California Assembly fails to pass budget bills; layoffs likely

California public works projects totaling $5 billion are expected to begin grinding to a halt today after the Assembly balked at a Democratic plan to end the state's bitter budget standoff.

Democrats and Republicans split along party lines in rejecting a roughly $19 billion package of companion bills – one for $11.3 billion in tax hikes, the other for $7 billion in spending cuts.

Tuesday's vote represented a last-ditch attempt to discourage state officials from beginning to pull the plug on $5 billion in public works projects because the state is dangerously low on cash.

Schwarzenegger, state Treasurer Bill Lockyer and Controller John Chiang are scheduled to meet today to vote on shelving the badly needed projects at a rate of about $660 million monthly.

Thousands of layoffs could result from delaying construction of projects ranging from school buildings to highway improvements, Lockyer told legislators in a rare joint session last week.

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