It was a busy second day of the new fiscal year at the printing facility tucked inside a quiet business park in a shaded east Sacramento neighborhood. But unlike most days, they weren't printing thousands of checks paid by the state of California.

This time, they were printing documents that aren't worth anything. For now, at least.
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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.
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It was an unusual ending to a long day, the final day of the 2008-2009 fiscal year. But there was no surprise ending: the conventional wisdom won out, as the state slipped into the new budget year with no solutions in place to a deficit that could be as large as $24 billion.
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Governor Schwarzenegger's advisers say he's made it clear to Democratic legislative leaders that he will accept an alternate set of proposals from his $24 billion May deficit solution, one that neither eliminates entire programs nor raises taxes.
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No one around the state Capitol believes there's an additional $3 billion in easy spending reductions just lollygagging inside the recesses of the budget. Okay, almost no one.

But should the current budget deficit impasse drag on beyond midnight Wednesday, it appears that's how much more money will need to be found to satisfy anyone who believes in solving what we used to call the whole enchilada.
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You're not really surprised that things turned out this way today, are you?

Of course, that's not to say that some parts of today's budget news weren't unexpected. And few would venture a guess as to what happens next... though indications are the Legislature will be spending the final weekend of June in session.

For a formal look at today's events, dial in to The California Report tomorrow morning. In the meantime...
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Audio from budget vote September 9, 2008

Few expect that today's debate and votes in the Legislature will produce a final resolution to California's historic fiscal crisis.

But by day's end, there will hopefully be a better sense of where we're headed... and when. Can lawmakers strike a deal before the state runs out of money in less than five weeks time?
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One of the most often quoted stats about California is that, were we a nation, we'd be the world's eighth largest economy.

But such power can also work in reverse, say economists. And now, there is speculation that whatever ugly deficit deal state lawmakers strike, its necessary slashing of public services could either slow, or stop, the economic recovery of the entire nation.
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At the suggestion of my editors (who are trying to keep tabs on things here in Sac Town like everyone else), this is the first of a new, and hopefully short-lived, feature: an end-of-the-week look at where things stand with the budget deficit debate.
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In the theater or the movies, we'd call this the beginning of Act Two. In baseball, it's probably the sixth inning.

We now have two relatively complete looks at how to resolve the gaping hole in the state budget -- one from Governor Schwarzenegger, one from legislative Democrats -- with the Dem plan headed for a vote on the floor of each house as soon as Monday.
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