The state Senate rejected three bills that would have
lessened the state's immediate cash crush by billions of dollars in a
surreal late-night session in which a packed Senate chamber quietly
counted down the minutes to the new fiscal year, as
Senate leader Darrell Steinberg's efforts to cajole Republicans came up empty.
Republicans in the Senate, at the behest of Gov. Arnold
Schwarzenegger, did not vote for the bills because
Democrats and Republicans could not come to an agreement
of a comprehensive $24 billion budget solution that the governor has repeatedly
said he must have before signing any partial budget
The bill's failure means that Controller John Chiang will begin
issuing promisary notes to certain state vendors so
that the state has enough cash on hand to meet debt
service obligations and make education payments that
are constitutionally required.
But the Senate's failure to act on the measures takes away a series
of deferred payments and bookkeeping tricks that could
have saved the state up to $7 billion. The Senate's inaction now deepens the state budget hole, and will
renew the fight over additional cuts to social service
programs, and inevitably, Democrats' call for some new revenues.
"It is without question the most irresponsible act I've seen in my 15 years of public service," a visibly frustrated Steinberg, D-Sacramento, said after the session. He called the act
"a major blunder" and said "I hope its significance catches enough attention that
people will truly say its time to change a system that
allows the minority to rule the day."
You can watch Steinberg's post-session comments here:
The Senate adjourned after a marathon series of negotiations
that lasted throughout the day and evening. As late
as 10 p.m., Senate Republican Leader Dennis Hollingsworth,
R-Murrieta, was meeting with the governor in Schwarzenegger's smoking tent. According to numerous Senate sources
in both parties, many Republicans wanted to vote for
the bills, but held the line in the face of a veto
threat from Schwarzenegger.
"I think the Republicans were looking for a way out,
but the governor won't budge," Steinberg said after meeting with Hollingsworth.
After the vote, Hollingsworth blamed Democrats for
the stalemate. "By waiting until the last hour, Democrats have brought
us to the brink and still refuse to solve the $24 billion problem everybody knows we have," he said. "This is not what the people of California want; it’s not a fix."
Time was of the essence Tuesday night. In order for
the state to be able to delay these payments, the bils
had to be passed and signed by the governor before
the start of the new fiscal year, which began at the
stroke of midnight Wednesday. Last week, Assembly Republicans
joined with Democrats in moving the bills out of that
house. But Schwarzenegger said he would not sign the
bills without a complete budget solution.
Assembly Republican Leader Sam Blakeslee, R-San Luis Obispo, said he was disappointed in the Senate
vote, noting "the Assembly acted responsibly" by passing the bills out of their house on a bipartisan
"The defeat of these measures means that these savings
go away and our budget obligations will grow by $8 billion – making an already tough task even more difficult,” he said in a statement Wednesday.
Through the arcane formulas of state education finance,
the failure of one of those bills, which shifts $350 million out of redevelopment agencies into local school
districts, means the entire computation of the Proposition
98 education formula is different. The end result is
that the state is now on the hook to give schools an
additional $11 billion over the enxt several years, a debt which
is known in the education world as a "maintenance factor."
Steinberg lashed out at the governor, saying he orchestrated
the bills' demise "for no good reason. The govenror apparently was out
to prove a point, and he proved a point," said Steinberg. "in the end the governor wanted it his way. He wanted
the cuts he wanted, he wanted the reforms he wanted
and he wanted it right away. Whatever point he thinks
he made, there's one undeniable fact -- California is worse off tonight than it was yesterday."
The disappointing result for Steinberg and fellow Democrats
ended a day that was marked largely by optimism. At
various points, there were rumors that a framework
had been agreed to on an overall budget deal. Other
stories had the Republicans willing to put up votes
for the bills if Democrats committed in writing to
making changes in fraud investigations of in-home healthcare workers and Medi-Cal abuses. Republicans also pushed Democrats to accept
the governor's 11th-hour proposals to change the public employee pension
system to roll back benefits for future state workers.