Capitol Alert: No state budget in sight on eve of new fiscal year

It may not feel like it, but today marks the end of another year.

A fiscal year, that is. For the 19th time in the last 25 years, California will enter the 2010-11 year tomorrow with no budget.

Despite not having a spending plan in place, courts have determined that the state can still maintain various functions. Those include paying off debt, providing about two-thirds of K-12 school funding and sending out SSI/SSP grants to low-income disabled and elderly people.

California, however, will withhold payments to community colleges, local governments and state vendors tomorrow, according to Controller John Chiang. The state also will withhold salary and per diem for lawmakers and their aides.

Chiang and Gov. Arnold Schwarzenegger are battling over whether to issue minimum-wage checks to state workers and withhold their remaining salary, starting in July, as long as there is no budget. Chiang has said it is infeasible to do so, while Schwarzenegger has suggested he will request minimum-wage pay without a budget. Colleague Jon Ortiz outlined the potential scenarios here. A state appellate court is expected to rule on the matter any day.

The Republican governor will meet tonight in a Sacramento closed-door session with Senate President Pro Tem Darrell Steinberg, D-Sacramento, and Assembly Speaker John A. Pérez, D-Los Angeles, to discuss where things stand.

Although Steinberg and Pérez agree that Democrats should preserve safety net programs rather than eliminate some of them as Schwarzenegger has proposed, they have been at odds over how to pay for them. Aides for both leaders say they are close to releasing a combined framework that will be the basis for budget talks ahead. The key word is "framework," as the Democratic plan will likely have some outstanding gaps that do not close the entirety of the $19.1 billion deficit.

Pérez entered his speakership emphasizing that he would avoid closed-door budget talks. But he has met several times privately with Schwarzenegger and Steinberg in the past two weeks, including Tuesday with the governor.

The publicly conducted budget conference committee meetings ground to a halt this month because Democratic caucuses in the two legislative houses could not agree on their revenue proposals. The leaders' private meetings, as well as the lack of a public document detailing the combined Democratic plan, seem to be an acknowledgment that the budget cannot be resolved entirely in public.

Today being June 30, leaders have begun issuing statements bemoaning the lack of a budget deal at the start of the next fiscal year. Senate Republicans, who back Schwarzenegger's budget but have not produced their own plan, criticized Democrats for, as Sen. Bob Dutton of Rancho Cucamonga put it, "partisan gamesmanship that only serves to hurt taxpayers and hinder private sector job creation."

And Democratic State Treasurer Bill Lockyer has urged lawmakers to get moving on a budget plan or risk further deterioration of the state's credit rating and of its access to Wall Street loans for public works projects and state services.

"It's absolutely critical that the governor and Legislature quickly adopt a budget that's free of hope-and-a-prayer math and legal clouds," Lockyer said in a statement.

Update (2:27 p.m.): Corrected statistic on how many times in the last 25 years California has been without a budget at the start of the fiscal year.