Jun 15, 2008 1:38 pm US/Pacific
CA's Constitutional Budget Deadline Arrives
SACRAMENTO (CBS 5 / KCBS) ―
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Sacramento, California's State Capitol Building
Sunday is the deadline, contained within the California constitution, for the state Assembly to pass the budget.
Members of both houses, and of both parties, have gathered to try to meet the deadline, although, as Senator Don Perata tells KCBS, the deadline hasn't been met since the 1980's.
"We haven't met that deadline for a long time because as California has grown, and our governments have become more complicated, it's simply impractical," said Perata. "However, the fiscal year does begin on the first of July, which means that if you don't have a budget by July first you no longer have the ability to pay your bills on a daily basis."
Legislators are used to pressure like this, but Perata says there are two differences this year.
First, the state treasurer, as well as Wall Street investment banks have said that California will be out of cash by August, so the state will have to borrow. Due to the current budget deficit, credit rating and how difficult credit is to get, borrowing will be extremely expensive, though necessary if no budget is passed.
The second difference, he says, is the severe deficit, which is even worse due to the recession. Perata says the state has been living dishonestly about costs and expenses for so long, that they're going to have to figure out how to close the huge deficit.
Perata says the deficit comes from 17-billion dollars in lost revenues over the past two years. This year, $6 billion in cuts have been made, with $10 or $11 billion more cuts necessary.
Republicans want to make the cuts, without raising taxes, but Democrats say they don't want to lay people off during a recession, which, they say, just compounds the problem.
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