By Denis C. Theriault

dtheriault@mercurynews.com
Posted: 02/01/2010 12:00:00 AM PST

SACRAMENTO — Nearly a month after Gov. Arnold Schwarzenegger called an emergency legislative session to begin tackling some $8.9 billion in budget fixes, the clock for lawmakers would seem to be ticking louder every day.

But aside from a few lengthy budget hearings and some closed-door huddles, the Capitol’s business has mostly been, well, business as usual. Bills have hatched and died. Cocktails have been downed at campaign soirees. And industry lobbyists have made the rounds — some of them carrying balloons.

Concrete alternatives to the governor’s deep cuts to schools, transit funding and welfare programs will wait until this week. That leaves the Legislature’s leaders with precious little time — three weeks from today — to negotiate a deal before crisis measures kick in and force the rest of the people’s business onto the sidelines. Again.

“We’re moving as expeditiously as possible,” said Assemblywoman Noreen Evans, D-Santa Rosa, who heads the Assembly Budget Committee. “The special session ends Feb. 22. It’s very likely we’ll do it before then.”

And yet, if that sounds like a firm deadline, it isn’t. Not really.

For one, lawmakers and the governor’s office have yet to agree on the size of the problem they must tackle immediately.

Legislators appear loath to rush into proposals that will mostly affect next fiscal year’s bottom line. Democrats also may propose delaying payments, instead of relying on cuts, to fend off a cash crunch this spring. The governor, meanwhile, is signaling he’ll reject any package that doesn’t address the full problem he’s laid out.

Lawmakers have until March 1 before gridlock actually starts costing the state, financial officers say, with every day afterward potentially widening an 18-month, $19.9 billion deficit by millions of dollars. Heck, they can squabble all the way until April 1, when the state finally will overdraw its checking account, if only for a few days.

Then again, they might wait until revised estimates for the 2010-11 budget come out in May — or until the state learns how much assistance, if any, it might receive from Washington.

And don’t forget that a budget for the 2010-11 fiscal year ultimately doesn’t need to be in place until June 15. Or that even in better financial times, lawmakers typically overshoot that deadline by weeks.

The governor’s office warns that implementing budget changes so late would cost an additional $2.4 billion, mostly because making cuts to social programs and starting up new initiatives — such as his plan to retrofit red-light cameras to catch speeders — require months of lead-in.

But even that is a point of contention, with other insiders arguing a delay would cost taxpayers “only” $1 billion and change.

Either way, warns H.D. Palmer, spokesman for the Department of Finance: “The longer it takes to confront this problem, the bigger the problem is going to be.”

That plea fell on deaf ears last year. It wasn’t until California hurdled headlong over the IOU cliff that a deal took shape.

According to the state’s current cash flow picture, that wouldn’t happen again until just before August.

Rhetorically, the factions have dug in around familiar fault lines. The governor and his fellow Republicans aim to reduce spending and trim regulations to spur the economy. Schwarzenegger also wants $500 million for a jobs-training initiative.

Democrats, after years of reluctantly slashing the state’s social safety net, have vowed to hold the line and raise new revenues. That might mean closing tax loopholes, creating new fees, extending temporary tax hikes or requiring businesses to ante up payroll taxes for contract workers.

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