Governor threatens to shut down state offices

June 11, 2009 7:25:35 PM PDT
There is tough talk coming from the governor as he pushes the legislature to solve the budget crisis. He's threatening to shut down state government.

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To light a fire under the budget talks, Governor Arnold Schwarzenegger (R) of California is threatening to make state government come to a grinding halt if lawmakers don't solve the $24 billion deficit before California runs out of cash next month. He says he'd rather do that than take out an expensive bridge loan from Wall Street known as a RAW.

"Let me tell you, the state will come to a standstill because I will not sign a RAW just so the Legislature will have additional time to solve the problem," said Governor Schwarzenegger.

A complete shutdown of California state government has never happened so leaders can only guess what that means.

"That would mean schools might not open. That would mean vendors wouldn't get paid. And frankly, it also might mean there'll be some intervening body, maybe the courts, I'm not really sure, who would come in and take over the budget-making process," said Assembly Speaker Karen Bass (D) of Los Angeles.

Short of a shutdown the state could delay sending money to state-funded programs, like it did in February when California teetered on going broke. State Controller John Chiang says the state could start issuing IOUs or worse.

"The worst, worst would be defaulting, right? That's described as nuclear meltdown of California where we're not paying out to education, health care and any other cash obligations," said Chiang.

The Governor told the LA Times, cutting off all state funding in a shutdown gives them a taste of what it's like.

"To who? Who needs that taste?" said Jennifer Crosetti, an adult health day care provider. "It's as if everybody who's in need of those services, who's in need in the community, we're now saying 'Sorry. No longer are we going to take care of you all.'"

The Governor's office says he meant lawmakers should be given that taste, not recipients of state funding. Democratic leaders vow they'll solve the deficit by July 1st to avoid a shutdown altogether.

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