Wednesday, July 01, 2009

Governator to Legislatures: My way or IOUs

Here's a quote from Henry Clay that the Guv and legislatures need to take to heart. Clay was a nineteenth-century American statesman and orator who represented Kentucky in both Congress and Senate:

"All legislation, all government, all society is founded upon the principle of mutual concession, politeness, comity, courtesy; upon these everything is based...Let him who elevates himself above humanity, above its weaknesses, its infirmities, its wants, its necessities, say, if he pleases, I will never compromise; but let no one who is not above the frailties of our common nature disdain compromises."

In doing so, Schwarzenegger has sent the message that he would rather allow the state to begin shutting down than let lawmakers push its troubles off for months by closing only part of the shortfall. The latter prospect could swallow up the rest of his governorship.


"Whatever needs to be done," Schwarzenegger told reporters outside his Capitol office Friday when asked why he would be willing to delay payments to needy Californians. "I know that there is a history in this building of always being late with the budget, to drag it out and to kick that can down the alley. . . . I don't think we have this luxury this time."The governor readily admits that he sees the crisis as a chance to make big changes to government -- to "reform the system," he said Friday -- with proposals he has struggled to advance in the past.

Among them: reorganizing state bureaucracy, eliminating patronage boards and curbing fraud in social services that Democrats have traditionally protected. The governor also would like to move past the budget crisis to reach a deal on California's water problems that has so far eluded him.By agreeing to a partial budget solution such as one the Assembly approved Thursday, the governor would lose leverage to accomplish many of those things. Without the pressure of imminent insolvency, Democrats might be less likely to agree to his demands.

But if his strategy fails, he could be blamed for unnecessarily subjecting state residents to misery."I don't believe the governor wants his legacy to be that he had the opportunity to avoid IOUs for Californians and that he failed to take it because he wanted to play a game of chicken," Senate President Pro Tem Darrell Steinberg (D-Sacramento) said last week.California Controller John Chiang has announced that on Thursday he will begin issuing IOUs on the scale of $3 billion a month, delaying payments to college students, welfare recipients, the elderly, the blind and the disabled. The state is on track to run out of cash by the end of July.

Read on.

Bump update: California misses budget deadline; IOUs will be issued.

* Democrats, Republicans at odds over plugging shortfall
* Plan for "IOUs" to help conserve dwindling cash
* State officials say paying bondholders a top priority

SAN FRANCISCO, July 1 (Reuters) - California's lawmakers failed to agree on a balanced budget by the start of its new fiscal year on Wednesday morning, clearing the way to suspend payments owed to the state's vendors and local agencies, who instead will get "IOU" notes promising payment.
Read on.

Also,
Board trims per-diem pay, cars, benefits for California legislators

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