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23 July 2024

Job cuts loom in California budget deadlock

Unemployed construction workers protest in Los Angeles, California after the Legislature failed to pass a state budget. (AFP) 

California Governor Arnold Schwarzenegger said layoff notices would be sent to about 20,000 workers starting Tuesday, after legislators failed to pass a plan to help close a projected $42-billion (Dh154.56 billion) state budget deficit.

The governor's latest threat came as legislators adjourned late Monday without approving a proposal, painstakingly negotiated by Schwarzenegger and legislative leaders, that would include more than $14 billion in new taxes and $15 billion in spending cuts.

About 10,000 of those state workers who receive the notices could have their jobs eliminated by July 1. State officials say such job cuts could save California $750 million annually.

The governor had threatened to send out the layoff notices last Friday, then delayed the action in hopes a budget plan could be approved over the weekend.

But the state Senate fell one vote short of approving the new taxes – which include a temporary one-percent increase in the state sales tax and a 12-cents-per-gallon tax on gasoline – and marathon sessions failed to come up with a solution.

"In the absence of a budget, the governor has the responsibility to realize savings any way he can," Schwarzenegger spokesman Aaron McLear said Monday.

Saying the state is on the brink of running out of money, Controller John Chiang already has delayed tax refunds and has warned he soon will be forced to stop paying some state bills or providing funds for some state services.

Hundreds of public works projects also could be halted unless a budget fix is passed.

State Senate leader Darrell Steinberg told senators to return for a vote Tuesday and vowed to lock them into the legislative chamber until a budget is approved.

"I will not allow anyone to go home to resume their lives or any kind of normal business," Steinberg said.