Lawmakers begin second day of budget talks

June 25, 2009 7:34:00 PM PDT
Lawmakers are considering a "rob Peter to pay Paul" approach to deal with the state budget mess. And in the role of Peter in this scenario are public schools, colleges, and universities across California.

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Lawmakers thought they found a way for the state to avoid issuing IOUs next week to pay its bills. But it comes at the expense of California's schools and public colleges and universities.

Sacramento would take $1.3 billion from K-12 classrooms for the remainder of the budget year that ends in a matter of days. It would also defer giving education billions by a couple of months.

"Of course the schools need the money. But if the state of California goes off the fiscal cliff, the schools will not have any money," said Assemblywoman Noreen Evans (D) Santa Rosa. "If the state goes off the fiscal cliff, nobody will be in operation including schools."

The bi-partisan agreement comes as the state is readying to issue IOUs next week to pay its bills. The Legislature's accounting maneuvers would keep $5 billion in the state's bank account and avoid the embarrassing step of IOUs.

Schools are upset lawmakers are even considering the move because most have run down their reserves and credit lines to cover years of budget cuts.

"That puts your whole financial system into turmoil, which is what's happening to schools. They're scraping around for money; borrowing from reserves; they're borrowing from banks. They're borrowing form county treasuries, trying to make just basic payments," said Dennis Meyers from the Association of School Bus Officials.

In the end, Senate Republicans shot down the idea of deferring payments to schools. It was just as well because the governor indicated he would have vetoed the package of three bills, saying he wants the entire deficit solved.

"I'll tell you what would avoid IOUs, having a solution to our $24 billion deficit. That would avoid IOUs. That's what the governor is interested in them doing and that's what they need to get to work doing right now," said the governor's press secretary Aaron McLear.

The state's top money guys, Treasurer Bill Lockyer and State Controller John Chiang, actually thought the deferrals were a good idea because it would have prevented IOUs and bought California at least two months.

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