Subsidized childcare services are threatened under the governor's proposal to end the budget stalemate. (Creative Commons)

The state's Big Five—Schwarzenegger and the two partisan leaders from each house of the Legislature—will continue discussions Thursday morning about the state's budget.

The legislature has been battling for 85 days now on how to close the $19 billion deficit in this year's budget. The fight continues to be an ideological clash between the Democrats and Republicans, with much of the discord heard in Washington also being practiced in Sacramento.

As last Friday, came and went, so too did the previous record of 78 days beyond the start of the fiscal year without the legislature having passed a budget.

Since that record was set, Schwarzenegger has been sick with a cold. Legislative leaders met with a recovering Schwarzenegger in Santa Monica on Wednesday. The talks resume there Thursday and could spill over into Friday.

Democrats want to delay corporate tax breaks passed in 2009 and are pushing for a combination of spending cuts, new taxes and fees. Republicans refuse to add new taxes and fees.

Meanwhile, as politics are being played in the legislature, serious effects are being seen throughout California. The state has withheld payments from health providers, schools that receive Cal Grants, and legislative staff.

Claremont McKenna College Professor of American Politics John Pitney Jr. says the lack of payment by the state also stands to have long-term effects.

“The chaos may discourage businesses from investing in the state,”he said.

While it is obvious the state needs to pass the budget as soon as possible, the effects of closing such a large deficit will also be significant.

If Schwarzenegger's budget proposal is passed, CalWORKS, California's welfare program, would be terminated and childcare funds would see a $1.2 billion cut. And according to a new report by the Berkley Center on Health, Economic & Family Security, hurting Californians stand to lose much more.

The report, called Cutting Child Care Out from Under Californians, argues that working parents and childcare providers would face severe economic uncertainty. The report also describes how the well being of children already in existing programs could be threatened.

According to the report, the hardest hit area will be the loss of subsidized childcare for low-income families and families that receive welfare or are no longer on it. Besides all of the families who would need to pull their children out of childcare, the providers themselves would be forced to reduce staff, scale back their programs, or shut down all together.

If this budget proposal is passed, one of California's most meaningful economic conventions could crumble. The report finds that the state's subsidized childcare system generates more than 130,000 related jobs, all of which could be in jeopardy. California has been guaranteeing childcare since World War II, when the state needed to support women entering the workforce.

Subsidized childcare is a staple in the California economy, allowing parents an option so that they can work. In a struggling job market, cutting a program millions of people rely on does nothing to stabilize California, the report says.

The report also said the proposal would:

• Cut 84 percent of children (more than 72,000) from general childcare subsidies

• Cause more than 185,000 children to be cut from CalWORKS-linked childcare, 159,000 of whom would end up without access to subsidized childcare

• Affect 130,000 child care providers who serve low-income children

• Result in 38,000 full-time equivalent child care jobs to disappear

• Force 85,000 working parents earning minimum wage to lose access to subsidized childcare

Finally, the report concluded that by cutting the state welfare program, California risks losing billions of dollars of federal funding.

Pitney said there are many people in the legislature who oppose cuts in programs like CalWORKS, but they have to answer the question: “Where else can the money come from?”

With few answers to that key question, Pitney doesn't see an accord in Sacramento occurring any time soon.

With every day that passes without a budget, California perpetuates the uncertainty in this struggling economy. What happens when the budget finally is passed, however, could be even more damaging to those who stand to lose the most.

To reach reporter Andria Kowalchik, click here.