Budget Deal: Now What?

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(Sacramento, CA)
Thursday, February 19, 2009

It’s been a long week of late-night debates, with locked-in lawmakers toting toothbrushes and sleeping bags.  One Senate session went for more than 45 hours straight:

"Our staff has been subsisting pretty much on red bull and power bars for the last week or so.”

That’s HD Palmer in the Department of Finance.  He says the budget comes just in the nick of time.  Another day or two, and hundreds of construction projects worth billions of dollars would have been stopped:

“Some of these key projects around the state in transportation and veterans homes and environmental work aren’t going to come to stand still because we now have a budget deal in hand.”

More than five-thousand other public works projects have also been delayed due to the state’s deficit and the tight credit markets.  Palmer says work on many of those will likely get going again too – but it depends on how quickly the state’s cash flow improves.  That’s a huge concern for State Controller John Chiang.  He’s been delaying income tax refunds, payments to vendors and student aid checks for several weeks because the state was short on cash:

“Well, I want them to know, the Controller’s office, once we have that cash, is going to make those payments immediately.”

But Chiang warns that won’t be right away.  His office says the plan is to send out checks that were due this month in March.  He says it depends largely on how Wall Street views California’s budget solution.  Meantime, Governor Schwarzenegger’s office says there will likely still be state worker layoffs – though it may be less than the planned 10-thousand.  And unpaid furlough days will continue as well – though for some workers it will on be once a month, rather than twice.

Some state offices will still be closed Friday because most state workers are required to take an unpaid day off.  However, this may be the last day offices shut down entirely.  In the future, furloughs are expected to be staggered so that buildings remain open.