After the California Assembly rejected two budget plans Friday, it appears Monday’s midnight Constitutional deadline will pass with no budget in sight, leaving state and University of California officials to grapple with the implications of functioning without a budget at the start of a new fiscal year.

Last year’s state budget was not signed until September 5 – the longest California has ever operated without a budget – but the state did not stop doling out monetary aid.

This year, however, things will be different.

A lawsuit levied by the Howard Jarvis Taxpayers Association, designed to coerce the state legislature into following its Constitution, resulted in the California Supreme Court’s ruling that state workers cannot be paid more than minimum wage without a passed budget. Also, the state could not deliver aid without a budget.

“There will be some very negative consequences if we operate without a budget,” said Hilary McLean, a spokeswoman for Gov. Gray Davis. “The governor’s budget is contingent on passage of budget on time, and each day (that its passing is) late we lose million of dollars on lost savings.”

A June 26 Los Angeles Times story reported that without a state budget, the UC would lose $250 million in monthly state aid. However, both the California State Controller’s Office and the UC Office of the President refuted this statement.

“The L.A. Times information is wrong. The $250 million figure is not accurate,” said UC Spokesman Brad Hayward. “As for salaries, we have not been given any indication that UC salaries will be withheld, so our employees do not need to worry about a lack of a state budget affecting paychecks.”

Hayward said if the delay lasts until September again, it is possible some state employees would have their paychecks reduced to minimum wage, but it is not yet known how this could affect the UC.

In terms of the UC’s non-payroll expenditures – such as paying vendors, or purchasing equipment for laboratories – California State Controller Steve Westly said the UC cannot pay for services in the new fiscal year until a budget is approved. However, the UC can still pay for items obtained during the previous fiscal year.

“That’s important because what typically happens is that the billing cycle lags and we are still paying for goods and services from the previous fiscal year,” Hayward said. “We are paying for stuff in July we bought in May or June; our vendors don’t have to worry for a couple of months.”

The budget shortfall has reached an unprecedented $38.2 billion, and Republicans and Democrats disagree as to how this can be resolved. Although Democrats hold a clear majority in the legislature, they do not have the necessary two-thirds majority to pass a Democrat-sponsored budget.

“The current process is right on track, where you have a budget negotiation and one side refuses to move, even in the slightest,” said state Sen. Sheila Kuehl (D-Santa Monica). “I don’t see the budget process wrapping up very soon.”

The governor’s May Revision to the budget saw no more cutbacks to the $300 million in cuts to the UC in his January proposal. In May, Democrats included measures for revenue enhancement. Republicans have said they will not agree to any tax increases.

“We’ve been asking them how to reach a balanced budget,” Kuehl said. “They have no plan.”

But state Senate Republican Leader Jim Brulte of Rancho Cucamonga said in the same Times article that the Democratic proposal was “nothing but a continuation of what (Democrats) all have done for the last three years that has nearly bankrupted this state.”

When Republicans rejected the May Revision, they also called for an additional 7 percent in cuts. Because there is a minimum that must be spent on education and health care, Democrats say a 7-percent cut cannot be made without revenue enhancement.

“(The 7-percent cut) would be more like a 12-percent cut in unprotected programs – like the Cal State University, the UC, and programs for foster children,” Kuehl said. “The number of social welfare programs it would affect would be devastating. It would mean another 30,000 teachers laid off. Or closing two Cal State Universities.”

Kuehl added that the proposed Republican cut could also have detrimental effects on the UC system.

“A 12-percent cut in the university would be tantamount to closing a campus,” Kuehl said. “It would be devastating to the system.”