State Budget Battles Continue

California's legislature voted down a Republican plan that would have closed the golden state's massive budget deficit by slashing spending, as budget battles continued into overtime in several states over the weekend.

According to The Los Angeles Times, the 45-27 vote in the California assembly mostly followed party lines, but five Republicans abstained, complaining about the harshness of the cuts proposed to close California's $38 billion deficit.

The cuts would scrap the state's Seismic Safety Commission, slash the budget to the authority that disciplines youthful criminals, end health care for American Indians, suspend monthly payments so low-income blind people can feed their seeing-eye dogs and stop burials of foster children.

California Gov. Gray Davis, a Democrat, faces a recall effort by voters upset over the budget crisis. He said last week he hopes a budget will be in place by the end of the month.

"There's some movement on the Senate side and we do think that in the next week or two that the state Senate will pass a budget and I hope that the Assembly will follow shortly thereafter," Davis said.

"Budgets have to cook. They come together very quickly sometimes," Assembly Republican Leader Dave Cox said.

CBS affiliate KCBS reporter Mark Selig says the sticking point remains taxes. The GOP wants to avoid any hikes and balance the budget through spending reductions, but Democrats believe the deficit is too large to allow cuts to achieve balance.

Around the country, states are squeezed by shrinking revenues due to the flagging economy and growing expenses for Medicaid and other programs.

Lawmakers in Nevada held a rare weekend session to try to resolve a budget dispute there that has led the governor to ask the state's Supreme Court to intervene.

In Connecticut, lawmakers were expected to head back to the negotiating table Monday, but the Hartford Courant reports there is little sign of compromise.

The state's fiscal woes were reflected Friday in the decision by Moody's Investors Services to downgrade the state's bond rating. That will increase the interest Connecticut pays on its debt, costing as much as $24 million a year.

Oregon's governor, state House speaker and Senate president are meeting again this week to try to close the budget gap there. The speaker, Karen Minnis, has threatened to end the joint House-Senate budget process and start passing her own bills, according to the Salem Statesman Journal.

Rhode Island lawmakers expect Governor Donald Carcieri to veto their latest budget bill on Tuesday.

The crises in many capitals are largely the result of national trends — slowed economic growth that has reduced tax revenue to state coffers, and growing health care costs.

According to the National Association of State Budget Officers, 37 states reduced the budgets they enacted last year by a total of $14.5 billion, the biggest combined cut in 24 years.

Governors in 29 states asked for tax increases totaling $17.5 billion, to offset plummeting tax revenues: sales taxes were down 2.5 percent, income taxes off 8.6 percent, and corporate taxes lower by 8.3 percent. Thirty states missed their revenue targets, NASBO reported.

Meanwhile, the overall state share of the Medicaid program — health insurance for the poor that is also funded by the federal government — rose 13 percent, the association said.