- The Washington Times - Monday, July 20, 2009

SACRAMENTO, Calif. | Lawmakers’ optimism about finally reaching a deal to close the state’s $26.3 billion budget deficit on Sunday turned out to be wishful thinking as Gov. Arnold Schwarzenegger abruptly postponed talks.

Legislative leaders said they had been on the verge of bridging remaining pitfalls that include how much money to borrow from local governments, whether to guarantee that schools will be repaid money they lose during poor economic times, and how much money to save for future budget emergencies.

Instead, they spent Sunday blaming each other for a scheduling meltdown that pushed the state’s massive budget problems off for at least another day. Mr. Schwarzenegger rescheduled Sunday’s bargaining session with the Legislature’s four top leaders for Monday.

The delay comes as the state pays its bills with IOUs for the first time in nearly 20 years and as major credit agencies threaten the state’s already basement-level bond rating. The dismal economy sent legislative leaders and Mr. Schwarzenegger back to the bargaining table just 4 1/2 months after they closed a previous $42 billion deficit.

A meeting had been set for Sunday evening, but Assembly Speaker Karen Bass said she might be delayed flying to Sacramento from her home in Los Angeles, so the governor pushed the meeting to Monday. Ms. Bass then said she could make the Sunday meeting on time. But by then, the plan already had been changed.

“I think it’s just a scheduling conflict. I’m not sure why the speaker’s office was giving conflicting information on her schedule,” said Aaron McLear, a spokesman for the Republican governor.

Mr. McLear acknowledged that Mr. Schwarzenegger hadn’t made the trip to Sacramento from his Brentwood home.

“The governor’s office is pointing the finger at us for no reason,” said Bass spokeswoman Shannon Murphy. “The speaker is committed to getting this deal done. There’s a lot at stake for all Californians.”

Ms. Bass said in a telephone interview earlier Sunday that she expected a budget vote in the Legislature by Wednesday or Thursday. It was unclear whether or how long a vote might now be delayed.

“We’re still on track to get a bipartisan agreement to balance our budget,” said Jim Evans, a spokesman for Senate President Pro Tem Darrell Steinberg, Sacramento Democrat. “Legislative leaders and the governor will meet [Monday] to hammer out the details.”

Republican leaders would not immediately comment.

Aides to the governor and Legislature spent their weekend rushing to work out legislative language that could resolve the remaining issues in time for Sunday’s aborted meeting.

Those include Mr. Schwarzenegger’s plan to permit oil drilling from an existing rig off the Santa Barbara coast. The proposal opposed by many conservation groups would be the state’s first new offshore oil project in more than 40 years.

“It’s worth a couple billion dollars and has the added benefit of tearing down those oil rigs at the end, so it’s good for the environment,” Mr. McLear said Sunday. He said terms of the lease are still being worked out, but the drilling would likely run for 20 to 30 years.

Most of California government would continue to shut down for three Fridays each month through next June because of employee furloughs ordered by Mr. Schwarzenegger. The three furlough days effectively reduce most state workers’ pay by about 14 percent.

Legislative leaders also had hoped to work out the final details of borrowing $4 billion from local governments.

Cities and counties already are laying off firefighters and police officers because of their own budget problems, and some are threatening to sue if the state takes their money for its needs. Legislative leaders said they have no choice, however, once Republicans led by Mr. Schwarzenegger refused to consider raising state taxes or fees.

The leaders have a tentative deal to repay schools $9.5 billion in installments in future years without amending the state Constitution. The money was cut from schools last year, and Democrats and Mr. Schwarzenegger had differed on the legal and fiscal means to reimburse them under the requirements of voter-approved Proposition 98, which sets minimum funding levels for schools.

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