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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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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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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My interview yesterday with Governor Arnold Schwarzenegger included a new assertion from the chief executive: that his willingness to break his anti-tax stance earlier this year was a one-time deal to which Democratic legislative leaders agreed.
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There hasn't been much of a post-mortem among politicos about the May 19 election -- partially because the state's fiscal crisis hasn't allowed time for pondering, but also because it's seemed pretty darn clear: the voters thought the budget deficit measures stunk.

Nonetheless, a couple of interesting points have come up in the past 24 hours... today from the state's preeminent pollsters and yesterday in my interview with Governor Schwarzenegger.
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It seems Governor Arnold Schwarzenegger’s position at this juncture of the budget deficit debate can be summed up thusly: he's resolute on the size of the needed solution, but flexible on how to get there. In every way but one, that is.

That was the thrust of the governor’s message in a 22 minute one-on-one interview this afternoon in his state Capitol conference room. You can hear my reporting on the conversation tomorrow morning on The California Report, and the full interview will be able to be heard online on our website.
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