Gov., lawmakers try to reach budget deal


The workers at Sacramento Technology Group are nervous because California won't be paying its bills starting Sunday, when the state's bank account closes in on zero.

The company could really use the $340,000 the state owes for network security services.

"First, pay distribution points and then pay employees, pay other vendors that we buy from, keep the lights on," said George Usi from Sacramento Technology Group.

It is day 86 of the budget stalemate -- plenty of time to avoid the cash crisis that's forcing the state to be a deadbeat.

"How could you let this happen? February 1st is here. The state doesn't have any cash. You've had three months to work on this. Why haven't you gotten anything done?" asked ABC7's Nannette Miranda.

"We're doing our best," said Senate President Darrell Steinberg (D) Sacramento.

Already, funding for most public works projects have stopped. State workers are being forced to take two days a month off unpaid.

Now, with no compromise in place by February 1st, State Controller John Chiang says the next casualties are payments, including state income tax refunds and Cal Grants to college students will be delayed at least 30 days.

"It's just a little bit of additional money, but it's still money you're depending on," said Cal Grant recipient Devon Carsen.

Governor Schwarzenegger said the other day negotiations are coming along, hinting there might be agreement on cuts and taxes.

"Democrats will make cuts that are very painful for them, painful for us too, but more so for them. And Republicans will have to do a tax increase also," said Gov. Schwarzenegger

The buzz around the Capitol is at least a half-cent sales hike and a higher vehicle license fee will be part of the compromise, and that negotiations are stuck over relaxing environmental reviews for certain highway projects.

Usi says get on with it already. Otherwise, he'll be forced to make painful moves also.

"The last thing we want to do is reduce staff through layoffs," he said.

State Controller Chiang is taking it month-by-month. If the budget stalemate drags on any longer, he'll have to start issuing IOUs, a very serious step he just doesn't want to do.

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