Gov. Brown's Budget Showdown

Katy Grimes: Yesterday’s May Budget Revise with Gov. Jerry Brown started off as a”No surprises” press conference. However, while the swords are still drawn in the political party duel over spending, revenue and tax increases, I am wondering if anyone noticed that Brown was not his usual jovial, glib self.

The governor seemed distracted, and almost distant while explaining the budget slides to the press audience.

Perhaps it is because he is debating himself now on the finer points of the budget – and that’s not a fun place to be.

Brown’s original budget proposal to extend the 2009 taxes – a higher vehicle license fee, sales tax, and income tax increase – has been the biggest source of contention between the Republicans and Democrats. Brown and Democrats insisted that the state needs the increased “revenues,” while  Republicans continue to prove that lower taxes increase state revenues.

Of the three taxes, only the income tax has already expired, with the VLF set to expire July 1. Brown’s message yesterday –  “I won’t tax your income this year” – did not fall on deaf ears. He even admitted that lower income taxes are what brought in the unexpected $2.5 billion in revenue, and the expected $6.6 billion through the 2011-12 budget year.

Brown said he still wants the Legislature to approve the tax extensions and only then will then take them to the voters. “We have a serious deficit now and into the future unless we cure it,” Brown said.

The revised budget released by the governor on Monday show that the state is facing a $9.6 billion deficit, which is down from about $26.6 billion in January. Brown said this is due to  the $13.4 billion in spending cuts already approved by the Legislature, and the $6.6 billion in projected higher revenues.

Education will receive close to $3 billion more under this revised plan but would have to move to “plan B” if voters or the Legislature vote down the tax plan.

The new budget is $88.8 billion for 2011-12, which is a 5 percent increase over Brown’s  January budget.

Brown’s evil twin must have been talking for part of the meeting. “We have to tax income, but I’m not going to because we will lose income to the state.” A consequence of taxing the state’s highest income earners is lost income to the state. This message made it through loudly and clearly, but is not popular amongst Democrats.

“Are you going back on your word about the 2-3 vote of the people?” Brown was asked.  He talked about a recent survey of taxpayers and said that they now want the tax increases. But this was just after saying that he knows people don’t want higher taxes.

Brown said he was “working with more than four and less than 10” Republicans on the budget, but was evasive. So another reporter asked him, “are you working with the legislature to pass taxes or to take it to the people for a vote?”

We still don’t know the answer to that questions, because apparently it is “yes.”

Brown’s inner debate became more obvious when he admitted “I am modifying what I said a year ago.” But many wanted to know if it he was acquiescing to the unions again, or modifying his approach with the Democrats and unions.

Brown seems to react differently everyday, which may explain why he seemed so out-of-sorts, and perhaps even exhausted from changing plans and directions so many times.

Playing whack-a-mole with the state’s massive budget can’t be fun.

Brown’s shoot-from-the-hip style is not working, with the state in such an economic crisis. He and the Democrats can trot out all of the sunny statistics they want, but in talking to people all over the state, recovery is not happening, and more taxes will only push even more people underwater – unless the plan is to continue to erode the middle class in order to expand entitlement programs for lower income Californians. If that’s the real plan, then Brown will be a smashing success.

Of all of the many responses I read to Brown’s May revise budget, former Sen. George Runner, now a member of the Board of Equalization, summed it up most succinctly:

“Overtaxed Californians will find little to cheer in the Governor’s revised budget proposal.

Despite the Governor’s concession to postpone higher income taxes for a year, he continues to push for legislative approval of higher sales taxes and car taxes this year.

And although the Governor dropped his effort to abolish enterprise zones—and the jobs they create—he continues to miss the big picture: Californians need jobs, not higher taxes.

Our best hope for new revenues isn’t higher taxes, but new jobs fueled by a recovering economy. Unfortunately, the Governor has yet to truly lift a finger in the fight for California jobs.”