Lawmakers Miss Midnight Deadline: IOU's Likely, Deficit Grows

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(Sacramento, CA)
Wednesday, July 1, 2009

The Senate session began around 9 yesterday morning….but as midnight approached, 15 hours later, no deal had been struck:

“If members can please take their desk, it would be appreciated.  We are 10 minutes away from the next fiscal year.” 

Democrats were pushing several measures aimed at freeing up some cash to prevent the state from having to issue IOU’s this week.  However, Senate Republicans blocked the move – and the Governor threatened to veto the measures.  Democratic Senate Leader Darrell Steinberg pleaded with lawmakers to pass the bills:

  “This is craziness.  There’s no excuse for it.  There’s no excuse to hold this whole stage hostage.”

Senate Republicans and Governor Schwarzenegger say they’ll only support a 24 billion dollar solution – not partial fixes.  GOP Leader Dennis Hollingsworth:


“The situation now, rather than cutting with a scalpel, because of the inaction and the refusal to address the entire 24 billion dollar problem, that scalpel will become an axe, and entire programs will have to be lopped off.”

The stop-gap measures included several billion dollars in education savings that were lost when the state’s new fiscal year began at midnight.  That means lawmakers will have to find other ways to make up that difference.   It also means the state’s shortfall has grown.   State workers are also probably looking at a third furlough day this month.  The Governor warned that if lawmakers didn’t come up with a deal by now, he’d implement a third unpaid day.  After the midnight deadline came and went, Senate Leader Steinberg was clearly upset:

“It’s without question the most irresponsible act I have seen in my 15 years of public service. It’s a major blunder.”

Both Steinberg and GOP Leader Hollingsworth say they think it’s still possible to avoid IOU’s.  The Controller isn’t expected to issue them until Thursday – and the leaders say that gives them one more day to try to work out a deal.