State Senate fails to pass budget; services threatened by lack of funds

After hours of frenzied negotiations, the state Senate failed to approve a budget Wednesday, prolonging an impasse that threatens to strap the finances of schools, community colleges and healthcare programs that rely on checks from Sacramento.

In a 26-14 vote held Wednesday night, one Republican senator broke ranks with his caucus to vote with Democrats to approve a bipartisan spending plan passed by the Assembly nearly two weeks ago. But it wasn’t enough. The Senate needs one more GOP vote to approve a spending plan by a required two-thirds majority.

The remaining Republicans continued to hold out, demanding more spending cuts and a softening of an environmental law they say is being used inappropriately to block building projects.

“This budget is late 31 days and I think it is time we start moving forward,” said Sen. Abel Maldonado (R-Santa Maria), who was under pressure from his caucus to continue holding out but voted for the measure. “We are getting more than we asked for with this budget.”

Yet the budget failed to pass, even after Gov. Arnold Schwarzenegger assured Republicans he would use his line-item veto authority to trim the $700 million in spending from the budget that GOP lawmakers say the state cannot afford.

Schwarzenegger expressed frustration that Republicans were not satisfied with his offer.

“I am very disappointed the Senate failed to pass the budget,” he said. “The origin of this stalemate was a bold call by Republicans to eliminate the operating deficit this year. I committed to doing exactly that by vetoing $700 million from the budget with my line-item authority. There is no reason the people of California should be forced to go a single day longer without a budget. We are now more than a month late and the gridlock is unacceptable.”

As for the Republican demands to change the environmental law, the governor said he shares their concerns but “I don’t think it is appropriate to hold up the budget over a non-budget issue.”

Senate Republican leader Dick Ackerman of Irvine, however, said his caucus will continue to seek more concessions. “We are not quite there yet,” he said. “It is our responsibility to put out the best budget we can. I think we are getting close on this one, but not quite there yet.”

Senate President Pro Tem Don Perata (D-Oakland) refused to negotiate further Wednesday night. He said Democrats had agreed to major cuts in public transportation, welfare and drug treatment programs. Perata had also signed off on the governor’s plan to use his line-item veto to make cuts. And the Democrats, he said, were also willing to support a bill to change the environmental law that Republicans are demanding be weakened.

“It seems like every time we take a step forward, they ask us to take two steps back,” Perata said. “The state budget is being held up by Republicans.”

The stalemate threatens to drag on for several weeks. The Senate adjourned Wednesday night with no plans to return.

Already, some $1.1 billion in payments have not been made to schools, hospitals, community colleges and social service programs.

A prolonged impasse could trigger a financial crisis at any number of smaller healthcare and social service institutions that do not have reserve funds and are unable to access bridge loans. Vendors are not getting paid. Some have already refused to supply services until a budget is in place. The state also could see its credit rating downgraded.

“I was prepared to eliminate the operating deficit as requested, therefore the Senate should have approved the budget,” the governor said. “My job now is to make sure this does not shut down state government.”

The impasse also could hurt the prospects of a February ballot initiative being championed by Democrats. The measure would change term limits to allow Perata and other legislators to keep their posts for several more years.

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evan.halper@latimes.com

jordan.rau@latimes.com