Budget Horror: New Year, No New Solution

By Mike Luery
|  Monday, Jan 5, 2009  |  Updated 5:23 PM PDT
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Budget Horror: New Year, No New Solution

Patrick Walton

Every hour, the state loses $1.7 million. By February, the state will have to hand out IOUs. People may get an IOU instead of a state tax refund.

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New year -- old problem. No solution.

California is spending more money than it is taking in.
 
Every hour, the state loses $1.7 million. By February, the state will have to hand out IOUs. People may get an IOU instead of a state tax refund.

"I will tell you that we have reached about 75 percent of what the Governor wants," said Assembly Speaker Karen Bass. "I also must tell you that the State of California will run out of cash at the end of the month."

The state legislature was back in session Monday following the holiday break.

The deficit clock outside the governor's office showed the state was more than $7.6 billion in debt as of Monday and losing $40 million each day the legislature fails to meet a compromise.

State employees may be the first to feel the budget crunch. Gov. Arnold Schwarzenegger's executive order calls for furloughing state workers two days a month without pay.

"You know furloughs really help us save money so we don't have to lay off employees," said BreAnda Northcutt of the Environmental Protection Agency. "We would treat it a lot like we treat a Saturday. So the work would be done in the four days, and on the fifth day, employees would not come in to work."

State worker unions, however, are fighting back, challenging the governor's executive order in court.

"We've sued him," said Chris Voight of the California Association of Professional Scientists. "We are in court. "We will have a hearing date fairly soon. We think we will get a judge to agree with us."

When he first suggested the idea in November, the furlough suggestion was one day a month," said Aaron McLear, the governor's press secretary. "Now, because the legislature has failed to act, it is two days a month. That is exactly what he has been saying, 'The longer we go without acting, the worst this gets.'"

Schwarzenegger said he intends to intensify the pressure this week to get the legislature to compromise.

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