California at the Precipice

August 22, 1992

Nothing, it appears, is real in California. Not even the money. Instead of paying state workers in checks redeemable in cash, officials are handing out IOUs -- that many banks won't cash.

That's the sad reality in this country's largest state, where a deadlock in the capital of Sacramento has the state operating without a budget. There's an $11 billion deficit to be closed but the Republican governor and Democratic legislature won't back down from their ideological stands.

This has been going on for eight weeks. Now banks aren't accepting the $2.8 billion in IOUs. Suppliers are balking at delivering any more goods to state agencies until the deadbeat government pays its debts. "We only ship to those people who pay us," said the owner of a small supply company who must lay off a third of his workers because of the state's non-payment. Added a baker who is owed $100,000, "If I ran my business like this, I'd have been out of business a long time ago."

Yet the massive political egos in the state capital won't budge. Gov. Pete Wilson wants to balance the state books by cutting deeply into local education aid. Democratic leaders refuse and instead want tax increases to cover the gap. Meanwhile, $740 million in monthly medical assistance bills for the poor go unpaid, rural hospitals may have to close, nursing homes are in deep trouble and even the severely disabled may be deprived of services.

Californians are used to calamities -- droughts, earthquakes, riots, smog, gridlock. Now they are also facing a deep recession, a loss of jobs in the key defense and aerospace industries and a breakdown of the political system. Voters, says respected pollster Mervin Field, are reaching "the snapping point. . . They don't see anything working."

Elected leaders may have badly misjudged public sentiment this year. Come November, voters could well take out their pent-up rage on those held responsible for this tragicomedy. Doing nothing in the midst of crisis may be the political death knell for state officials in California -- and beyond.

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