California Budget: Someone Has to Blink
The California budget crisis is alive and well. In December, Governor Schwarzenegger called a special session of the State Legislature to address the impasse in the California budget. State Legislators proposed several budgetary alternatives, including a Democratic proposal that would reclassify certain taxes as fees, thereby eliminating the requirement for a two-thirds vote. The Governor vetoed the fee concept, and California Republicans are holding firm to their commitment against any new taxes. The California Department of Finance has estimated that the State will face a combined $41.6 billion budgetary shortfall for fiscal years 2008-09 and 2009-10. State Controller John Chiang authored a letter to State agencies requesting the issuance of IOUs to certain payees beginning February 1, 2009, to preserve cash for debt service and educational payments.