California Budget Crisis Diaries: Day 14 of the budget impasse

One can find much change in California in just 48 hours. That’s right, 48 hours and nothing less because state legislators are now pulling all-nighters until a budget agreement is made. Here’s what happened since Day 12 of the budget impasse.

All-nighters: The Big 5 (Gov. Arnold Schwarzenegger and party leaders) have been meeting throughout the day until the wee hours of the morning. Although the Democrats still want tax increases and the Republicans still want more cuts, leaders of both parties have said, “progress has been made.” Furthermore, state leaders are still optimistic a budget agreement may be reached as early as Friday.

Step aside Steinberg, Bass is here: As budget negotiations get hotter, Assembly Speaker Karen Bass (D-Los Angeles) is stepping into the lime light, more so now than her caucus colleague Sen. President Pro Tem Darrell Steinberg (D-Sacramento). Most recently, Bass spent some time with reporters earlier this week discussing what’s been happening in the closed-session Big 5 meetings. She has even spoken on behalf of Steinberg.

“The Pro Tem and I are absolutely committed to solving this deficit,” Bass said. “But we are not going to destroy the safety net in the course of the present deficit.”

Prior to the impasse, most reporters heard from Steinberg more often that Bass. When the two did hold press conferences together, Steinberg did most of the talking. However, after Bass took a brief hiatus from Big 5 meetings out of frustration with the Governor — she has stepped into the spotlight. A new day has arrived and Steinberg is now on the sidelines.

Layoffs: Exhibiting his executive power, Schwarzenegger announced 2,000 more state employee layoffs Tuesday. This move doesn’t require a legislative vote and allows the Governor to garner some savings as soon as possible. If the 2,000 layoffs follow through - this would add to the 33,000 state employees who have already received their layoff notices.

For state employees not being laid-off, a fourth furlough day may come into play. Like his ability to make layoffs without the legislative support, the Governor can also execute furloughs. He announced this possible move over the weekend for the state employees who’ve already taken a 20 percent cut from three furlough days.

Schwarzenegger is expected to further delve into his idea Wednesday.

Because acting comes so naturally: Schwarzenegger, exuding the skills he learned from his Hollywood years, launched a commercial (see video) Tuesday. The commercial allows Schwarzenegger to defend numerous attacks from all parts of the political spectrum and most recently, the attack from the California Teachers Association.

Schwarzenegger’s one-minute spot, titled “Stand for California,” features the man himself; simply stating he’s standing for California.

“I will not sign a budget that does not address the waste, fraud and abuse in our government,” Schwarzenegger said in the ad. “I will not push a budget that pushes our financial problems down the road, because the road stops here.”

Schwarzenegger then stands up and asks viewers to “Stand for California.”

The cost of the ad was not released. However, the Governor’s office said the tab is being paid through Schwarzenegger’s own private political campaign pocket. Of course, this fact doesn’t come as a surprise as the Governor has not accepted his salary since entering office.

Related Links: California Budget Crisis Diaries | Fool’s Gold

Credit rating: More than a week has passed since Fitch Ratings lowered California’s score from an A- to a BBB. Now, another major bond rating is dropping the State’s score too. Moody Investor Services dropped California’s debt rating from an A2 to Baa1, down two notches. This means California is now two notches away from junk rating when it comes the eyes of Moody and Fitch.

Standard & Poor hasn’t dropped California’s rating, yet.

Steady bonds? Yes, really: The nation’s financial outlet, The Wall Street Journal, pointed out that although the credit rating is faltering, California’s bonds are remaining steady. In an article printed Tuesday, the Journal points out that California’s bond rating is up 5.2 percent.

What does this mean for California? Not much, but for bondholders, this is like a breath of fresh air.

Possible buyer of Fairgrounds: The Del Mar City Council voted to send Schwarzenegger’s office a letter of interest over the purchase of the Fairgrounds Monday, according to the Union Tribune.

Schwarzenegger originally proposed to sell the Fairgrounds and other state assets including the Governor’s mansion earlier this year, simply saying California “didn’t belong in the real estate business.”

This may be good news for the State government, as local real estate economist Nathan Moeder said real estate developers would not purchase the land until all entitlements are completed (entitlements tell developers what they can and cannot build on the land).

In addition, this may be good news for County residents who expressed their dismay last month over this proposal — saying they wanted to keep the Fairgrounds and keep it as is.

Moeder said the coastal development wouldn’t sell for more than $750 million.

Hoa Quach is the SDNN political editor. She can be reached at Politics(a)SDNN.com

Tags: big 5 meetings, california budget crisis, california budget mess, california deficit, california employees, california furloughs, california layoffs, fitch ratings, moody investor services, Schwarzenegger, schwarzenegger commerical, SDNN, seiu100, standard & poor

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