The state budget deficit has widened from $24.5B to $26.5B since the legislature’s failure to arrive at a budget last week. The state has begun to issue interest bearing IOU’s in lieu of payment and a commission set the interest rate at 3.75% and a maturation date of 90 days (meaning they will be payable in 3 months by which time the cash-crisis should be addressed).
There have been ongoing negotiations involving the Governor and Majority and Minority leaders of both houses (“The Big 5”), the discussions stalled last week. Assembly Speaker Karen Bass was absent from Big 5 meetings out of frustration with some of the Governor’s proposals. This article gives a good explanation of the proposals and the standoff.
The Governor has been moving forward in trying to identify waste by identifying plans to root out fraud in a variety of areas including in home support services (IHSS) for people with disabilities.
Below are a few stories that will help you understand IOUs, furloughs and some of the Governor’s proposals:

Q&A: IOUs & furloughs — California’s fiscal woes are in sharp focus again today, as state offices close on the first of three “Furlough Fridays” this month, idling tens of thousands of state workers; major banks stop redeeming state-issued IOUs at the close of business; and state leaders appear no closer to resolving the $26.3 billion hole in the state spending plan. The item is in the Sacramento Bee — 7/10/09
Governor’s borrowing plan risks stimulus funds — Gov. Arnold Schwarzenegger’s budget package, which he has touted as a way to solve the state’s entire deficit, has a glitch that may jeopardize $10 billion in federal stimulus funds for California’s public schools, colleges and prisons. Matthew Yi in the San Francisco Chronicle — 7/9/09
Critics say Schwarzenegger scapegoating the poor for budget problems — On the stump, as he tries to sell his deficit-cutting plan to voters, Gov. Arnold Schwarzenegger has tried to show a softer side toward those who will get hit hardest, often returning to a variation of a line he rolled out in an address to the Legislature in May: “I see the pain in their eyes and hear the fear in their voice.” Steven Harmon in the Contra Costa Times — 7/9/09
The state budget mess — Here’s the reason Californians don’t trust Sacramento: In July 2003, the state controller’s office figured there were 230,000 state employees. Since then, every budget deal has featured legislators’ howling protestations that they’ve been forced to make horrific budget cuts, yet the controller now estimates the state has 244,000 employees. Debra J. Saunders in the San Francisco Chronicle — 7/9/09
As always, CALCASA will do our best to relay information to our members as soon as it becomes available.