Dems, GOP Butt Heads on Budget, Taxes

JUNE 9, 2011

By KATY GRIMES

Budget showdown time. Rumors have been swarming through the Capitol this week over budget issues. Talk of which legislators might agree to a budget seems to be a moot point, as most budget trailer bills were passed Wednesday on party lines.

Budget committee hearings went late Wednesday, but committees still sent the Assembly and Senate budget plans for decisions either later this week, or most likely, next week.

Democratic Gov. Jerry Brown is still pushing lawmakers to extend the expiring 2009 taxes. He now wants them on a temporary basis, then take the vote to the people of California. But voters in the last seven elections have refused to pass tax increases, making many Democratic legislators squirm this time around. This has left many special interest groups and public employees calling for the Legislature’s immediate vote instead.

Republican Stance

Republicans would prefer to let the taxes expire, then later in the year take the vote to the people to decide if taxes should be reinstated.

Republicans say that there are Republican votes for the tax extensions. But a sticking point is Brown’s bridge tax plan, which would not pass, according to many lawmakers’ offices.

The fight is over implementing tax hikes or waiting for an election. Brown has said his bridge tax is necessary before an election takes place to tide the state over until voters could decide the issue. But those talks were abruptly ended by Brown, not Republicans. Brown said this week that he wants a vote on the taxes in September, but only after Legislators agree and pass the bridge tax increases as part of the budget.

Republicans have remained steadfast on not raising taxes, but are willing to ask voters to decide.

Budget issues Republicans want to see changed include reducing and retiring restrictive environmental and business regulations which many say are are preventing new businesses from moving to California, as well as preventing business growth within the state.

Republicans have been pushing for a permanent spending cap, which would limit budgets in the future, as well as a conservative savings plan for any excess revenue in positive growth years to be used for rainy day funds, and to pay down debt when possible.

However, Republicans are aware that, since the Gann Limit effectively was repealed by voters in 1990, all attempts to limit budget growth have failed. For example, in 2004 voters passed a reform of then-Gov. Arnold Schwarzenegger, Proposition 58. It was called the California Balanced Budget Act. It didn’t work.

Pension Issue

The hot button for Republicans has been the state’s upside-down public pension system. Republicans have offered up a more traditional 401(k) retirement plan for state employees, which would require participants to contribute more to their own retirement plans, unlike the existing retirement system.

The looming threat is a new law that will stop lawmakers’ pay if they do not pass a balanced budget by June 15. For now, Republicans are holding strong and insisting a budget must be passed only without raising taxes and instead, making necessary cuts.

This week has seen rumors and even disinformation coming out of the Capitol, and more than a few Democratic complaints about Republicans not playing nicely. But Republican lawmakers and staff insist that the ball is in the Democrats’ court. Not enough cuts have been agreed to, while tax increases seem to be the only plan Democrats have to shore up the budget.

One Senate staff member who asked to remain anonymous said that “promises of pension reform aren’t good enough. Republicans need to see something sincere before a budget will be passed.”