Abel MaldonadoArnold SchwarzeneggerCalifornia BudgetDarrell Steinberg

Shocker: California on the BRINK of Financial Collapse? Governor Schwarzenegger Ready to Send 20,000 Layoff Notices


California on the Brink screams the Drudge LEDE.


No, because California has been in financial trouble for some time now and RINO GOP Governor Arnold Schwarzenegger is the main cause for his inability to lead and govern the Golden State.

So, where does California stand and what is the urgency?

Lawmakers adjourned tonight until Tuesday after failing for the third consecutive day to muster an elusive final vote for the state budget package.

The move came after Gov. Arnold Schwarzenegger said he would send 20,000 layoff notices on Tuesday and other administration officials warned of construction stoppages if the $40 billion budget shortfall and the associated cash crunch are not resolved.

Senate President Pro Tem Darrell Steinberg, D-Sacramento, said the Senate would consider the critical tax increase bill on Tuesday morning, whether or not a third Republican senator comes forward to provide the deciding vote. He said the house would stay in session until the package was approved.

“Bring a toothbrush, bring whatever necessities you need to bring,” Steinberg told senators as the house shut down for the evening.

The tentative deal would bridge an estimated $40 billion budget gap through a massive mix of program cuts, borrowing and new revenues, including vehicle license fee increases and higher gasoline, sales and personal income taxes.

Key elements require passage by a two-thirds majority of the Senate and Assembly – thus three GOP votes in each house.

The California State Senate will reconvene at 10 AM this morning and the tax bill will be taken up. Should the Big 5 Legislative Leaders not be able to persuade one GOP California State Senator to flip their vote for the California State Budget with tax increases, the stalemate will continue.

And, according to Democrat Senate Leader Steinberg, the Senators will be locked in the State Senate chamber until there is a resolution.

Here are the details of the Big Five crafted plan.


The plan would raise up to $14.4 billion through June 2010 by imposing a variety of temporary taxes. The higher taxes would be in effect for two years. However, Republicans would allow taxes to remain longer – two more years – if voters approve a state spending cap during a special election in May.

Here are the specific taxes:

  • Increases the state sales tax by 1 cent on the dollar, generating $5.8 billion through the next fiscal year.
  • Raises the fee for licensing vehicles to 1.15 percent of market value, up from the current .65 percent. The move is projected to generate $1.5 billion. A portion of the fee will be dedicated to local law enforcement.
  • Adds a 12-cent gasoline tax, raising $2 billion.
  • Imposes a one-time, 5 percent surcharge on people who owe personal income tax at the end of 2009 to generate $3.2 billion. If the state receives more than expected from the federal government, the surcharge would be reduced to 2.5 percent.
  • Reduces the amount taxpayers can claim on a dependent care credit to the federal level of $100 instead of $300, adding $1.4 billion.
  • Redirects $201.6 million of tribal gambling revenue from the state Department of Transportation to the general fund over the two-year period. The money is intended to offset the effects of increased traffic around Indian casinos.

The GOP Senate Caucus does not support the above tax increases and insist that more cuts in state government spending be made.

Stay tuned as the California State Budget Stalemate continues.

Flap will be live microblogging the California State Senate Session on Twitter (in the right sidebar) ——>

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