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State again without budget

Unpaid bills could hurt many businesses


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SACRAMENTO — A new fiscal year began in California on Tuesday, and for the 18th time in the past 22 years, it began without a state budget in place.

Although a series of court decisions over the years has required the state to continue paying most of its ongoing obligations even in the absence of budgetary spending authorization, a number of private vendors and state employees will once again be operating on a promise rather than a payment.

"Who are the people who don't get paid in the absence of a budget? It is the businesses that sell to the state that by and large will feel the immediate impact," said Jean Ross, executive director of the nonprofit California Budget Project.

Ross cites a timely example of the type of vendor that entails: companies that supply fuel to the air tankers and helicopters now being employed to fight the hundreds of wildfires burning in Northern California.

Hospitals, clinics at risk

"Yes," she said, "it does matter that California is perennially late with a spending plan."

Among others most at risk are hospitals and clinics that provide services to Medi-Cal patients. They will be reimbursed for their services until a contingency fund is exhausted, probably within three weeks.

"When it was first created 10 years ago, it was enough to get us through about two months without a budget," said Jan Emerson, spokeswoman for the California Hospital Association. But the $2 billion amount hasn't changed in a decade, and the cushion provided by the contingency fund shrinks.

Last year, by the time a budget was signed on Aug. 24, the contingency fund had expired about 10 days earlier, forcing hospitals and other Medi-Cal providers to shift funds or borrow money to make up for millions in unpaid bills.

Budget at least month away

This year, with the fund expected to be depleted earlier and lawmakers predicting that a budget will likely not be negotiated until at least Aug. 1, some healthcare providers will be imperiled.

"If you're part of a larger system, you're going to be OK with cash flow," Emerson said.

"But that's not the case with independent hospitals and rural hospitals. We may have hospitals struggle to meet payroll and keep their doors open."

The situation could become even more critical for operators of rural health clinics that treat Medi-Cal patients almost exclusively.

Controller John Chiang said his office will continue to make such payments as debt service, payroll checks to civil service employees, federally mandated services such as in-home support services and income tax refunds. But he estimates his office will be unable to make timely payments on at least $1.2 billion in state obligations for the month of July.

Others due large amounts

Among those most at risk are community colleges, which could miss a $505 million payment on July 29; institutional Medi-Cal providers, which could miss $275 million in July payments; regional centers that provide services for the developmentally disabled, which could miss $222 million; and vendors that provide goods and services to state agencies, which could miss $164 million in July payments.

In addition, $1.3 million in Cal-Grants to college students could be delayed, as well as $42 million in nonpayroll expenses incurred in trial courts across the state.

There are three classifications of state workers who will not get a paycheck until a budget is approved: elected officials, political appointees and legislative staff.

The combined July payroll for those workers is about $21 million, according to Chiang's office.

Discussions

Posted by lawson_wayne on July 2, 2008 at 12:09 a.m. (Suggest removal)

Guess Arnold never got around to cutting up the State's credit cards. CA is a state of morons electing Arnold, Boxer and Finestein be careful on the roads you're surrounded by idiots.

Posted by jeff93024 on July 2, 2008 at 8:25 a.m. (Suggest removal)

Rather than simply not pay the Governor & elected state officials until the budget is passed, they should all be penalized with a daily fine, and it should be a very big fine. If, at the end of a month they still haven't done the job they're getting paid to do, they should all be placed under house arrest (for breach of contract) in the State Capitol building and kept there until they produce an acceptable budget. They can sleep on cots and eat prison food. If someone has a medical emergency, they can bring in a prison doctor.

If this were the law, I'm pretty sure we'd always have a reasonable budget submitted on time.

Posted by aecusn on July 2, 2008 at 9:42 a.m. (Suggest removal)

The Dems are too busy trying to pass gun laws to bother with meaningful legislation.

Posted by BudgetMaster19 on July 2, 2008 at 11:04 a.m. (Suggest removal)

California needs a budget and soon! You can create your own version of the state budget with the Next 10 Budget Challenge. The nonpartisan Challenge allows you to go through the steps of deciding what to spend and what to tax to see the tough choices involved. Try it! www.next10.org/challenge

Posted by whatsup805 on July 2, 2008 at 4:02 p.m. (Suggest removal)

One thing that can be done is take away the fuel allowance and change to electric cars. This would save millions of dollars being spent on gas. This is only one idea....



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