3 plans, no budget

JULY 2, 2010

The governor has a budget proposal. Democratic senators have a budget proposal. Assembly Speaker John Perez and the Assembly Democrats have a budget proposal.

Does Mrs. Smith’s 10th grade civics class also have a budget proposal?

With Democrats divided on how to prepare one budget, or what the budget should actually look like in California, we could be stuck for a while – even with Sen. Darrell Steinberg’s semi-stern announcement of “no recess until the budget is signed.”

The basic budget concept of current expenditures equaling receipts does not seem to be part of the discussion. Continuing to raise taxes to pay for increasing spending isn’t the basis for budget preparations. In the private sector, when expenses are higher than income or sales, cuts are made in order to balance a budget.

Not in California.

So where do the Republicans fit in? They appear mildly supportive of the governor’s budget proposal because it doesn’t seek to raise taxes. However, not all Republicans are singing the team fight song.

Reports of Republicans being happy with the governor’s budget revise don’t sit well with all. Sen. Bob Dutton, R-Rancho Cucamonga, was critical about a lack of business growth. “Until we get serious about job creation in the private sector, California’s fiscal problems will continue. We won’t restore California’s economy by trying to tax our way out of our budget problems,” Dutton said.

Sen. Dennis Hollingsworth, R-Murrieta, seemed more supportive of the governor. “By wisely not raising taxes, the governor is siding with the people by refusing to punish California’s working families because of the Legislature’s dawdling which wasted more than $3 billion,” Hollingsworth said.

Sen. George Runner, R-Lancaster, identified the loss in state revenue due to the last tax increase. “For proof look no further at the effect last year’s $13 billion tax increase had on California’s economy: Revenues are down,” said Runner.

Assemblyman Ted Gaines, R-Roseville, released a statement Thursday expressing his disappointment with legislators’ inability to come to an agreement “to do the job we were elected to do — pass an on-time, responsible balanced budget.” Gaines said, “The governor has presented the only realistic budget plan on the table with his May Revise.  Now is the time for Democrats to stop playing political games and join Republicans and the governor at the negotiating table. We must work through our differences and reach agreement as soon as possible on an honest and responsible budget solution, with no new taxes.  For my part, I am standing by — ready, willing and able to get to work.”

Assembly Democrats are predictably critical of the governor’s budget revise, and instead have proposed a budget that is a complex scheme to borrow billions of dollars to allow for ongoing spending increases on non-revenue-building spending.

And Democratic senators have proposed a budget that’s based on raising taxes and shifting some programs from the state to counties. Steinberg is a proponent of shifting budget deficits down to local municipalities, and letting counties raise taxes. Steinberg even offered legislation that would allow counties to raise taxes without a two-thirds majority.

Either way, it’s not going to work.

Assembly Speaker John Perez says that his proposal is “a budget solution that saves and creates hundreds of thousands of jobs.” Specifically, Perez said in a recent press release that while working together with the senate budget proposal, he expects to save and create 465,000 jobs and address the long-term structural problems.

“Save and create jobs”… haven’t we heard that somewhere? It would save government jobs, though!

During the presidential campaign, Barrack Obama pledged to create or save 1 million jobs, and then increased the jobs goal to 2.5 million jobs over two years.

Could California Democrats be getting talking points from the Obama campaign team? Senator Denise Moreno Ducheny, D-San Diego, was less charitable than her Republican colleagues about the governor’s budget and said, “The governor’s budget proposal would further setback our economic recovery by taking billions of federal money out of our economy and putting hundreds of thousands of families out of work.”

What’s so interesting is that Perez appeared to be digging his heals in on his budget proposal, but Assembly sources say that there are discrete meetings taking place between legislative leaders.

California liberals give the Democrats kudos for pushing tax increases. “I must give the majority credit, however, for making hard decisions about cuts and proposing new taxes that are not on the whole injurious to the average tax payer. Doctrinaire answers to difficult times are the cause of this chaos,” said the California Majority Report’s Bob Reid in a recent story. Stating that Democrats put people first (implying that Republicans don’t), Reid says Democrats aren’t perfect and have their special interests that “are historically linked with education, organized labor and social welfare programs.” Reid says, “…[T]he other side seems to care more about taxpayers in the upper brackets and corporations than they do average Californians.”

Several Health and Human Service advocates sent out a press release on July 1st, imploring the Legislature to “pass a timely budget with long-term solutions.” Western Center on Law & Poverty said, “State leaders need to continue to work hard towards passing a budget that protects health and human service programs and creates jobs through long-term solutions.”

Health Access California suggested imposing additional taxes to pay for social programs: “We can prevent cuts devastating to our health system and our economy, with targeted revenues, whether from oil extraction, or eliminating corporation tax breaks given in the last few years.”

California Alliance for Retired Americans said “Given the serious challenges at hand, now is the time for legislators and the governor to recognize that California desperately needs a budget that includes targeted revenues as part of a long-term solutions.”

“Targeted revenues” mean tax increases.

Three budget proposals, and no consensus between parties on what it will take to match expenditures with expenses, does not make for a budget any time soon.

If this is just a replay of previous budget experiences, Democrats won’t budge on social spending or tax increases and any Republicans voting for tax increases will undoubtedly be publicly flogged by party leaders and voters.

Capitol sources are saying nothing and leaking even less, meaning the budget is precarious.

Yet, business as usual seems to be the order of the day for California legislators, only this year they are a little sneakier about it. While Steinberg has ordered no recess until the budget is signed, with a wink and a nod, legislators are encouraged to remain within an easy 24 hours of the Capitol.

Now that is an affirmative statement about legislators’ commitment to producing a budget.

–Katy Grimes

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