States Face Budget Breakdowns

End-Of-June Deadline Passes, Calif. May Have To Write IOUs To Employees, Aid Recipients

(AP)  Legislators in more than a half-dozen states, their revenues evaporating in the recession, frantically worked to stave off government shutdowns and devastating service cuts. California failed to meet a midnight deadline and now may need to issue IOUs instead of paying bills.

Across the country, lawmakers were feeling the heat as their legislatures began the new fiscal year without a budget in place.

In Illinois, the sputtering drive to come up with a state budget broke down completely Tuesday, leaving the state without any plan for paying its employees or delivering government services. The session ended without any firm plans to return or even for Gov. Pat Quinn and legislative leaders to resume negotiations.

In Pennsylvania, talks between Gov. Ed Rendell and top legislators ended Tuesday night with no substantial progress, aides said. Rendell said he didn't think an agreement would come soon. The state faces the prospect of not being able to pay state employees if they cannot resolve an impasse.

The end of June marked the end of the fiscal year in many states, meaning lawmakers worked late Tuesday to pass budgets in a year that has seen the recession take a devastating toll on government finances.

Fallout from California's budget mess threatened to spread nationwide because of the sheer size of the state's economy. The Senate rejected three bills designed to save $5 billion, including $3.3 billion in education funding cuts that had to be enacted before Wednesday.

Senate President Pro Tem Darrell Steinberg, a Democrat, called Republicans' refusal to vote for the measures "an irresponsible position to take." At least two Republican votes were needed to put together the two-thirds majorities required to approve the legislation, which passed the Assembly last week with bipartisan support.

Arizona, Indiana, Ohio, Connecticut and Mississippi also were among the other states that raced against the clock to pass budgets - and avoid crippling consequences.

Ohio on Tuesday passed a seven-day spending plan that will allow the state to keep operating while talks continue, the first temporary budget Ohio has been forced to approve in 18 years. On Wednesday, the House was considering a second seven-day budget to give lawmakers more time.

Indiana narrowly averted a large-scale government shutdown after coming to terms on a budget.

Mississippi lawmakers approved most of the $6 billion budget, but left one agency — the state's utility regulatory agency — unfunded. The Public Service Commission said it didn't know how the agency would continue to function, but Gov. Haley Barbour has said he can run the agency by executive order.

In Connecticut, Gov. M. Jodi Rell signed an executive order to keep the government running without a two-year budget in place. While she contends the average taxpayer won't notice any change, municipal officials fear delays in state grants that fund everything from road repairs to education.

In the wee hours Wednesday, the Arizona Legislature completed action on budget bills to implement most of a compromise $8.4 billion budget negotiated with Gov. Jan Brewer. Lawmakers omitted a sales tax increase that Brewer wanted, and her spokesman declined to say if she would sign the bills.

In Pennsylvania, state workers will receive only partial pay on July 17 and July 24, after which paychecks will be withheld entirely until the impasse is solved. They will then be paid retroactively.

Rendell said 10 banks and credit unions have agreed to help 69,000 state employees by offering them low- or no-interest loans and lines of credit.

In most states, the debate centers around whether states should be raising taxes to bridge the budget gaps. California Gov. Arnold Schwarzenegger said he wouldn't sign anything that raised taxes or fees beyond what he has already proposed.

"They should forget about that," the Republican governor said, accusing Democrats of going through a "song and dance. Let's get to work, fix it."

State Controller John Chiang has said he would have to start issuing the IOUs on Thursday unless lawmakers took steps to stem the state's red ink by then.

Roughly $3 billion worth of IOUs will be issued in July unless a compromise on closing the deficit is reached quickly. They will be sent to state contractors, college students, welfare recipients, low-income seniors, the disabled and others who depend on or deliver state services. Counties will not get paid for social programs they administer.

[hungry1968-15]

by underdogus09 July 1, 2009 5:04 AM PDT
38 states are experiencing revenue shortfalls,what the heck, let's blame the illegals,EIN VOLK , EIN REICH , EIN FUHRER !







Why not blame the businesses that closed their doors, and moved their production / operations "off shore", leaving America's working people with nothing but $12 / hour jobs?

And currently, those jobs don't come with benefits.

[tbbaot]

California is a failed experiment in socialism. You can attribute most of the deficit to social programs, especially the millions of illegals that call California home. The other contributing factor is that many people have moved out of the state due to the enormous tax burden that state and local governments have placed on them. When the tax base leaves you end up with those that expect government to care for them. The same thing is now happening in New York and New Jersey. Now Obama is repeating the same mistakes on the federal level.

[underdogus09]

The end of the current financial system, as we know it, may be imminent. If you would have asked me even two weeks ago if collapse was imminent, I would have said it was highly unlikely, now I am saying it is possible. Bernanke may be able to patch things up short-term, if he is lucky, but in the long term the U.S. financial structure is in serious trouble. There is just too much Treasury debt that needs to be raised. An international panic out of Treasury securities, even a slow controlled panic, means the Fed will be the major buyer. This will ultimately mean record inflation.

And keep this in mind, we have never seen a collapse of a currency like the dollar. Even the hyperinflation during Germany?s Wiemar Period can not serve as an example. Since the dollar is the reserve currency of most of the world, a panic out of the dollar means more dollars will return to the U.S. shores than any country has ever experienced.

Other countries have had collapsed currencies, but never in the history of world of finance has so much currency been held outside a country of issue that could come flying back, almost on a moments notice. If the panic out of the dollar starts, even if Bernanke stops printing money (unlikely), all the dollars flying back into the U.S. could cause a huge price inflation all on its own.

[american_11-2009]

Yes it is very hard for American tax payers to support the millions of criminals and third world rejects invading this Nation

[platteman]

Couldn't happen in a better State. Keep all those illegals and lazy oafs in CA and spend, spend, spend. There is a lesson here. You can't spend other peoples money without any accountability. Sort of like Obambi and his merry men and women. So what we see in CA today, will be the future for the USA.
Look at all the states in trouble. Tax and spend liberals for every program that they can think of. Someday you have to pay for the whole thing.

I am sure that Obambi, Uncle Al, King Harry and Queen Nancy will come to the aid of CA. They are "Too Big To Fail".

[specialty8]

Where is botox Pelosi and her side kick Reid? Every spend happy bill Obama made when he first went in they were in the pictures showing him where to sign. Are they sick or just not to good for his image?

[hungry1968-15]

38 states are facing budget shortfalls, and you clowns think it's a "liberal" or "conservative" problem?

With clowns like you two, it's no wonder that our country is in such deep trouble.

[sean58z]

The Commonwealth of Pennsylvania bankrupted from Ed Rendell's incompetence. He demands this massive personal income tax increase to pay-out to his special interests from state treasury. Rendell refused to reduce budget costs. He is guilty of graft, fraud, and political blackmail. Starting today, state employees will not receive their salary until Rendell signs the agreement with State House Republicans. Why not impeach Edward Rendell for financial mismanagement and avarice?

[american_11-2009]

California the Golden state, American future, is fast becoming the poster child for an bankrupt third world State!

An unholy alliance of Socialist Democrat politicians, Unions, and Illegal Aliens supporters are feasting at the trough of tax payers paid benefits while taxing & regulating business and the tax paying public into poverty.

The pandering of Left Wing Democrat Politicians to their constituency of Illegal Aliens, open border supporters, and unions are driving business and citizens to other states & countries, while leaving the parasites & welfare leeches in an increasing bankrupt, crime ridden, dysfunctional state!

For years California has ignored economics 101 and imported poverty, Criminals and uneducated Peons from Mexico, which increased Medical, Welfare, Crime, Prison, etc. & adding a estimated 16 billion per year to Calif. State expense to provide for the invading horde of Illegal Aliens while exporting business and educated tax payers.

Like all Socialist & Marxist States the results have been a astronomical increase in social welfare, schooling, prison cost etc. and a lowing of Living standards, Education standards, Tax receipts & finally Bankruptcy.

Failure to abide by our Constitution against invasion & enforce our Immigration laws and constraints on wages and benefits for public employees will result in turning the Golden State into MexiCalif and the bringing of the Calif. Nightmare!

The policies of Obama and Wash. DC Democrats are intent on following Calif. policies and are resulting in the same creeping socialist process across American.

Amnesty & Citizenship as a reward for their invasion of the USA, will result in the rest of the USA turned into a Spanish speaking third world cesspool, modeled on Mexico and follow California into a polluted, over populated, Spanish speaking third world Nation of Crime, Corruption, Poverty, Cruelly & Misery!

This will result in a population depending on Welfare and the Democrat party, thus assuring the lock on power for the Socialist Democrat party of the United States of Mexico!

[ianlou]

I agree, Illegal Aliens are sucking social services dry.
The other half of the problem is the shrinking tax base and shrinking spending power from the shrinking middle class because of policies supporting job outsourcing, union busting and trickle-down economics.

The greedy in America have killed their cash cow and are now scrambling to find someone to blame other than themselves.

[dartplayer501]

For all the money wasted on these "illegals," how much do you reckon that hiring them saves the farmers in the central valley? Some estimates say that if no "illegals" were employed by the CA farming system, vegetable and fruit prices would double or more. How much do you think THAT would cost California?

[zonkzilla]

Let's see, GW Bush the Republican destroyed the US economy. Now Arnold, a Republican, has destroyed California's economy.
I see a pattern.

[v22forever]

Brian Nestande, State Senator from District 64 (Riverside/Indian Dunes) is anti-working people and only caters his votes to the rich. He is a key element in filibustering this current deadlock on the budget. Remember to vote NO on Brian Nestande next election.