California Watch photo by Erin FergusonA budget clock hangs at Gov. Arnold Schwarzenegger's office in Sacramento.
In a display case outside Gov. Arnold Schwarzenegger’s office, a digital clock tracks the ever-growing state budget deficit. A technician had to adjust the clock Tuesday morning as the numbers grew too large for the space, hitting more than $1 billion in losses from ticking away an estimated $52 million per day.
California remains the only state without a passed budget this year, 28 days into the new fiscal calendar, and the clock keeps running. Of the $19 billion-budget shortfall, the governor and the Legislature have reached agreement on trimming about $11 billion of the shortfall, leaving a $7 billion problem.
Today, the first repercussion from the budget stalemate will hit the state’s community colleges.
Without a signed budget, state Controller John Chiang said his office cannot release $155 million in payment to the community colleges. The colleges will then have to borrow the money, and the amount the state pays in interest will come at the expense of cutting 1,200 classes, according to Scott Lay, president of the Community College League of California.
Meanwhile, the problems are mounting.
Yesterday, Schwarzenegger issued an executive order forcing furloughs on 156,000 state employees, starting Aug. 1. The governor’s spokesman, Aaron McLear, said the emergency order was made because “the governor has a responsibility to advert a cash crisis, and unfortunately because of the Legislature’s continued failure, we have to do furloughs.”
The move would reportedly save $147 million a month.
"Without a budget in place … every day of delay brings California closer to a fiscal meltdown," Schwarzenegger said in a statement. "Our cash situation leaves me no choice but to once again furlough state workers until the Legislature produces a budget I can sign."
The order, however, exempts certain unions and agencies that have agreed to Schwarzenegger’s pension-reform plan. Those groups, including the California Highway Patrol and the state Board of Equalization, will “contribute more of their salary to their pensions and roll back some of their benefits in order to save the state a lot of money," said McLear. "It's unnecessary to furlough them because they are already contributing back to the state."
The furlough order comes after Schwarzenegger lost a courtroom battle to cut state worker pay to the minimum wage. Unions condemned the newest move.
"To once again force state employees to take unpaid furloughs is just another punitive measure by Governor Schwarzenegger because he couldn't impose minimum wage," said Patty Velez, president of the California Association of Professional Scientists.
Pension reform, as it turns out, is one of the sticking points in budget negotiations. Schwarzenegger threatened to leave office without a budget next year if he doesn’t see significant movement on the issue.
"If I do not get all of the things that we need," Schwarzenegger said Tuesday while speaking at the Los Angeles Chamber of Commerce. "I will not sign a budget, and it could actually drag out until the next governor gets into office."
That hardened stance has the Legislature feeling that they have been left with very little room to negotiate in budget discussions. “To remove a full solution set and say ‘No way. No how,’ is irresponsible” said Speaker of the Assembly John Perez, D-Los Angeles.
Perez said “the budget needs to reflect what the priorities of our values should be as a state and the challenge is to pass a budget that doesn’t devastate the future by protecting jobs and funding higher education.”
Yesterday, Perez said Schwarzenegger's furlough order "deliberately hurts people."
"Every decision he's made has been designed to punish working families," Perez said in a written statement. "It would be a refreshing change if for once he could make a decision that helps the economy rather than hurts it."
Ongoing discussions among leaders are likely to continue into August.
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