Shortfall Creates Trickle-Down Effect: Bill Addressing State's Deficit Fails Following Partisan Vote

Cities and Counties Brace for Cuts as State Legislators Struggle to Address Budget Crisis

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State lawmakers voted along party lines and fell into a deadlock after the latest budget proposal failed in both the State Senate and Assembly Wednesday.

The bill proposed by Democrats would have reduced the state's deficit by $11.4 billion, generated $1.9 billion in new tax revenues and kept Cal Grants and other "safety net" programs for low-income citizens.

The bill-the first in a 20 bill package-failed by a 48-30 vote in the Assembly and by 22-16 in the Senate.

The failure of the Democrats' bill puts the question of funding for Cal Grants-which would be eliminated in the budget revision proposed by Gov. Arnold Schwarzenegger-back on the table.

UC Berkeley Chancellor Robert Birgeneau, an advocate of Cal Grants, said several legislators had told him they expected the bill to fail.

"I'm upset to hear that (it failed) but not surprised," he said.

The possible loss of Cal Grants has concerned many university officials.

"We think that preserving the meaningful Cal Grants program, which has benefited generations of Californians, is a vital goal," said UC spokesperson Ricardo Vasquez.

Birgeneau said potentially losing the grants "would fundamentally change the nature of Berkeley and the entire UC system in a very negative way."

After Wednesday's vote, legislators still remain undecided on how to balance the state's $24.3 billion deficit.

The discussion on the senate floor became heated Wednesday, with Democrats defending the public programs and Republicans opposing any new taxes.

"We will not eliminate the Healthy Families program, we will not eliminate CalWORKs ... it's not going to happen," said Senate President pro tem Darrell Steinberg, D-Sacramento. "And if that is the price for earning or garnering (Republican) votes for a budget respectfully, forget about it."

Senate Republican leader Dennis Hollingsworth, R-Murrieta, said his caucus would not vote for a bill that would increase taxes, adding that the bill did not cut services deep enough.

"The failure of the plan today was that it was not a full solution to the $24 billion deficit," said Melanie Reagan, spokesperson for Hollingsworth. "Any new taxes are a non-starter."

State Controller John Chiang said in a statement Wednesday that he will be forced to pay the state's bills with IOUs-officially known as register warrants-beginning July 2 if immediate budget and cash solutions are not quickly adopted.

The bill's failure to meet the full $24 billion shortfall was the main criticism from Republicans, while Democrats insisted the bill was only the first step towards meeting the deficit.

"This is just one of the first bills," said Larry Levin, spokesperson for Sen. Loni Hancock, D-Berkeley. "The rest of (the package) will make up the rest of the $24 billion deficit."

Levin said the Democrats would not likely eliminate taxes from future bills.

"I don't think (taxes) will be gone," he said. "I think the Democrats will fight for those, it is the only way to have a fair and balanced budget."

Hancock defended the safety-net programs protected in the bill in a statement released after the vote.

"I do not believe it is necessary to balance the budget on the backs of the poorest and most vulnerable among us ... that I will not support," she said in the statement. "It is a moral issue as well as an economic one."


Contact Javier Panzar at [email protected]

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