No California budget deal yet, more talks on Tuesday
SACRAMENTO, California (Reuters) - California's leaders failed to reach a final budget agreement to close a $19.1 billion deficit on Monday, the 89th day of their stalemate over a spending plan, top lawmakers said.
California's budget has suffered massive shortfalls in recent years as a result of plunging revenue caused by the mortgage crisis, housing downturn, financial market turmoil and double-digit unemployment in the most populous U.S. state.
"We've got a little bit more work to do," Assembly Speaker John Perez told reporters after a closed-door meeting with Governor Arnold Schwarzenegger and other top lawmakers in the state capital of Sacramento.
State Senate President Pro Tem Darrell Steinberg said budget talks would resume at noon on Tuesday and that he hoped an agreement would be reached quickly so the full legislature could vote on a budget next week.
"We're almost there," Steinberg said.
Schwarzenegger, a Republican, and leaders of the Democrat-controlled legislature had agreed on a framework for a budget deal on Thursday, signaling a final agreement was near despite sharp partisan differences over how to balance the state's books.
Democrats have pressed for raising revenue and spending cuts to fill the state's budget shortfall. Schwarzenegger and Republicans in the legislature's minority have held out for deep cuts and oppose tax increases to raise new revenue.
At more than $19 billion, California's budget deficit equals more than $500 for every person in the state and the political fight in Sacramento over closing coincides with the state's gubernatorial campaign.
Democrat Jerry Brown, a former California governor and the state's attorney general, and Republican rival Meg Whitman, the former chief executive of eBay Inc, are campaigning for Schwarzenegger's seat. The Hollywood icon cannot run again for governor because of term limits.
A budget signed into law would allow California's money spigot to open again for public works and services put on hold since the July 1 start of the state's current fiscal year.
"We're already at a point where a lot of projects, road projects, are getting delayed, where community colleges are uncertain about funding," said Stephen Levy, director of the Center for Continuing Study of the California Economy.
In East Palo Alto, California, Gloria Marshall said she needed a state budget to be signed into law to pay her staff of 33 at the Creative Montessori Learning Center, which gets 80 percent of its funds from the state's education department.
Marshall, the child-care and preschool facility's executive director, said the state owed her center more than $200,000 for staff pay suspended since late July as a result of a stalemate that would break the state's previous 78-day record.
"It's certainly longer than any of us expected," Marshall said.
California also needs a state budget in place soon to go forward with a private sale of roughly $5 billion in short-term debt to meet its immediate cash-flow needs, State Treasurer Bill Lockyer said on Monday in New York.
(Additional reporting by Joan Gralla in New York; Editing by Tomasz Janowski)
