CALIF. BUDGET IMPASSE ABOUT TO BECOME THE LONGEST EVER

By Judy Lin, Associated Press Writer | The Boston Globe | http://bit.ly/a7WoFb

Update:

California budget stalemate now longest ever 17 September | The impasse over solving California's $19 billion budget deficit reached an inglorious milestone today when it officially became the longest stalemate over the state budget in history, though some lawmakers think it may end soon.

September 16, 2010 - SACRAMENTO, Calif. (AP) —California lawmakers are on the brink of setting a record, but it's not one that is likely to boost their abysmal approval ratings among voters.

While budget impasses in the Golden State have become as common as Santa Ana wildfires, Thursday marks the 78th day -- the longest period ever that the Legislature has gone without approving a new state spending plan. There are ominous signs that the imbroglio will continue indefinitely.

The outcome may not be resolved until after the November elections, the leader of the state Senate has suggested, as Democrats and Republicans remain in a standoff over whether new taxes or more spending cuts are needed to close California's $19 billion deficit.

If Thursday passes without a budget, which seems entirely likely, it will break the current record for failing to produce a spending document set two years ago -- after deep spending cuts and grueling negotiations -- with the nation's most populous state sliding deeper into recession.

The impact of the new record delay hasn't been widely felt -- yet. State finance officials are able to keep paying most of the bills, and many businesses that rely on state funding have found loans or other ways to work through what have become almost yearly problems.

But that could change, beginning in October when available tax funds will diminish. To preserve cash, the state already has deferred billions in payments to schools and counties, delayed grants to about 65,000 low-income community college students and put off paying vendors that provide services and products to the state.

State workers remain under a three-day-a-month furlough order from Gov. Arnold Schwarzenegger.

Plenty of people among the state's 38.6 million residents, particularly the most vulnerable who rely heavily on state services, are worried about their prospects if the impasse continues for weeks or months.

Democratic female lawmakers held a rally in front of the state Capitol last week demanding the governor find new revenue sources rather than hurting low-income women and children through proposed social service cuts. Schwarzenegger has proposed eliminating the state's welfare-to-work program, which would affect 1.4 million people, most of them children, according to the California Budget Project.

"Enough is enough," Assemblywoman Noreen Evans, D-Santa Rosa, chanted at the rally.

Jenine Quinones, a single mother of two, spoke as someone who relies on $2,000-a-month in state child care assistance through the welfare-to-work program. The 43-year-old San Rafael resident works full-time with developmentally disabled adults at an assisted living facility but relies on state funded child.

The state recently sent her a letter notifying her that it will stop paying child care at the end of the month.

"If the budget gets cut, I will lose my job because I won't have child care. I'll be homeless," Quinones said.

For others, homelessness is a barely healed scar.

Sacramento resident Mark Green, 47, said it took him and his wife years to get to their low-income apartment. Helped by $459 in food stamps and $533 a month from the state's welfare-to-work program, known as CalWORKS, Green is looking for a job at warehouses between caring for their 20-month-old daughter Marlisha.

If the state eliminates the program as the governor and Republicans have proposed, Green said his family will go back to sleeping in fields, parking lots and sidewalks.

"We'd be right back out on the street," he said.

The payment delays caused by this year's budget stalemate have piled on to budget cuts in recent years for some programs and businesses. Three domestic violence shelters have closed this year, and four nonprofit health clinics and two dental clinics have shut down, in part because the state no longer reimburses them for adult dental care. Many of those were located in rural areas that provided critical care to the aging and disabled.

But the state has become so inured to fiscal disaster over the past two years a state of crisis has become the status quo.

In 2009 California handed out thousands of IOUs for just the second time since the Great Depression. Vendors were given IOU notes that eventually repaid them with interest, and some banks agreed to cash them in advance, sparing some recipients of real hardship.

Lawmakers have cut spending by tens of billions of dollars as the recession has left far less tax revenue than the state needs to cover spending, the bulk of which goes to education and health care.

Democrats want a combination of spending cuts, new taxes and fees, and a delay of corporate tax breaks granted last year. Republicans have refused to accept any tax or fee increases, asserting that the state can no longer offer what they deem to be overly generous public benefits.

Meanwhile, Schwarzenegger has said he will not sign any budget unless lawmakers agree to long-term tax, budgeting and pension reforms, major policy changes that have eluded the governor for seven years.

A close fight between state Attorney General Jerry Brown and former eBay CEO Meg Whitman to be the state's next governor has only encouraged political gamesmanship .

Whitman criticized the leadership of Schwarzenegger, a fellow Republican, for failing to meet daily with the four legislative leaders to close the state's $19 billion deficit.

Schwarzenegger has bristled at criticism that he is not doing enough. California, he says, is not a dictatorship.

San Francisco-based Standard & Poor's analyst Gabriel Petek says seasoned investors have grown accustomed to California's cash problems and notes there's a reason why the state has the worst credit rating in the nation, ranked below that of Illinois.

"I think the key thing for me is this: For how long can this go?" Petek said.