SACRAMENTO — The state Assembly on Thursday approved $5 billion in budget revisions intended to keep California from having to issue IOUs next week, but Gov. Arnold Schwarzenegger quickly declared the package inadequate and vowed to veto it.
Republicans blocked the measures soon afterward on the Senate floor. But Democrats said they would not abandon the effort to pass the package, which would cut billions from education, push some education costs into the future and defer other state expenses.
The Assembly's action came despite earlier declarations by GOP lawmakers that they would block any proposals that did not close the entire $24-billion deficit. With the prospects of IOUs going to local governments, welfare recipients and college students as early as next Thursday, Assembly Republicans joined the majority Democrats to pass the measures.
As lawmakers debated, the controller and the state treasurer issued a joint statement warning that IOUs -- if made necessary by California's cash crunch and the continuing lack of a balanced budget -- would cause "substantial, long term damage" to the state's standing on Wall Street. Assembly GOP leader Sam Blakeslee of San Luis Obispo said that approving Thursday's budget bills was "the responsible and prudent thing to do."
But Schwarzenegger said the $5 billion in budget revisions, which could avert IOUs for much of July, "amounts to nothing more than a piecemeal proposal."
"Since the first day we began working to solve this $24-billion deficit, I have been clear: The Legislature must solve the entire deficit," he said. He vowed a veto if the bill package made it to his desk, "because it doesn't solve the problem."
Several GOP senators then met with the governor in his office. Republicans in the Senate subsequently blocked the package.
Senate President Pro Tem Darrell Steinberg (D-Sacramento) accused the governor of "engineering the Senate Republican efforts," a charge denied by that house's Republican leader, Dennis Hollingsworth (R-Murrieta).
Steinberg, who earlier this month received a gift of metal bull testicles from Schwarzenegger with a note suggesting he might need them to close a budget deal, accused Schwarzenegger and Hollingsworth of "machismo game-playing."
Some of the measures the Assembly approved would save money only if the legislation is enacted before Tuesday, when the current fiscal year ends. After that point, the billions of dollars in payments to schools will have been made.
