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Reporting from Washington -- Obama administration officials expressed concerns today about California's request for federal intervention in its budget crisis, and even the state's own Congressional delegation is split on the issue. The state has asked the administration to provide loan guarantees for billions of dollars in emergency loans, saying it will soon run out of cash without help from Washington. But today, Treasury Secretary Timothy F. Geithner expressed doubt that he had the authority, without new congressional legislation, to aid the state under the program set up by Congress to rescue financial institutions. He told a Congressional committee that...

Tuesday night was tough for Sacramento: State lawmakers were handed a decisive defeat as voters rejected a series of ballot initiatives that would have allowed lawmakers to raise taxes and raid designated state funds to close a massive hole in the budget. Now the state legislature must work with Gov. Arnold Schwarzenegger to craft a budget that reduces spending to levels that neither wants to accept. Their only alternative is to beg President Obama for a bailout on top of the stimulus funds Congress has already approved. Proposition 1A offered the carrot of a spending cap in exchange for the...

Treasury Secretary Timothy Geithner expressed skepticism Thursday that he could help California out of its budget crisis without congressional action, raising the prospects of a battle on Capitol Hill, where even the states own delegation is split. Just days after California voters rejected a series of state-budget ballot measures, debate erupted in Washington over whether the federal government should provide a loan guarantee that Golden State officials say they need to avert a cash crisis. Geithner was barely in his seat at a congressional hearing on an unrelated subject when Texas Congressman John A. Culberson, a Republican, asked: "Mr. Secretary,...

The Coming California Bailout By George F. Will Thursday, May 21, 2009 California, the sunny incubator of America's future, has relished its role as a leading indicator of political trends. Tuesday it became what it thinks it should be, the center of attention, but not in the way it wants to be. Its voters, at last sensible, rejected, by an average of 65 percent, five of six propositions. Gov. Arnold Schwarzenegger, the "post-partisan" Republican, and the partisan Democrats who control the legislature, promoted the propositions as efficient for and essential to eliminating the state's budget deficit, which will now be...

California, the state that gave us wheatgrass, the microprocessor and the summer of love, is about to provide us with yet another first: a bailout of a failing state government. Preliminary returns on Tuesday night show that voters soundly rejected ballot measures calling for higher taxes, meaning that the not-so-Golden State's politicians are likely to take hat in hand and head to Washington begging for a bailout. It will be interesting to watch Senate Majority Leader Harry Reid, a Nevada Democrat, explain to conservative constituents why Sin City taxpayers must bail out San Franciscans. It will be even more interesting...

As the Legislature’s lame-duck session sputters to a close this week without much action expected, California budget watchers remain in limbo, hoping federal assistance will help alleviate the state’s financial burden. The state is preparing a new round of mid-year budget cuts to close an $11 billion shortfall. But even as budget stakeholders play defense, some are quietly talking about new proposals that could re-channel pots of existing money into new programs, such as an expansion of health care coverage for uninsured children. Part of the lethargy of the lame-duck session, according to Capitol leadership sources, is the remaining uncertainty...

Assembly Speaker Karen Bass touted Uncle Sam as a realistic savior Wednesday for California's multibillion-dollar budget shortfall – but critics say the tactic could backfire by raising false hopes. "I'm still concerned that some folks are looking at this in isolation and not in its national and international context," Bass said of a projected budget gap of $27.8 billion over two years. Rather than Gov. Arnold Schwarzenegger's approach of bridging the gap by roughly a 50-50 formula of tax increases and program cuts, Bass said it's realistic to turn to federal officials for a bailout that would avoid cuts. "I...