California Dems' budget plan crashes and burns

SACRAMENTO — California's budget mess got even messier Wednesday, with the failure of legislators to reach a compromise on spending cuts, the state controller warning he will issue IOUs next week instead of checks, and no clear idea of what to do next.

"How can the people of California have a clue what we're doing if we don't?" asked Assemblyman Jim Nielsen, R-Gerber, as the Assembly debated a proposal to make $11 billion in program cuts to help plug a $24.3 billion budget hole.

Nielsen's comment was in reference to the fact that GOP legislators didn't receive copies of the inches-thick bill until an hour before debate began.

But it also reflected the general tone of a day in which:

State Controller John Chiang announced he would be forced to pay the state's bills with IOUs, beginning next Thursday, if lawmakers and Gov. Arnold Schwarzenegger can't reach agreement on a budget-balancing plan by Tuesday, the end of the current fiscal year.

The first formal effort to reach an agreement flopped, when majority Democrats in both houses failed to get the necessary two-thirds approval for the spending cuts bill, one of 20 measures in the budget-balancing package.

Rumors and speculation rampaged through the Capitol as to what steps might come next in the state's fiscal odyssey, from borrowing money from the lottery to revisiting major changes in state workplace rules.

In a news release issued even before legislators began debating, Chiang said the state was facing "a massively unbalanced spending plan and a cash shortfall not seen since the Great Depression."

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