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Calif. headed for another budget deadlock?

June 17, 2009 12:00:00 AM PDT
California's State Controller John Chiang is warning the state could run out of cash by the end of July unless lawmakers approve a balanced budget quickly.Democratic leaders will provide a formal summary of their budget plan Wednesday.

Legislature takes up the proposed budget plan early next week.

The possibility of another budget stalemate prompted Standard & Poor to place California on a credit watch Tuesday.

A developing Democratic plan to deal with part of the state's $24.3 billion deficit is reportedly not gaining the support of the governor and Republican lawmakers.

State Democrats want higher taxes and fewer cuts. Governor Arnold Schwarzenegger has pledged not to accept any plan that includes higher taxes, or one that does not close the entire shortfall. However, Schwarzenegger is proposing deep cuts in social services.

Meanwhile, Democrats are considering another increase in the vehicle license fee of $15 to keep state parks open.

Tuesday, a joint conference committee voted to cut $5.5 billion from education, which was nearly $1 billion less than the governor proposed. The Democratically controlled committee also voted along party lines to reject the governor's proposal of a 5 percent pay cut for about 235,000 state employees. The pay cut would have been in addition to two furlough days per month, which was imposed on employees last February.

That move reduced state employee's pay by almost 10 percent.

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