California Budget Crisis Diaries: Costly lawsuits and late payment fees

San Francisco Mayor Gavin Newsom, left, is joined by former U.S. President Bill Clinton, right, at Los Angeles City College's new Science and Technology Building to talk to faculty and students about education for green technology jobs Monday, Oct. 5, 2009, in Los Angeles. Clinton is in Los Angeles to help raise money for San Francisco Mayor Gavin Newsom's slow-starting campaign for governor. (AP Photo/Damian Dovarganes)

The number of lawsuits being filed against state lawmakers and the state offices making late payments show millions of dollars down the drain. But there may be a light at the end of the tunnel as the various gubernatorial candidates put forth their ideas for fixing the budget.

The possibility of unlawful cuts: Gov. Arnold Schwarzenegger and state lawmakers have been inundated with lawsuits since they reached a budget agreement in July. Even Senate President Pro Tem Darrell Steinberg (D-Sacramento) filed a lawsuit against the governor.

If Schwarzenegger and the state lose all the lawsuits filed against them, the state could lose $4.7 billion, the San Jose Mercury News reports.

“While legal battles are common in every budget cycle, the unusually high number this year – and their potential to wreak exceptional fiscal havoc – is a testament to the drastic, even risky, measures employed to solve deficits amounting to some $60 billion,” according to the Mercury News.

“This year’s bevy of lawsuits also is the legacy of an annual budgeting process in which tax increases have become anathema and in which certain spending obligations, such as money for education, are set in stone during boom years, without any provision to pay them when revenues slip.”

The exact amount the state could spend on legal fees has not yet been determined.

Cost of late payment fees: The state is spending millions on late payment fees, according to the Los Angeles Times.

According to the Times, in the past two years California has had to pay “more than $8 million” in late payment fees due to “confusion over which offices should make payments, delays in invoices being sent from field offices to headquarters and shortages of staff to pay the bills …”

“The penalties are mandated under the California Prompt Payment Act, which requires state agencies to pay properly submitted, undisputed invoices within 45 calendar days of receipt. Every department is required to report annually how many invoices were paid late and the sum of penalties incurred.

“For the two-year period ending June 30, state agencies reported paying more than 38,800 invoices late. With a budget some three months overdue last year and 50 days overdue in 2007 because of political gridlock, the state ran out of cash and stopped paying its bills.”

And, Californians who are heated over specific budget cuts tell the Times, such office sloppiness is “inexcusable.” Schwarzenegger’s spokesperson is pointing his finger at the Legislature for passing the budget nearly two months after the start of the fiscal year. But Steinberg is pointing back at Schwarzenegger – which just about sums up another day in Sacramento.

California’s next governor: While quandaries continue to arise at the Capitol, the governor’s race continues. Former eBay CEO Meg Whitman and California Attorney General Jerry Brown officially announced their candidacies last week, after much campaigning in the past few months.

Additionally, San Francisco Mayor Gavin Newsom may have seen a boost in supporters Monday when former President Bill Clinton visited the Golden State just for him.

The former president and the mayor – known for his support of same-sex marriage – visited classrooms at Los Angeles City College before attending a private fundraiser, where tickets were priced up to $50,000.

Clinton’s blessing, announced weeks earlier, was not surprising. Last year, Newsom supported Hillary Rodham Clinton’s White House bid.

Newsom will hold an online town hall meeting Tuesday at noon in an attempt to garner more supporters.

Associated Press writer Michael Blood contributed to this report. Hoa Quach is the SDNN political editor. Follow her on Twitter.

Tags: california budget, california deficit, california late payment fees, california lawsuits, darrell steinberg, Gavin Newsom, jerry brown, meg whitman, Schwarzenegger, SDNN

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