Nothing Changes on New Year's Day

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State worker protesters at the state Capitol on July 1, 2009Gov. Schwarzenegger speaking to reporters at state Capitol on July 1, 2009

The battle over California's gaping budget hole is probably going to get more intense before it ends... as just about everyone thinks someone else is to blame.

Actually, the title of the posting isn't quite true (though an homage to a great song); it appears the state budget gap grew overnight to $25.3 billion, after a series of stopgap measures were rejected by Senate Republicans and Governor Schwarzenegger.

You'll see that number reported elsewhere as $26.3 billion; but the governor's budget team is assuming a $1 billion reserve for the new fiscal year. Picky, yes, but a reserve isn't a deficit... and so we'll be calling it a $25.3 billion shortfall.

In a Capitol news conference, Schwarzenegger put forward a new set of deficit solutions totaling $4.882 billion. And tops on that list: a formal suspension this year of the public school funding guarantee, Proposition 98. Prop 98 has really only been suspended once before in its 20 year history (though twice if you count changes following the '89 Loma Prieta earthquake). And that one time came during Schwarzenegger's first days as governor in 2004, a move at the time he insisted (after a question by, well, me) was a "rebasing" of Prop 98.

That's because suspending Prop 98 is often controversial; it means the state can spend less on public schools than the voters dictated by ratifying the ballot measure in 1988.

In the 2009 version, Schwarzenegger again attempted to present the new world order for California public schools as not so bad. "This is consistent with what I said when I promoted and campaigned for Proposition 1B," said Schwarzenegger. He's referring not only to the $9 billion in supplemental funding that Prop 1B would have provided had it not been defeated, but the reemergence of that obligation to schools that exists now that the 2008-2009 spending reductions have evaporated. (Sort of. Prop 1B generally referenced the same money now obligated to schools, plus or minus a bit. Again, this is a 'how Prop 98 works' discussion for another time.)

Good thing for schools? Bad for everyone else? The governor's take:

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Call that spin or just eternal Schwarzenegger optimism, but the governor's assessment of education funding was the only thing upbeat on this day after the ugly end to the fiscal year that just passed by.

Schwarzenegger also declared a formal fiscal emergency, vowed to veto any bill on his desk that wasn't budget related (and legislators scrambled today to yank some back that were pending), and added a third furlough day for state workers every month.

The furlough day was one of the final straws for the small but vocal crowd of workers who rallied outside the state Capitol today, chanting, "Enough is enough!" It's projected to save the state $425 million this fiscal year, and when combined with the existing two furlough days amounts to close to a 15% monthly cut in pay. The governor's advisers say the furloughs will now largely revert back to fixed days off (Fridays), rather than the 'self-directed' policy that has let workers take them at their own convenience.

Meantime, Democratic legislative leaders are moving to focus on the deficit issue, too. Senate President pro Tem Darrell Steinberg has ordered the postponement of all policy committee hearings indefinitely -- thus stopping work on all issues that can't be tied back to resolving the deficit crisis.

Steinberg was a study in frustration last night. The Sacramento Democrat universally known as a Mr. Nice Guy, Steinberg appeared to find himself stuck negotiating for a deal that couldn't be sealed. His comments after it all fell apart depicted a frustration the pro Tem rarely shows in public.

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From here, the immediate impacts will likely dominate the headlines -- especially the all-but-certain issuance of IOUs for some state invoices beginning tomorrow. But in many state budget negotiations, the longer a painful deal sits out there the more it begins to unravel. Assuming this one was ever bound together, that's going to make for some more long days and nights as FY 2009-2010 begins.

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About John Myers

John Myers is senior editor of KQED's new multimedia California Politics & Government Desk.  He has covered California politics for most of the past two decades -- serving previously as Sacramento bureau chief for KQED News and, most recently, as political editor for KXTV News10 (ABC) in Sacramento. He moderated the only gubernatorial debate of 2014, and was named one of the nation's top statehouse reporters by The Washington Post. Follow him on Twitter @johnmyers.

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