SAN FRANCISCO (Reuters) – California’s controller on Friday warned the state could be forced into the “shameful” practice of issuing IOUs or delaying payments if legislators did not act fast to close holes in the budget.

California last year issued IOUs for the second time since the Great Depression while legislators and Governor Arnold Schwarzenegger wrangled about how to fill a budget gap.

“Only you can prevent history from repeating this year,” Controller John Chiang wrote to legislators and the governor, who are once again at odds over the budget, on the same day December unemployment was reported steady at 12.4 percent.

“Barring any unforeseen circumstances, such as a spike in expenditures or precipitous decline in revenues, $2.7 billion in cash solutions are necessary to avoid a cash shortage in the current fiscal year,” Chiang wrote in the letter.

WASHINGTON/SAN FRANCISCO, Jan 20 (Reuters) – U.S. regions will lead efforts to contain greenhouse gas emissions over the next few years if Washington can’t pass its own legislation, but will have crack down harder if they are to force industry to take meaningful action on fighting global warming. The election of a Republican in Massachusetts to the U.S. Senate on Tuesday will make it even tougher for the Obama Administration to pass a climate bill containing a "cap and trade" market on emissions –largely because of the already strong opposition to the effort. That will put the focus back on the states which plan more ambitious regulations to tackle global warming that will proceed with or without Washington’s legislative efforts. This involves 10 states in the eastern U.S. that already regulate carbon dioxide in the Regional Greenhouse Gas Initiative, and a western U.S. and Canadian initiative led by California. RGGI, which started regulating carbon dioxide emissions from the region’s power plants in 2009, has so far raised $494 million in quarterly auctions of permits to pollute. Much of the money will go to state programs to increase energy efficiency. But the weak economy has taken a toll on trading in the market and prices have fallen for three quarterly auctions in a row, to about $2.05 a ton. That compares with prices in the European Union’s carbon market that are nine to 10 times higher. And it is well below the $20 to $50 level that experts say will be needed to push electric utilities and heavy industry to invest in expensive technologies, like capturing carbon and burying it underground, building new nuclear power plants, or new transmission wires for power from solar and wind power farms. "Two dollar carbon prices aren’t going to do much to fight climate change," said Peter Fusaro, a climate markets expert at Global Change Associates, Inc in New York. ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ ^^^^^^^^^^^^^^^^^^^^^^^ For a graphic showing U.S. state climate pacts, see: here ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ ^^^^^^^^^^^^^^^^^^^^^^^ INNOVATION AND EXPANSION RGGI is hoping to expand its programs to tackling economy-wide carbon emissions. It would make those cuts by going beyond regulating pollution from power plants to carbon from transportation, said David Littell, chair of the RGGI board of directors and commissioner of Maine’s Department of Environmental Protection. The 10 states, plus Pennsylvania, are trying to set up a trading system that would reward polluters for using low carbon fuels. They also hope to build regional charging facilities for electric cars that could help development of cars that are more efficient. In addition, RGGI states mostly agree that they may need to tighten the cap on power plants to raise prices, though may take until 2011 or 2012 to enact. "You have to constantly reevaluate and readjust to remain vital in climate markets," said Eileen Claussen, the president of the Pew Center on Global Climate Change. California has a legal mandate to start cap and trade in 2012, and it plans to work with 11 U.S. states and four Canadian provinces in a group called the Western Climate Initiative. The group plans to start trading in the pollution from power plants and other big emitters in 2012 and expand to cover 90 percent of gases in 2015, when transportation fuels and other sources are included. That plan could face a one-year delay if moderate Republican Meg Whitman wins the state’s race for governor this November. The law allows a one-year moratorium, and Whitman said she would do it in order to study the economic consequences of the 2006 law. Whitman also has the power to rescind a Schwarzenegger order requiring utilities get a third of their power from clean sources by 2020. California has already made a number of tough decisions, such as deciding what industries will be affected and outlining the cap and trade program broadly. But plenty of important details have to be nailed down, including how many polluting permits should be auctioned and who gets the money. The debate in California often boils down to whether the state gains more by fostering clean technology — it is the leader in venture capital — or loses more as other states with less regulation steal jobs and businesses, and the weak economy has increased voters’ concerns. RGGI’s Littell said if the federal climate plan fails, all of the forward looking states should try to link their cap and trade markets to make them more robust. It could also spur more companies to lobby Congress to shape a national carbon market, which remains the ultimate goal for carbon market backers, he said. (Additional reporting by Ed Stoddard in Dallas; Editing by Marguerita Choy)

SAN FRANCISCO (Reuters) – Children raised by gay and lesbian couples develop just as well as those brought up by traditional couples, a British child psychologist on Friday told a U.S. federal court considering whether a California ban on gay marriage denies constitutional rights.

Pedophile priests and whether the number or gender of parents was most important were core topics in testimony.

Lawyer David Thompson, defending the ban, jousted with Michael Lamb, head of the Social and Developmental Psychology Department at Cambridge University, about whether a child growing up without a father or without a mother would face developmental problems.

Two gay men and two lesbian women are asking the federal court to rule the right to marry has no exceptions under the U.S. Constitution, a fight they hope to take all the way to the U.S. Supreme Court in a bid to overturn bans on same-sex marriage in 40 states.

SAN FRANCISCO (Reuters) – Children raised by gay and lesbian couples develop just as well as those brought up by traditional couples, a British child psychologist on Friday told a U.S. federal court considering whether a California ban on gay marriage denies constitutional rights.

Lawyer David Thompson, defending the ban, jousted with Michael Lamb, head of the Social and Developmental Psychology Department at Cambridge University, about whether a child growing up without a father or without a mother would face developmental problems.

Two gay men and two lesbian women are asking the federal court to rule the right to marry has no exceptions under the U.S. Constitution, a fight they hope to take all the way to the U.S. Supreme Court in a bid to overturn bans on same-sex marriage in 40 states.

A key question in the case is whether government, and U.S. voters, have a reasonable justification for denying same-sex couples the right to marry, such as promoting healthier families, or if the bans reflect discrimination and hate.

SAN FRANCISCO (Reuters) – Legalizing gay marriage would provide a financial boost for San Francisco, the city’s top economist said on Thursday in a closely watched federal trial over California’s same-sex marriage ban.

Edmund Egan, the city’s chief economist, estimated that annual wedding-related spending would rise by $35 million in San Francisco, with an additional $2.7 million in hotel spending, if same-sex marriage were legal.

That would mean more than $2.5 million in additional city taxes, he calculated. The city would see much more in long-term effects that were difficult to quantify, he added.

“San Francisco would see an increase in sales tax revenue and an increase in property tax revenue in the future,” Egan added. “Married individuals tend to accumulate more wealth than single people.”

SAN FRANCISCO (Reuters) – California’s main debt rating was cut on Wednesday by Standard & Poor’s, which said the government of the most populous U.S. state could nearly run out of cash in March — and another rating cut might follow.

The state government’s budget gap of nearly $20 billion over the next year and a half leaves it in a precarious situation, requiring tax increases or spending cuts, either of which may slow economic recovery, the agency said in a statement.

“If economic or revenue trends substantially falter, we could lower the state rating during the next six to 12 months,” S&P said after cutting the rating on $63.9 billion of California’s general obligation debt one notch to A- from A.

The new level is four notches above “junk” status, a level at which many investors refuse to buy debt.

SAN FRANCISCO, Jan 13 (Reuters) – California’s main debt rating was cut on Wednesday by Standard & Poor’s, which said the government of the most populous U.S. state could nearly run out of cash in March — and another rating cut might follow.

The state government’s budget gap of nearly $20 billion over the next year and a half leaves it in a precarious situation, requiring tax increases or spending cuts, either of which may slow economic recovery, the agency said in a statement.

“If economic or revenue trends substantially falter, we could lower the state rating during the next six to 12 months,” S&P said after cutting the rating on $63.9 billion of California’s general obligation debt one notch to A- from A.

The new level is four notches above “junk” status, a level at which many investors refuse to buy debt.

SAN FRANCISCO (Reuters) – Standard & Poor’s cut California’s main debt rating on Wednesday by one notch, saying the government of the most populous U.S. state could nearly run out of cash in March — and another rating cut might follow.

The state government’s nearly $20 billion budget gap over the next year and a half leaves it in a precarious situation, requiring tax increases or spending cuts, either of which may slow economic recovery, the agency said.

“If economic or revenue trends substantially falter, we could lower the state rating during the next six to 12 months,” S&P said after cutting the rating on general obligation debt to A- from A. The new level is four notches above “junk” status, a level at which many investors refuse to buy debt.

“The big question is, is there any fear they will get downgraded out of investment grade (so) you may have to sell…that’s where I think it would get interesting or hairy,” said Evan Rourke, an Eaton Vance portfolio manager in New York. Bond prices did not move much, though, since many expected the downgrade, he said.

SAN FRANCISCO (Reuters) – Two gay men and two lesbians challenging a California ban on same-sex marriage on Monday said their relationships had lasted for years but they felt like third-class citizens, leading them to launch the federal case that could set a national precedent.

The couples unable to marry in California hope to take their case against the state’s Proposition 8 ban on same-sex marriage all the way to the U.S. Supreme Court and to overturn bans throughout the nation.

A loss in the top court, two ranks above the action in the case which began on Monday, would seriously undermine efforts to win gay marriage rights in state courts.

The United States is divided on same-sex marriage. It is legal in only five states, though most of those, and the District of Columbia, approved it last year.

SAN FRANCISCO, Jan 11 (Reuters) – Two gay men and two lesbians challenging a California ban on same-sex marriage on Monday said their relationships had lasted for years but they felt like third-class citizens, leading them to launch the federal case that could set a national precedent.

The couples unable to marry in California hope to take their case against the state’s Proposition 8 ban on same-sex marriage all the way to the U.S. Supreme Court and to overturn bans throughout the nation.

A loss in the top court, two ranks above the action in the case which began on Monday, would seriously undermine efforts to win gay marriage rights in state courts.

The United States is divided on same-sex marriage. It is legal in only five states, though most of those, and the District of Columbia, approved it last year.