This Reuters article remains one of the best overviews of the California budget crisis in the press at the time.
California partisan politics deepen budget crisis Tue July 01, 2003 08:51 PM ET By Michael Kahn
SAN FRANCISCO, July 1 (Reuters) - California staggered into the new fiscal year on Tuesday with no plan to plug a $38 billion shortfall, forcing a freeze on hiring and payments to state contractors and leading officials to draw up plans to cut the salaries of many state workers to minimum wage.
The fiscal crisis, which threatens California's already shaky credit rating, came amid warnings the nation's most populous state will run out of money in August.
This has forced California officials to draw up plans to pay state workers not eligible for overtime the minimum wage and slap a freeze on checks going to vendors for business performed for the state on or after July 1, officials said.
They added that the plan to cut many salaries back to the minimum wage would probably not take effect until August. Meanwhile Gov. Gray Davis announced a hiring freeze amid warnings that the state may have to lay off thousands of state workers if no budget deal is reached soon.
Analysts warned that a deeply partisan legislature may make quick resolution of the crisis impossible, especially with Republicans leading a campaign to have Davis recalled in a special election.
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