State Budget Watch

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 Tuesday: 11,374, with a value of $31.1 million.

Since July 1: 875,736, with a total value of $1.96 billion.

GOV. PETE WILSON: Met in his office for about two hours with the top four legislative leaders. Wilson said afterward that the leaders had agreed on higher education issues but reached an impasse on the local government finance package, which he said needs to be resolved before much more can be done in the negotiations. Wilson said he and Assembly Democrats disagree on what level of aid counties should be required to provide for poor, able-bodied men under the general assistance program.

THE LEGISLATURE: Neither the Senate nor the Assembly met. Private negotiations are continuing.

KEY DEVELOPMENTS: The state’s largest bank, Bank of America, stopped accepting IOUs as of the close of business Tuesday. Most other major banks that are still cashing the IOUs are only accepting those issued by July 31. A few, including First Interstate, are still taking the warrants without restrictions.