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California: Impasse sends debts soaring
The Stockton Record ^ | Thursday, July 25, 2002 | Will Shuck Capitol Bureau Chief

Posted on 07/25/2002 5:26:29 PM PDT by Ernest_at_the_Beach

Budget Crisis

Impasse sends debts soaring

By Will Shuck

Capitol Bureau Chief

SACRAMENTO -- Urging the governor and lawmakers to overcome the 39-day-old budget stalemate, Controller Kathleen Connell said Wednesday that she is "very concerned" about a "huge mountain of debt encircling our budgetary process."

California has borrowed billions to pay its bills and needs billions more in loans to pay off those short-term loans. And an increasingly massive and complex array of borrowing and repayment schedules could be undermined if Gov. Gray Davis can't get Republican lawmakers to agree on a spending plan in the coming weeks, said Connell, the state's chief financial officer.

Like other states feeling the pinch of a nationwide economic slowdown, California has exhausted its bag of one-time, debt-reliant easy fixes. Next year and in the following years, the state will face increasingly difficult budget problems.

"(There will be) no such gimmicks available next year," she said.

Although Connell said she didn't "want it to appear that we want to become addicted to debt," she said the state has done well in its recent bond sales because investors tended to view the tax-exempt notes as a safe harbor from the storms in the stock market.

But those storms -- prices falling to their lowest in years as investor confidence plummets amid revelations of corporate cheating -- could make the state's dim outlook even worse in coming months, Connell said.

And the state appears to be saturating the market with municipal bonds. Connell sold $7.5 billion in short-term notes in June. And state Treasurer Phil Angelides plans to sell $11.5 billion in bonds to cover the debt the state incurred buying overpriced power on behalf of its financially crippled utilities. Then there is an additional
$7 billion needed to help repay the first bond, and the governor's budget envisions selling $4.5 billion in bonds on the strength of its share of the national tobacco settlement.

The more California bonds are on the market, Connell said, the more difficult it becomes to guarantee their creditworthiness, which makes them attractive to buyers.

She made her statements during a morning news conference at which she described which bills the state could pay and which it couldn't while California staggers into a new fiscal year without a constitutionally required spending plan in place.

State workers and people who depend on CalWORKs and other aid programs will be paid. Lawmakers and their staffs won't, and, she said, don't deserve to be. Other elected officials also will have to wait.

She will continue to mail tax-refund checks, disability payments and pension checks. But the thousands of companies that sell goods and services to the state will go unpaid until a budget is passed. Those vendors, ranging from mom-and-pop operations to large companies, typically earn about $600 million a month catering to government needs from prison food supplies to copier repair.

Most of the money that goes to local governments will continue to flow, she said, especially that which pays for county-managed relief programs.

But the whole house of cards becomes increasingly difficult to keep up the longer the Legislature fails to adopt a budget.

Connell urged Davis to meet with legislative leaders from both parties and both houses in a so-called big-five meeting.

Davis, however, said he won't call such a meeting. "The Senate has already completed its work and gone home," he said. "The Assembly Republicans have failed to articulate for 24 days what they need to allow a budget to pass."

Republican spokesman Peter DeMarco said Davis has no choice but to meet with GOP leadership.

"(He) needs to face reality," DeMarco said. "His budget is going nowhere."

In the meantime, Assembly Democratic and Republican leaders continued to hold meetings that DeMarco described as cordial.

* To reach Capitol Bureau Chief Will Shuck, phone (916) 441-4078 or
e-mail sacto@recordnet.com


TOPICS: Business/Economy; Front Page News; Government; News/Current Events; Politics/Elections; US: California
KEYWORDS: budgetcrisis; calgov2002; california; davis
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This is the millstone around Davis's neck!

Everything else is a diversion!

1 posted on 07/25/2002 5:26:29 PM PDT by Ernest_at_the_Beach
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To: *calgov2002; Carry_Okie; SierraWasp; Gophack; eureka!; ElkGroveDan; Libertarianize the GOP; ...
calgov2002:

calgov2002: for old calgov2002 articles. 

calgov2002: for new calgov2002 articles. 

Other Bump Lists at: Free Republic Bump List Register



2 posted on 07/25/2002 5:27:18 PM PDT by Ernest_at_the_Beach
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To: Ernest_at_the_Beach
State workers and people who depend on CalWORKs and other aid programs will be paid. Lawmakers and their staffs won't, and, she said, don't deserve to be. Other elected officials also will have to wait.

She will continue to mail tax-refund checks, disability payments and pension checks. But the thousands of companies that sell goods and services to the state will go unpaid until a budget is passed. Those vendors, ranging from mom-and-pop operations to large companies, typically earn about $600 million a month catering to government needs from prison food supplies to copier repair.


The "Real" Gubinor has spoken.. and she means business. :-)
DUMP DAVI$ & the Den of Socialists

GO SIMON

3 posted on 07/25/2002 5:45:55 PM PDT by NormsRevenge
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To: Ernest_at_the_Beach
The same thing is happening in Wisconsin. Massive spending despite falling revenues, papered over thisyear with Tobacco booty. Next year will be a disaster in this Tax Hell. Of course the election for Governor will be over by then....
4 posted on 07/25/2002 5:48:51 PM PDT by Kozak
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To: Ernest_at_the_Beach; SierraWasp
Ladies and Gentlemen of FreeRepublic,

Tonight you have before you one history's finest examples of democracy in action as one of the most sophisticated examples of a technical society crashes and burns on the economic heroin pursuant to a bankrupt ideology. If you ever needed an example of how hard representatives will try to ignore the words, "Limited Government," this is it. One more example of how the founders of this nation were correct in their assessment of the need to prevent the accrual of power, and the requirement of a vigilant and educated electorate.

God bless the Republic, only He can save us now.

CO

5 posted on 07/25/2002 5:51:53 PM PDT by Carry_Okie
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To: Carry_Okie
BUMPIUS MAXIMUS CO !!! ;-)

6 posted on 07/25/2002 5:55:31 PM PDT by NormsRevenge
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To: Carry_Okie
We are going to get constitutional limited government in our life time. The state can not nationalize every last piece of property and industry without causing lots of blood to flow.

Two cows explanation of governments.

Socialism:

You have two cows. You keep one and give one to your neighbor.

Communism:

You have two cows. The government takes them both and provides you with milk.

Fascism:

You have two cows. The government takes them and sells you the milk.

Bureaucracy:

You have two cows. The government takes them both, shoots one, milks the other, pays you for the milk, and then pours it down the drain.

Capitalism:

You have two cows. You sell one and buy a bull.

Corporate:

You have two cows. You sell one, force the other to produce the milk of four cows and then act surprised when it drops dead.

Democracy:

You have two cows. The government taxes you to the point that you must sell them both in order to support a man in a foreign country who has only one cow which was a gift from your government.

7 posted on 07/25/2002 6:04:31 PM PDT by SSN558
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To: Ernest_at_the_Beach
This news release (Davis caught selling short) is another golden oppurtunity that I certainly pray our Republican gubernatorial candidate doesn't pee pee away.
8 posted on 07/25/2002 6:25:09 PM PDT by Amerigomag
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To: Carry_Okie
Maybe a few million more illegal immigrants sucking up sevices and destroying hospitals financial solvency could solve this. Many seem to think that is a solution. Bunch of deluded a-holes.
9 posted on 07/25/2002 6:32:18 PM PDT by willyone
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To: Carry_Okie; snopercod; Dog Gone; Ernest_at_the_Beach; Not gonna take it anymore
"only He can save us now."

Incredibly, it just keeps gettin absurder and absurder!!!

Davis commercials keep saying... "If we can't trust him to run his own business affairs... how can we expect him to run the world's 5th largest economy?"

If Sal Russo doesn't run an ad to respond with something to the effect that the governor doesn't "run the economy, he can only help it along!!! Davis is driving it out of it's collective mind to other States & Countries with his collectivist thinking and actions!!!

You're so right! "Only He can help us now!" Davis can't run anything without corrupting it and bankrupting it!!! (then tries to blame others) I guess the people have been sold collective altruism to the point that they can no longer see this new "bondage" as a "pocket book issue" that is self-destructive to the 5th largest economy on Earth, to say nothing of their own self-interests!!!

10 posted on 07/25/2002 9:57:52 PM PDT by SierraWasp
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To: SierraWasp
I think that they are going to try the technique that was used on Newt Gingrich.
Bankrupt the State Government and blame it on the Republicans!
11 posted on 07/25/2002 10:48:22 PM PDT by Ernest_at_the_Beach
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To: Carry_Okie
God bless the Republic, only He can save us now.

That says it all!!!!

12 posted on 07/25/2002 11:00:56 PM PDT by c-b 1
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To: Carry_Okie
Notice how the welfare recipients are first in line to be paid, and those who produce the things the state needs are at the tail end?

Talk about an inverted morality!

13 posted on 07/26/2002 3:06:04 AM PDT by snopercod
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To: NormsRevenge
Did you happen to hear Roger Hedgecock sitting in for Rush yesterday?

He actually said that Doofus [that's how "Davis" is pronunced in California, he said] turned a $12 billion surplus into a $23 billion deficit in two years. It was great to hear!

14 posted on 07/26/2002 3:11:01 AM PDT by snopercod
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To: Ernest_at_the_Beach; Robert357; randita; abwehr
From Kathleen Connell's Website:

STATE CONTROLLER KATHLEEN CONNELL ADDRESSES IMPACT OF LINGERING BUDGET DEADLOCK

Controller Connell Says She Will Continue to Make Payments

SACRAMENTO, July 24, 2002 - As the State approaches its fifth week into the new fiscal year without a budget, State Controller Kathleen Connell today announced that she will continue to make payments in the absence of a budget for which she has legal authority.

"I am hopeful that the legislative leaders will soon reach some resolution to this situation and that a balanced budget will be passed," stated Controller Connell. "In the meantime, however, I will continue to make all payments for which there is a legal justification. However, in light of the hardship involuntarily imposed on the taxpayers of this State, I believe that it is only fair that I withhold the pay and per diem of the Legislature, the Governor, and other Constitutional Officers pending passage of the Budget Act. Therefore, I have directed my staff to withhold all such payments."

Controller Connell explained that some payments are required to be made under Federal law such as the state employees' payroll for services rendered after July 1, 2002, CalWORKS benefits, In-Home Support Services payments, payment of wages to court employees, and employees of the UC system.

"The Howard Jarvis case, with limited exception, does not, and will not impact these payments," explained Controller Connell. "In fact, the Jarvis case upheld the criteria used by my office to justify payments in the absence of a budget."

In addition to those payments required to be made by Federal law, Controller Connell stated that the school apportionment will be made at the end of the month as originally scheduled. The Controller's legal staff has determined that there are other constitutional and statutory provisions, notwithstanding the Court's ruling on Proposition 98, which will allow the regular school apportionments to continue to be made. The Controller's Office staff continues to work closely with the Superintendent of Public Instruction's Office to ensure that there is no disruption of payments.

With respect to what payments are not being made, Controller Connell reiterated that most payments required to be made in July are in fact being made out of last year's budget to the extent those payments are legally authorized. However, legislative employees have not been paid and will not receive a check until after the budget is signed.

"Unfortunately, while these employees continue to work during this budget hiatus, they are not covered by the Fair Labor Standards Act," stated Controller Connell. "Therefore, as long as there is no budget, they will not be paid."

Additionally, vendors that provide services to the State after July 1, 2002, will not be paid for those services until after the budget is passed and signed by the Governor. Examples of these vendors are those that provide food services to our correctional facilities and hospitals, as well as suppliers of the State's office supplies and equipment. Other types of payments that cannot be made are utility and rental payments.

Also, as the end of the month approaches, there will be a slowing in payments made to the providers of Medi-Cal services. Some payments to local governments, such as portions of the highway users tax, will not be made.

Acknowledging that lawmakers are up against exceedingly difficult choices in an attempt to close a record deficit of as much as $24 billion, the Controller encouraged them to bring this budget impasse to a conclusion as soon as possible.

Controller Connell concluded, "The longer this impasse continues, the number of employees and taxpayers, which will be impacted, will continue to grow."

15 posted on 07/26/2002 3:19:42 AM PDT by snopercod
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To: SSN558
Democracy: You have two cows. The government taxes you to the point that you must sell them both in order to support a man in a foreign country who has only one cow which was a gift from your government

Democracy, California style:

You have two cows. The government says your agricultural vehicle causes too much pollution so it takes one cow. The government says you have failed to hire enough minorities so it takes the other cow. The government then declares your farm to be the home of endangered species so you cannot sell it. You leave the state penniless. Your farm's irrigation system fails after you leave so illegal immigrants sue the state for failing to provide adequate water to meet their needs.
16 posted on 07/26/2002 3:24:05 AM PDT by cgbg
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To: SierraWasp; All
The real story here (which of course the media have totally ignored), is that Kathleen Connell is thwarting the will of the State Court of Appeals. From The California State Union of Safety Employees:

PAYCHECKS WILL NOT BE AFFECTED

The State Controller has officially announced that the lack of a state budget will not affect the paychecks of state employees this month. It will also not affect payments for retirees, disability insurance, welfare benefits, and court employees. It will, however, affect the reimbursement of state employees for their travel expenses. It will also affect the paychecks of Governor Grey Davis, the legislators, other constitutional officers, Board of Equalization members, legislative staffers and about 376 appointed executive officers, as well as payments for any goods, services, rents, equipment and utilities that are provided to the state this month.


UPDATE ON MINIMUM WAGE THREAT

As you know by now, the appellate court has recently issued a decision holding that absent a budget, most state employees are only entitled to receive minimum wages and overtime

The budget cut off date of June 30 has now passed and no budget is in place. Naturally, there is a lot of anxiety about what is going to happen with state employee paychecks. Here is a little updated information:

  1. DON'T PANIC. YOUR PAYCHECKS SHOULD CONTINUE FOR NOW.

  2. In its decision, the appellate court left in place the stay (writ of supersedeas) on the lower court's injunction that prohibited the payment of wages. That stay will remain in place until the appellate court issues its remittitur (an order making the lower court's decision final).

  3. The Controller and the intervening unions, including CAUSE, have until July 8 to appeal by filing their petitions for review with the Supreme Court. You can be assured that we will meet that deadline.

  4. The Supreme Court will then have 60 days to decide whether to accept the case. If the court accepts the case, the stay will remain in effect.

  5. If, however, the Supreme Court declines to accept the case sooner than 60 days, the appellate court decision will become final and the remittitur will then issue to the lower court. If no budget is in place and the remittitur is issued prior to the Controller's cut off date for making changes in the state computer, usually by the 20th of the month, minimum wages will be paid.

  6. If the remittitur is not issued before the Controller's cut off date, regular paychecks probably will be issued for that pay period.

  7. If a budget is in place prior to the issuance of the remittitur, paychecks will issue as usual.

  8. Due to the importance of this issue, we believe that the Supreme Court will accept the case. As stated above, if the Supreme Court does accept the case, the appellate court's decision will be superceded and the stay will continue to be in effect until a decision is rendered, or until the Supreme Court directs otherwise (but the Supreme Court will probably not dissolve the stay while its decision is pending).

  9. Should the Supreme Court eventually uphold the appellate court, the minimum wage threat will be a reality each year that there is no budget.

17 posted on 07/26/2002 4:00:49 AM PDT by snopercod
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To: All
HOWARD JARVIS TAXPAYERS ASSOCIATION v. KATHLEEN CONNELL and STEVEN WHITE v GRAY DAVIS
DISPOSITION

The appeal in the action initiated by White (B122178) is dismissed as moot. White and respondents in this action shall bear their own costs on appeal.

The preliminary injunction in the action initiated by Jarvis and White (B123992) is reversed to the extent that it bars the Controller from disbursing funds pursuant to (1) continuing appropriations, (2) article III, section 4, and article XVI, section 8.5, of the state Constitution, (3) the Federal Labor Standards Act (29 U.S.C. § 201 et seq.), and (4) the federal funding mandates that we haveidentified applicable to the Food Stamp program (7 U.S.C. § 2011 et seq.), Foster Care and Adoption programs (42 U.S.C. § 670 et seq.), Child Support program (42 U.S.C. §§ 651-669b), and Child Welfare Services program U.S.C. §§ 620-628). The preliminary injunction is otherwise affirmed.

In view of Jarvis and White's abandonment of further action in the trial court, we do not remand the matter for modification of the preliminary injunction. Appellants in the action initiated by Jarvis and White are awarded their costs on appeal. The writ of supersedeas will remain in effect until the issuance of our remittitur.

The petitions for writ of mandate (B124395, B124397, B124398) are dismissed as moot. Petitioners are awarded their costs regarding these petitions.

CERTIFIED FOR PUBLICATION
CURRY, J.We concur:
EPSTEIN, Acting P.J.
HASTINGS, J.


18 posted on 07/26/2002 4:31:25 AM PDT by snopercod
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To: SierraWasp
Incredibly, it just keeps gettin absurder and absurder!!!

The Lens of the Media is distorting Davi$' grasp of reality. This is too much like Alice in WonderLand if ya ask me.

GraYout may have to declare martial law November 5th to save us from ourselves. [/;-)]
19 posted on 07/26/2002 7:54:36 AM PDT by NormsRevenge
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To: snopercod
I caught parts of Roger, who has no great love for ol'GraYouT.

This is great Davi$ is getting national exposure. This should nail GraYouT's chances for any White House bid to the a$$ end of EnRon as it sinks into the annals of history.
20 posted on 07/26/2002 7:58:32 AM PDT by NormsRevenge
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