State Relations

August 7, 2007

California Budget Stalemate Enters Sixth Week

While most state legislatures have long since adjourned for 2007 and new fiscal year budgets are quietly chugging along, the California state legislature is still wrangling over the 2007-08 state budget which was supposed to have been enacted by June 30th. 

Although Democrats have sizeable majorities in the legislature and agreed on a budget deal with Governor Arnold Schwarzenegger several weeks ago, the Sacramento budget stalemate has persisted into the month of August.  Most of the reason for the hold-up is because California is one of three states in the nation that require a two-thirds majority of both chambers to pass a budget.  This means that enactment of the budget requires the support of some Republican members in each chamber.  While Assembly Democrats and Republicans passed a bi-partisan $103 billion budget on July 20, Senate Republicans have refused to go along with that spending plan, claiming it doesn’t go far enough to prevent future budget deficits.

The lack of a legal basis for spending state money in the Golden State is starting to become a serious problem.  The Sacramento Bee reported today that state hospitals, clinics and nursing homes will not receive more than $200 million in Medicaid payments this week and state vendors have not been paid since July 1.  If the stalemate continues, it is expected that K-12 and higher education institutions could be affected.

In case you were wondering, the longest budget stalemate in California occurred five years ago when then Governor Gray Davis signed the budget on September 5, 2002 — 67 days after the start of the new fiscal year.