California - largest of the United States - was looked in a budget crisis Tuesday (1 July) which left the state government without funds to pay its 185,000 employees or to buy everyday supplies.
(In Sequence) LS - CALIFORNIA STATES CAPITOL BUILDING; VARIOUS SHOTS - STATE WORKERS CONTINUING ON JOBS DESPITE FISCAL CRISIS; GOVERNOR RONALD REAGAN & DEMOCRATIC PARTY LEADER JESSE UNRUH ANNOUNCING EACH OTHER.
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Background: California - largest of the United States - was looked in a budget crisis Tuesday (1 July) which left the state government without funds to pay its 185,000 employees or to buy everyday supplies.
The state government has been without legal authority to spend money since midnight, 30 June - the end of its 1968-69 fiscal year. State workers have continued on the jobs as "volunteers" without assurance they will be paid. Prisons and hospitals bought products like meat, milk, and eggs on credit. The merchants selling these products relied on the state's "good faith" for eventual payment.
A dispute between Governor Ronald Reagan and Democratic Party members of the California State Legislature caused the crisis. The Democrats prevented passage of the Republican Governor's proposed budget - demanding tax reforms and more money for schools. Reagan refused to give in and rejected a compromise offer by the Democrats.
The Republican Party controls both houses of the Legislature by narrow margins. The minority Democrats have a veto power over the budget because a two-thirds vote is required to pass it.
Governor Reagan and Jesse Unruh, leader of the Democrats in the State Assembly, denounced each other at separate news conferences Tuesday (July 1).
Reagan called the Democrats' refusal to vote for his budget "the single most irresponsible act in the history of California state government".
Unruh said the Democrats behaved responsibly by offering to vote for a 1-month "interim" budget. The Democratic demand for more school money is a proper and moral one, Unruh said.