMENTO — As lawmakers rejected the core of a Democrat-backed budget plan intended to tame California's $24-billion deficit, a top finance official warned that the budget crisis could force him to begin issuing IOUs next week.
Controller John Chiang announced that he would have to start paying many of the state's bills with IOUs on July 2 if the partisan tug-of-war over the deficit isn't ended by then.
With a scant seven days to that deadline, both houses of the Legislature took up one of the 20 bills that make up the latest spending plan but failed to garner the two-thirds vote needed to pass it.
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.
Schwarzenegger has offered a plan that includes deep cuts to government services and the elimination of some health and welfare programs.
Steinberg and other Democrats said they won't budge from holding Schwarzenegger's most severe proposed cuts at bay.
"This is a matter of conscience," Steinberg said. "We have a sacred obligation, I would call it a moral obligation, to stand up for the least among us."
Republicans, meanwhile, said they would stand fast against any new taxes and complained that the majority Democrats did not let them participate as a joint conference committee crafted the latest budget proposal.
"Frankly, Republicans have been frozen out of the process," said Assembly GOP leader Sam Blakeslee (R-San Luis Obispo).
The complete budget text arrived so late, he complained, that voting for it would have been "an act of supreme faith."
With no GOP votes forthcoming, Democrats said they were contemplating options to pass their budget revisions with a simple majority vote. Such an act would take 90 days to go into effect and blunt some of the savings they hope to achieve.
