Image: California State Assembly lock down
Rich Pedroncelli  /  AP
Assembly members Hector De La Torre, D-South Gate, left, and Bill Monning, D-Monterey, right, sleep at their desk during an all-night lock down of the Assembly at the Capitol in Sacramento, Calif., Sunday, Feb. 15.
updated 2/17/2009 9:23:54 AM ET 2009-02-17T14:23:54

California lawmakers on Monday were locked in a frustrating search for one more vote to approve a $42 billion budget-balancing plan state leaders say is needed to stave off fiscal disaster.

The stalled effort prompted Gov. Arnold Schwarzenegger to make good on an earlier promise to begin the layoff process for thousands of state workers, though under the state's process it would take months for anyone to actually be laid off.

Lawmakers were in session for a state-record 30 hours before disbanding Sunday night, with many of them looking haggard and worn out after a futile attempt to secure the necessary votes. They regrouped Monday, but the expected budget votes kept getting pushed back.

By Monday night, Senate leader Darrell Steinberg announced that lawmakers had failed to find the final vote in his chamber as Republicans refused to support more than $14 billion in tax increases. He called a session for Tuesday morning and said he would put the tax provisions of the budget proposal up for a vote, even if they would not pass.

Lawmakers have been trying to pass a combination of spending cuts, tax hikes and additional borrowing negotiated by Gov. Arnold Schwarzenegger and leaders of both parties, who warn that California faces insolvency unless the Legislature enacts a midyear budget fix to close the projected $42 billion budget shortfall through June 2010.

The plan continues to fall short of votes because rank-and-file Republicans have refused to agree to $14.4 billion in higher taxes. Lawmakers believe there are enough GOP votes in the Assembly, but the Senate has fallen short by one.

Furloughed workers
State workers have been furloughed because of the budget crisis, some 2,000 public works projects are on hold and tax refunds and payments to vendors have been delayed. The state controller says the state will run out of cash at the end of the month if lawmakers do not act.

The governor had delayed releasing layoff notices on Friday when it appeared lawmakers would pass a compromise plan, but with marathon weekend sessions failing to produce the necessary votes, Schwarzenegger's spokesman said the administration had no choice.

The notices will start going out Tuesday to 20,000 workers in corrections, health and human services and other agencies that receive money from the general fund. Administration officials are seeking to eliminate up to 10,000 jobs as part of the governor's order to cut 10 percent from the government payroll.

The budget plan includes $15.1 billion in program cuts, $14.4 billion in temporary tax increases and $11.4 billion in borrowing. The package also would send five ballot measures to voters in a special election to be held May 19.

The proposed tax hikes include an increase of 1 cent on the dollar in the state sales tax, a 12-cent-a-gallon hike in the gasoline tax and a boost in vehicle licensing fees.

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The measure also includes a one-time, 5-percent income tax surcharge for taxpayers who owe money to the state at the end of 2009. The surcharge would drop to 2.5 percent if California gets its expected share of money from the federal stimulus bill.

Frozen public works projects
On Monday, Schwarzenegger's finance director warned that a state board will freeze even more public works projects unless the Legislature approves a budget quickly.

The Pooled Money Investment Board on Tuesday is expected to shut down 276 critical projects worth $3.6 billion, along with 98 transportation projects funded from voter-approved bonds worth $1.8 billion. The combined $5.4 billion freeze would affect 91,800 California jobs.

"Let's get back to work. Let's solve this fiscal crisis," said Sen. Alan Lowenthal, D-Long Beach, chair of the Senate transportation committee. "It's a tremendous amount at stake."

Steinberg, D-Sacramento, acknowledged Monday that tax increases were difficult for all lawmakers to swallow but said the Legislature had no choice.

"Nobody likes that idea, but remember the reason we are in this crisis is because we are in a national and international crisis," he said. "California's revenue is estimated to drop over $30 billion between 2008 and the middle of 2010, and so there isn't a choice but to make deep cuts, painful cuts, but also to raise some taxes temporarily to get through these difficult times."

He said it was time for GOP lawmakers to fall in line behind their caucus leaders in the Assembly and Senate, who helped negotiate the budget proposal.

"It's time for one more vote," Steinberg said.

Getting it is the problem. One Republican, Sen. Abel Maldonado, criticized Senate Minority Leader Dave Cogdill for failing to make sure he had enough votes from his caucus.

Maldonado was thought to be one of the GOP lawmakers who would vote for the budget, but so far he has been a holdout. He said he was not asked to support the negotiated package until Sunday.

"I think the responsibility here falls on the shoulder of Dave Cogdill," Maldonado, R-Santa Maria, told reporters on Monday. "He still has to put up three votes. He's the leader of the party."

Cogdill, R-Modesto, declined to comment.

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Video: California on the brink

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