State Budget Watch

On the state’s 34th day without a budget, these were the key developments in Sacramento:

THE PROBLEM

Legislators and Gov. Pete Wilson need to bridge a $10.7-billion gap between anticipated revenues and the amount it would take to continue all programs at their current levels, rebuild a reserve for emergencies and erase last year’s deficit. The state is short of cash and, without a budget for the fiscal year that began July 1, cannot borrow money to pay its bills. Instead, claims are being paid with IOUs known as registered warrants.

IOUs

Issued Monday: 93,714, with a value of $311.8 million.

Since July 1: 864,362, with a total value of $1.9 billion.

GOV. PETE WILSON

Met with the top four legislative leaders for two hours in his office. Wilson said afterward that the leaders were making little headway and suggested that it would be at least eight or nine days before the budget crisis comes to an end. Assembly Speaker Willie Brown (D-San Francisco) has predicted that the stalemate could drag on until Aug. 15.

THE LEGISLATURE

The Senate met but did not address budget matters. The Assembly met and sent two budget-related bills to the governor.

KEY DEVELOPMENTS

The Assembly passed and sent to the governor two bills that will become part of an eventual budget-balancing package. One measure, passed on a 78-0 vote, gives the Franchise Tax Board greater leeway to settle disputed tax cases without going to court. It is expected to generate $300 million for the state in the current fiscal year. The other measure, passed on a 55-21 vote, would give the California State University system the power to grant an early retirement “golden handshake” to employees 50 and older. It would not produce a direct savings to the state, but would help CSU avoid layoffs and allow the system to again offer some class sections cut last year.

An influential Senate Republican, Frank Hill of Whittier, spelled out for Democrats what it would take to get his vote in the budget-writing conference committee to send a bipartisan spending plan to the floors of the Senate and the Assembly. Treasurer Kathleen Brown began redeeming IOUs. Brown said warrants worth $433 million were eligible to be redeemed. More will be eligible each day through Thursday. Holders of the IOUs may redeem them in person at Brown’s office or through the mail. Brown said that by Thursday interest on the warrants issued in July would amount to $4.6 million.