Today Governor Schwarzenegger becomes only the second governor since the Depression to have IOUs issued on his watch. Today he has abdicated his fiscal responsibilities and effectively turns California's finances over to Treasurer Bill Lockyer and Controller John Chiang.
Small businesses, students, seniors, and taxpayers will all start receiving IOUS. This shameful day didn't have to arrive. In fact, Governor Schwarzenegger had several opportunities to prevent it.
On June 12 Governor Schwarzenegger unilaterally blocked the Controller's authority to secure short-term loans to avoid the cash crisis. He said, "let them have a taste of what it is like when the state comes to a shutdown -- grinding halt."
On June 25 after the governor called Senate Republicans to his office for private meetings, $4 billion in immediate cash solutions that had been passed on an overwhelming bipartisan majority in the Assembly were killed in the Senate.
Most recently, the governor vetoed a comprehensive package of budget solutions supported by majorities in both houses of the legislature that would have resolved the $19.5 billion deficit, left a $4.0 billion reserve, avoided the cash crisis and prevented IOUs.
The focus of Assembly Democrats throughout this process has been to find a responsible approach that solves the deficit without eliminating the safety net or eviscerating schools. That meant rejecting the governor's outlandish proposals to take health care away from 950,000 kids, to make 587,000 poor families homeless by eliminating CalWORKs, and to push 400,000 seniors into nursing homes by effectively eliminating IHSS.
During weeks of budget hearings we heard from too many people who were going to lose access to medicine, access to college, access to the basic necessities of food and shelter for us to accept the governor's plan. However, we did the right thing and dug down to make deep cuts in programs and services we care about -- cuts on top of the $27 billion that has been slashed from state services since 2003. But by using a scalpel instead of a chainsaw, we were able to take the Governor's plan and come up with solutions that reflect 93% of his proposals somewhat and 45% of his proposals entirely. We ultimately sent him a package of bills that solved the entire deficit without raising taxes. He vetoed those bills.
Instead, Governor Schwarzenegger decided he wanted to use the state's cash crisis to leverage last minutes demands unrelated to the budget -- demands described in the press as "proposals he has struggled to advance in the past."
None of the governor's last ditch proposals had been publicly vetted, and it would have been an abdication of our responsibility if we were to sign off on these extraneous demands without a thorough review of their impact on the people of California. Do we believe California needs a wide range of policy and governmental reforms? Absolutely. Were we, as duly elected agents of the people of California, going to be extorted into buying a pig in a poke? No.
We did offer, as a sign of good faith, to begin work immediately on reforms regarding restructuring Medi-Cal and eliminating fraud in the IHSS program. We also committed to working with the governor on other reform legislation for him to sign. But the governor wouldn't take "yes" for an answer. So California businesses, taxpayers and students will be receiving IOUs simply because Governor Schwarzenegger thought it was more important to immediately force last minute changes such as reducing future employee pensions, fingerprinting elderly and disabled Californians who receive services, and denying kids food stamps if their families can't access a computer to sign them up for the program.
Of course, this fight is not over yet. We must move to clean up the fiscal mess caused by the national recession and made $7 billion worse by the governor's actions. We will continue fighting to prevent the elimination of the state's safety net -- especially in these tough times -- and to block partisan attempts to punish public schools.
We will also continue to say "yes" to the cuts we need, and "yes" to responsible reforms. But the problem won't be solved until Governor Schwarzenegger picks up his cue and finally decides to say "yes" back.
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