Talks fail to break California budget impasse
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Thu Jul 16, 2009 1:55am EDT
Jim Christie
SACRAMENTO, California (Reuters) - California Governor Arnold Schwarzenegger and lawmakers failed on Wednesday night to agree to balance the state's budget by closing a $26.3 billion deficit, but officials said talks would continue.
The budget talks, which have lasted weeks, have stalled over a part of the governor's plan to suspend a law on school funding, Karen Bass, the speaker of the state assembly, and California Senate President Darrell Steinberg told reporters.
The legislature's two top Democrats said budget talks would resume on Thursday.
Schwarzenegger, a Republican, had said earlier on Wednesday he was hopeful a deal to resolve the lengthy budget crisis was near and might be reached by the end of the day.
"There's no nastiness in the discussions, no blowups," he said at a press conference. "There's none of that, so I think we have a good shot of getting the budget done today."
The state government began its fiscal year on July 1 facing a historic budget gap and a severe cash crisis.
California, which would be the world's eighth largest economy if it were an independent nation, has issued IOUs to vendors as well as taxpayers owed refunds to save cash for servicing of state bonds and other priorities payments.
Among sticking points in negotiations are Schwarzenegger's demands for a budget deal including changes to rules he says will prevent fraud in welfare programs.
He has also proposed paring education spending by suspending a voter-approved measure that locks in funding levels for public schools. Democrats oppose both ideas and are especially concerned about education spending cuts.
“California, which would be the world’s eighth largest economy if it were an independent nation,”
At one time Argentina had the eight-largest economy. California has done exactly what they did with the same result.