Calif. budget crisis continues to worsen

SACRAMENTO On top of the 5,000 layoff notices that went out to state workers in May the Schwarzenegger administration is targeting another 2,000 positions.

"The state budget crisis gets worse by the day. We need to conserve cash so that we can meet payroll," said Lynelle Jolley, State Department of Personnel Administration.

State workers are already being hit with three unpaid furlough days. Many are frustrated that their work is piling up with fewer amount of people to do the job.

"It will be more work for those who are remaining in the various departments. It is a concern for everyone because state employees wonder when it is going to end. I really wish the Legislature would do their job and pass a budget," said state worker David Cousins.

While state leaders have made some progress on how to close that $26 billion deficit a deal has not been sealed. And everyday that goes by the pressure mounts.

Bank of America Corp., Wells Fargo & Co., JPMorgan Chase & Co. and other large institutions have stopped cashing in California IOUs for its customers.

/*Gov. Arnold Schwarzenegger*/ started airing TV ads statewide to pressure lawmakers.

"I do not think that ad is helpful. I think it will produce more resistance. I think more people will dig their heels in," said John Syer, political analyst.

A grassroots group sick of Sacramento's budget bickering has added pressure of their own by circulating an initiative to make the Legislature part-time aimed at encouraging regular citizens to replace career politicians.

"California has been plagued with bad budgets and gridlock for over a generation now. The reason being that our Legislators, or elected leaders, have lost touch with real Californians," said Tom Kise, Citizens for Reform California.

Wall Street has again weighed in on the state's budget mess. On Tuesday Moody's downgraded California's bond status to slightly above junk bond status.

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