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Despite Backdrop of Problems, Lawmakers Take Time with Budget With AM-Budget Blues-Elsewhere

July 2, 1992

SACRAMENTO (AP) _ California’s unemployment rate is up, its bond rating is on the verge of going down and the state is paying bills with IOUs instead of money. But lawmakers and Gov. Pete Wilson appear in no hurry to end a political stalemate over the state budget.

On Thursday, day two of the new fiscal year, Wilson did a series of television interviews in Los Angeles and the Assembly and Senate adjourned without acting on budget-related matters.

Speaker Willie Brown said the Assembly might be able to vote on a budget bill Sunday night, but only if a conference committee can find an acceptable compromise between plans offered by Wilson, a Republican, and the Democrats who control the Assembly and Senate.

The absence of progress caused the state controller to issue a second batch of IOUs to vendors, taxpayers awaiting refunds and some state workers. Also, Moody’s Investors Service warned it probably would drop California’s bond rating, from AA1, if a budget is not in place by Monday.

Brown held out hope of meeting that deadline. But the Wilson administration, according to one top official who spoke on condition of anonymity, expects little action in the next week to 10 days.

Wilson’s chief spokesman, Dan Schnur, said the governor is prepared to wait as long as necessary to get Democrats to agree to his terms.

″As the summer wears on, (Democrats) are going to come to terms with a budget without taxes and without deficits. And when enough of them come to terms with that, then we’re going to have a budget,″ Schnur said.

Negotiations are stalled over how to deal with an anticipated $11 billion deficit. Democrats have already given in to Wilson’s demand that a settlement include no new taxes, but the two sides remain far apart on education funding.

Wilson wants to cut aid to schools by $2.3 billion over two years. The Democrats proposed a reduction of about $600 million.

The budget impasse has left thousands of state workers on edge, wondering if the eventual settlement will leave them without jobs. Compounding their anxiety are the latest jobless figures, which showed a 9.5 percent unemployment rate in the state in June.

Since 1990, California has lost more than 700,000 jobs and has been mired in its worst economic slump since the Depression.

Terry Donoho was in line to apply for unemployment benefits Thursday, one day after being furloughed from a seasonal data-processing job at the state Franchise Tax Board.

″It seems like it always falls on the shoulders of the working class and the underpriviledged,″ she said. ″It just seems that the Legislature, the government and the higher ups seem to be able to get their money’s worth, and we don’t get ours.″

Kyay Kader, who owns a cigar store and news stand a few blocks from the Capitol, said his business has suffered as state workers worry about their jobs.

″It’s bad, it’s getting worse,″ Kader said, noting business is off about 20 percent from last year. ″A lot of state employees come in here, but they spend less. They don’t have the money.″

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