Schwarzenegger & Legislative Leaders Reach Agreement To Close CA Deficit

CALLING FOR DEEP CUTS AND AVOIDING TAX HIKES, SCHWARZENEGGER AND LEGISLATIVE LEADERS AGREE ON WAYS TO CLOSE CALIFORNIA’S DEFICIT.

Gov. Arnold Schwarzenegger and legislative leaders announced today that they have reached a deal to close California’s $26.3-billion deficit and begin paying all of the state’s bills again.

The agreement does not include any broad-based tax increases, they said, and relies largely on deep cuts in government services to wipe out the deficit.

Most of the details have yet to be released. But interviews with lawmakers and staff involved in the negotiations suggest that the plan would reshape government in California, significantly scaling back many services that have been offered to residents — particularly the elderly and the poor — for years.

In addition, tens of thousands of seniors and children would lose access to healthcare, local governments would sacrifice billions of dollars in state assistance this year and large numbers of state prisoners would have their sentences scaled back. Welfare checks would go to fewer residents, state workers would be forced to continue to take unpaid days off and new drilling for oil would be permitted off the Santa Barbara coast.

“There isn’t a whole lot of good news in this budget,” said Senate leader Darrell Steinberg (D-Sacramento).

But the agreement does not “eliminate the safety net for California,” said Assembly Speaker Karen Bass (D-Los Angeles).

Schwarzenegger emphasized the lack of new taxes in the package, and said he hopes the full Legislature will vote on it Thursday.

The compromise followed several weeks of meetings in the governor’s office. The talks broke down repeatedly and the public was largely kept in the dark about the fine points of the negotiations. The accord comes amid one of the worst cash crises in history.

Finance officials have been sending out hundreds of millions of dollars in IOUs because the state does not have enough cash to pay all its bills; it is only the second time that has happened since the Great Depression. California’s credit rating has dropped to its lowest level in many years, teetering just above junk status. State Treasurer Bill Lockyer has warned that failure to put a budget in place quickly could hurt California’s standing on Wall Street so much that it would be unable to access the cash it needs to build schools and roads.

FOR THE LATEST NEWS AND INFORMATION ON THE BUDGET AND OTHER STORIES -CLICK THIS LINK FOR THE LOS ANGELES TIMES: Budget accord reached – Los Angeles Times.

Article by Shane Goldmacher and Evan Halper

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Posted by Man In The Middle on Jul 20th, 2009 and filed under Credit & Debt, Economy, Family Finances, Labor/Unions, Latest News, Money, News, Politics, Taxes, The States. You can follow any responses to this entry through the RSS 2.0. You can leave a response by filling following comment form or trackback to this entry from your site

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