California Strains to Pay Workers, Avert Bankruptcy
.SACRAMENTO, Calif., June 16ÛÓBattered by economic crisis and a series of natural and manmade disasters, the state of California will be forced to issue warrantsÛÓequivalent to post-dated checksÛÓto pay its work force of 274,000 unless severe budget cuts are made within two weeks.</br></br>Gov. Pete Wilson (R) met privately today with legislative leaders in a grim effort to avert potential bankruptcy. Wilson warned that California will be out of money when the fiscal year begins July 1.</br></br>Û÷ÐÊ'We have no choice except to bite the bullet and cut the size and structure of state government,Û said State Senate Minority Leader Ken Maddy (R). Maddy was one of the few Republicans who last year supported what was then seen as a bold Wilson proposal to raise state taxes by more than $7 billion to deal with a growing and inherited deficit. Because of the economic slide, the tax hike produced little new revenue and the deficit is higher than ever.</br></br>.Registered warrants, a modern form of the scrip used by hard-pressed governments in colonial days, are numbered, state-issued checks that can be cashed only as money comes into state coffers to cover them. The state treasurer's office would publish the numbers of the checks that could be cashed on any given day.</br></br>Wilson and the legislative leaders today failed to agree on rival Democratic and Republican plans for closing an $11 billion deficit in a $60 billion budget. While details were not made public, sources said both would drastically cut many services, reduce welfare grants and school funding and close or merge various agencies.