Budget Impasse Hurts O.C. Firm, Many Others

If you’re looking for a victim of the state’s budget impasse, businessman George Gamar is willing to volunteer.

President of a cold storage and delivery business, Gamar gave a tour of his facility Monday to State Controller Gray Davis, telling him that the impasse caused the layoff of four of his 25 employees.

The state owes his Orange County Cold Storage $250,000, Gamar said, for the thousands of pounds of frozen meat, burritos and pizzas he has delivered to prisons and state hospitals since July 1.

“And I’m about to lay off four more (employees,)” Gamar said. Sales to the state make up about 80% of his $3-million annual business, and he says he has taken out a $200,000 loan at an annual interest rate of 9.5% to cover a cash flow shortage caused by the state’s non-payment.

“What’s going to happen is, I’m going to stop supplying the state (until the impasse is settled), because this loan is eating up my profit margin so I won’t be making any money on state sales,” Gamar said. He said that cutoff may come as soon as next week.

“And you know how prisoners act if they don’t get fed the right food,” Gamar said. “How do you think they are going to act if they don’t get fed at all? I’m sure the state has a backup plan for a month or so, but what will happen after that?”

Davis said that, unlike state employees who have received warrants that banks have been honoring just as paychecks, Gamar and thousands of others supplying the state with everything from machines to pencils have received nothing because Gov. Pete Wilson and the Legislature have not authorized their payment.

Davis said that if the impasse cannot be broken, he hopes that the Legislature will pass and the governor will sign a temporary measure allowing him to pay suppliers using the same fee schedule in place during the last fiscal year.

Dan Schnur, a Wilson spokesman, said the Republican governor feels sorry for businesses such as Gamar’s but believes that adopting the budget currently offered by the Democrat-controlled Legislature would make the long-term situation worse.

“The governor would like nothing more than to solve the budget crisis, but he is not going to do it by raising taxes or by deficit spending, which in the long term would result in higher taxes,” Schnur said. “In the long run, that would be worse for businesses” such as Gamar’s.

Davis, a Democrat, said Gamar and the other suppliers are being hurt by the governor.

“The Legislature has given in on not raising taxes or rolling over the deficit,” Davis said. “Businesses are suffering because Wilson wants to advance his own personal political agenda.”

Gamar, sitting in his office at his three-acre site in an industrial section of Orange, said he blames both the Legislature and the governor and he doesn’t care which side gives in so long as it is soon.

Because he and other suppliers will not receive any interest on the money due them when the state eventually does pay, they are in effect being asked to keep the state’s operations afloat for free, Gamar said.

“I don’t think it’s fair,” Gamar said. “The state has the money, it just hasn’t passed a budget. Its sales tax payments, its income tax payments, its property tax payments--they’re all still going into Sacramento. What would happen if I decided to send my employees’ payroll tax payment to the state with an IOU? I’d have a state tax collector at my door in no time.”

Gamar said some businesses he deals with are talking about no longer doing business with the state. That is an option Gamar said he may also consider.

“I would just cut back to three employees and just do cold storage,” Gamar said.