A No Jive Diatribe

                                                    

California Gov. Arnold Schwarzenegger on Thursday ordered the pay for 200,000 state employees
cut to the federal minimum wage of $6.55 an hour and ordered the termination of contracts of about
22,000 independent vendors.

 “We do not have a budget, and as governor, I have a responsibility to make sure our state has
enough money to pay its bills,” said Governor Schwarzenegger. Without a budget in place, the

                                                                
 
Governor says the the state has no authority to pay vendors and contractors for goods and services
chargeable to Fiscal Year 2008-09, or for payroll for legislative staff, appointees, exempt employees and
payroll for other state employees beyond that required by federal labor law. He also says other bills
cannot be paid including:

• Highway User Taxes that are apportioned to the state, cities and counties for highway
  and road improvement projects
• Cal Grants to students in higher education
• Transfers to the Trial Courts
• Transfers to University of California, California State University and Community Colleges
• Transportation Revolving Fund disbursements
• Non-revenue limit school payments
• Payments for non-federally mandated social services programs such as:
 Community Care Licensing, Adult Protective Services, State Only Foster Care; State
 Only Adoptions Assistance and Cash Assistance Program for Immigrants
• Tax relief payments to low-income seniors and disabled persons.

Meanwhile State Controller John Chiang, who actually pays the state’s bills, says he will ignore the order
unless directed by a court. Mr. Chiang says there’s enough money to pay bills through September even
without a budget. The Governor contends the California Supreme Court has granted him the authority to
issue the order.

OK, let’s play this out. If a budget is not passed before September and the money runs out, then the State
will have to borrow.  It will cost money to do that, thus increasing the size of the deficit.

It has been 31 days without a budget. California does not need this lack of inaction. Put party politics aside
and find a compromise and get on with fixing the broken budget system. California’s solons passed a law
this week to rid us of transfats. What we need is less fat in a budget. We have already recalled one governor;
do Californians need to be thinking about recalling the state legislature?  

                                                                   
                                                                        BUDGET GODS

The 'Budget Gods' have shown their cards. There aren't any good ones. Fold - and get on with the business
of running this state. Win, loose or draw, California deserves a better hand.


  
Tim Johnson
www.CaliforniaBusinessMinute.com