State Budget Watch

On the state’s 62nd day without a budget, these were the key developments in Sacramento:

THE PROBLEM

Legislators and Gov. Pete Wilson need to bridge a $10.7-billion gap between anticipated revenues and the amount it would take to continue all programs at their current levels, rebuild a reserve for emergencies and erase last year’s deficit. The state is short of cash and, without a budget for the fiscal year that began July 1, cannot borrow money to pay its bills. Instead, claims are being paid with IOUs known as registered warrants.

IOUs

Issued Monday: 98,574, with a value of $335 million.

Since July 1: 1.54 million, with a value of $3.34 billion.

Interest costs to date: $9.61 million.

GOV. PETE WILSON

Vetoed a Democrat-backed education bill, saying it put the state in jeopardy of ending the year with a $1.9-billion deficit. Vowed he would sign the state budget only after the Legislature gives him the remaining pieces of the spending package on his terms.

THE LEGISLATURE

Both houses were meeting late into the night.

The Assembly early Monday revised legislation passed by the Senate to shift $1.3 billion in property taxes, proposing that less be taken from counties and special districts and more from redevelopment agencies. Later, a bipartisan effort to ease higher education cuts was under way in favor of proposals to cut bureaucrats’ travel, eliminate public relations officers and make other cuts in state operations. The Assembly also passed a health and welfare bill.

Both the Assembly and Senate passed a Democrat-backed education bill that financed schools in a way acceptable to Wilson but did not include a crucial provision to protect it against legal challenge.

OTHER ACTIVITY

Treasurer Kathleen Brown said that the huge state employees’ retirement fund has agreed to provide a half-billion dollar line of credit to fund redemption of IOUs. Brown said IOU holders who have had trouble cashing them may turn them in at the treasurer’s office, where payouts will be made against the credit extended from the California Public Employees Retirement System.