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California's budget meltdown
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No sign of comprise between Gov. Schwarzenegger and California Assembly on a budget. Negotiations broke down on Monday with no sign of a deal to close California’s deficit. .jpg)
Assembly Speaker Karen Bass refused to meet with Gov. Schwarzenegger on Monday. Gov. Schwarzenegger is insisting a package of solutions be introduced that close the state's deficit. The proposal should also include long-term changes to reduce spending.
Bass, a Democrat from Southern California, told reporters she was tired of Schwarzenegger's proposals, which she said were not likely to help erase the state's $26.3 billion shortfall through June.
Bass said the governor's demands include changes to allow the state to more easily hire contractors. The Governor is also asking for a reduction of money the state puts into the state employee pension system, and the building of a "massive new computer system that we would use in determining public assistance."
Bass said "We believe that many of the governor's reforms are worthy of consideration, but what is most Important right now is that we close the deficit."
Governors’ communications director Matt David said "Speaker Bass can boycott budget meetings, but it will not change the size of our deficit, the amount of cuts necessary, and it will not stop IOUs from going out," he said. "It is in California's best interest for the speaker to be engaged in solving our deficit."
On Monday, Fitch Ratings, a Wall Street credit ratings firm, downgraded California's general obligation bond rating. California’s rating is already the worst among 50 states, to triple-B from A-minus.
The downgrade "is based on the state's continued inability to achieve timely agreement on budgetary and cash flow solutions to its severe fiscal crisis," the agency wrote in a two-page note to investors.
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