| By Michael B. Marois and William Selway
Feb. 17 (Bloomberg) -- California lawmakers failed to reach agreement on how to eliminate a $42 billion budget shortfall as Governor Arnold Schwarzenegger prepares to shut down hundreds of public works projects and fire thousands of state workers. Senate President Darrell Steinberg, a Democrat, plans to lock lawmakers in the capitol unless they pass a $40 billion package of tax increases, spending cuts and bond sales today. The bills, backed by the Republican governor and by Democrats, remain one Republican vote short after round-the-clock negotiations over the three-day weekend. The floor debate is expected to start at 10 a.m. Sacramento time. “We are dealing with a catastrophe of unbelievable proportions,” said Senator Alan Lowenthal, a Democrat from Long Beach. “We cannot deny it any longer.” California, a state that would rank as the world’s eighth- largest economy, is close to running out of cash because its tax collections have fallen amid the U.S. recession. It has already stopped paying income tax refunds and next month may be forced to pay bills with IOUs for the second time since the Great Depression unless a new budget is agreed. Link to Article |