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Calif. Near Financial Disaster Nursing homes are losing so much state aid that many soon may have to shut down or limit their services, a prospect that has elderly residents confused and frightened. As many as 30,000 government workers who had been expecting pay raises in the fall are instead receiving formal notices warning that they could lose their jobs by then, because the state is broke. This is life in California, on the brink of a fiscal disaster. The nation's most populous state, home to one of the world's largest economies, has been staring in disbelief at the same dire predicament for months: a $38 billion deficit, the largest shortfall in its history and an extreme example of the budget woes afflicting many states. But now it has only hours left to solve the problem. State lawmakers have until midnight to reach a compromise with Gov. Gray Davis (D) on a budget that would wipe out the enormous deficit, but the odds of that happening appear slim. And without a deal, the state will be bound by law to begin cutting off billions of dollars in payments to its agencies and its contractors in July -- and could run out of money by August. "It looks bleak," said Perry Kenny, president of the California State Employees Association, which represents more than 100,000 government workers. "This is the biggest hole we've ever been in, and no one can seem to find a way out. We're all sweating bullets here." For weeks, the state's budget has been hostage to an intensely partisan political war over taxes and spending that is now getting even more bitter and complicated because of a Republican-led campaign to recall Davis from office. Organizers of that movement have collected nearly 400,000 voter petitions in favor of ousting the governor, and political strategists in both parties say a recall election, which would be unprecedented, is looking ever more likely. Davis and the Democrats who control both houses of California's legislature cannot get their way on the budget because state law requires a two-thirds majority vote for it to be approved. They need a few Republican lawmakers to support their plan, which they say must include new taxes in order to save public schools and other vital programs from ruin. But Republicans are refusing to consider any tax increase, which they say would harm California's already weak economy, and are demanding deeper cuts in government spending. There is no end in sight to the impasse, which California voters are watching with increasing exasperation. Polls show that public support for Davis has plummeted below 25 percent, and that two-thirds of voters are dismayed with the legislature. Republican lawmakers say they will not budge from their stand on the budget because they are fed up with Davis's governing style. "He and his allies have gotten the last three budgets they wanted and we're nearly bankrupt," said James L. Brulte, the Republican leader in the state Senate, who has threatened to work against the reelection of any GOP colleague who sides with Davis in the budget battle. "Somebody has to stand up and say enough is enough. That's what Republicans in California are doing." But Democrats see other motives. Some are accusing GOP lawmakers of deliberately dragging their feet on the budget in the hope that will hurt Davis politically and strengthen the recall campaign.
"It's hard to take Republicans seriously when they say they want a real solution to this budget crisis at the same time some of them are openly backing the
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