State Budget Watch

THE PROBLEM: Legislators and Gov. Pete Wilson need to bridge a $10.7-billion gap between anticipated revenues and the amount it would take to continue all programs at their current levels, rebuild a reserve for emergencies and erase last year’s deficit.

The state is short of cash and, without a budget for the fiscal year that began July 1, cannot borrow money to pay its bills. Instead, claims are being paid with IOUs known as registered warrants.

IOUs: Issued Wednesday: 10,571, valued at $36.4 million.

Since July 1: 657,004 with a total value of $1.23 billion.

GOV. PETE WILSON: Met with Assembly Speaker Willie Brown to discuss a plan to shift property tax money from local governments to help bridge the state’s budget gap.

THE LEGISLATURE: Neither the Assembly nor Senate met Wednesday. Private negotiations are continuing.

KEY DEVELOPMENTS: Wilson and legislative leaders from both parties in both houses announced that they will meet as a group this morning for the first time in more than a month. The meeting of the so-called “Big Five” is seen widely in the Capitol as a sign that the leaders believe they are close enough to an agreement to begin hammering out the details in face-to-face negotiations.

Treasurer Kathleen Brown announced that the state will meet its Aug. 1 debt obligations as planned, despite the continued issuance of IOUs. She said the state will pay nearly $141 million in principal and interest due on $2.5 billion in Public Works Board bonds and $11.4 billion in general obligation bonds. The payment will be made from cash that has been set aside for this purpose.