California lawmakers to miss budget deadline

SAN FRANCISCO (Reuters) - California lawmakers will not meet their deadline on Tuesday for approving a state budget, which requires closing a shortfall of more than $19 billion, a spokeswoman for the state Senate's top officer said.

They will instead work toward having a spending plan together for the state's next fiscal year by the time it begins on July 1, said Alicia Trost, spokeswoman for Senate President pro Tem Darrell Steinberg, a Democrat.

"The conversations continue. Obviously, we're very aware today is a deadline and we take that very seriously, but the most important thing is to get a budget right," Trost said.

Analysts have learned to expect California lawmakers to ignore their June 15 deadline for approving budgets. Lawmakers have also routinely engaged in often lengthy battles over spending plans that stretch out over summer.

This year will be no different, analysts say, noting the stark differences between how Republican Governor Arnold Schwarzenegger and Democrats who control both chambers of the Legislature would balance the state's budget.

Schwarzenegger has called for massive spending cuts. He opposes tax increases, which Republican lawmakers also rule out.

Democrats have urged selective tax increases, scrapping corporate tax breaks and shifting money between state funds to soften the blow of spending cuts.

READY FOR THE LONG HAUL

Assembly Republican Leader Martin Garrick said lawmakers from both parties agree California's government is in deep financial trouble. But he noted that they concur on little else, adding that Republicans also want any budget agreement to include provisions for overhauling the state's public pension system as Schwarzenegger has demanded.

Garrick also said he expects a long budget battle: "I don't have any vacation plans. I've canceled them for the rest of the year."

Democrats do not have sufficient votes to pass budgets on their own, giving the Legislature's minority Republicans considerable leverage during budget disputes.

State Controller John Chiang in a letter sent on Tuesday to the governor and top lawmakers from both parties detailed the difficulty his office will have in paying the state's bills without a budget deal soon.

"At a time when the economy is showing signs of recovery, we can ill afford the 'business as usual' approach of requiring the state to be driven to the brink of fiscal meltdown before compromise is achieved," Chiang said in the letter.

Without a speedy budget agreement, the state will at some point next month exhaust funds for some education programs and local governments, and will be forced to defer those payments to conserve cash for legally guaranteed payments, including those to investors holding the state's bonds.

Last year, Chiang took the extraordinary step of issuing IOUs while cash ran thin as leaders debated budget plans.

(Reporting by Jim Christie; Editing by Jan Paschal)