Federal dollars may not arrive

California's $19 billion deficit might get even larger because Washington money that the governor had been counting on is looking shaky. Deficit hawks in the House pulled $24 billion in aid to states, which means that California might not get $1.5 billion in Medicaid funding. The Medicaid provision had been considered a sure thing, not just in California but at least 30 states. From the NYT:

The Senate plans to take up the measure this week, and the majority leader, Harry Reid of Nevada, favors restoring the money, said his spokesman, Jim Manley. The House speaker, Nancy Pelosi, signaled last week that her chamber was open to reconsidering the appropriation. But state and Congressional officials said the evolving politics of an election-year Congress meant the federal aid could no longer be taken for granted. And if it does not arrive, it will leave gaping shortages for states that are already slashing services and raising taxes to balance their recession-wracked budgets.

By the way, next Tuesday is the constitutional deadline for enacting a state budget, but there's zero chance of that happening. Even the Democrats are arguing among themselves. From Dan Walters:

Senate President Pro Tem Darrell Steinberg wants about $5 billion in new tax revenues, mostly by extending temporary taxes due to expire or by postponing scheduled tax cuts. Assembly Speaker John A. Pérez, while proposing some additional revenues, is touting a very gimmicky borrowing scheme. Meanwhile, Republicans - some of whose votes would be needed for any budget and any new taxes - are simply saying no.

Controller John Chiang says the state will run out of cash by the end of August unless a new budget is signed off.