Dem Budget Deals In Hope

Katy Grimes: Democratic legislators and Gov. Jerry Brown announced today that they have reached a majority-vote budget deal – without Republican votes or any of the reforms Republicans have pushed for.

Legislators will begin voting on the plan on Tuesday. Democrats and the governor claim that revenues will be up $4 billion over last year, but will still need cuts.

The numbers don’t pencil out with a $26.6 billion deficit, leaving many wondering just how big the tax “revenues” will need to be to cover the budget hole.

The governor, who has been massaging Republican votes for several months in order to be able to hold a statewide election to approve tax extensions, said that because his original proposal was not passed, lawmakers will most likely end up using the ballot initiative process to for the future tax increases they say are necessary for the budget.

Assembly Speaker John A. Pérez said Democrats “have not wavered in our belief that new revenues are essential” for a balanced budget. “The conversation has been started and we will keep that conversation going as we move to the ballot next year.”.

Assembly Minority Leader, Republican Connie Conway said in a statement, “While Democrats may still use legally questionable maneuvers to raise taxes, the simple truth is because of Republicans’ resolve, temporary tax increases will expire this Friday and the average California family will save nearly $1,000 per year.”

Conway promised that in the remaining months of the legislative year, Republicans will continue to push for pension reform and the “pro-jobs agenda to help the nearly 2 million unemployed Californians get back to work.”

Brown’s budget will also deal with the public safety realignment to shift many inmates from state prisons to county run jails. Democrats insist that the realignment is the only way to comply with the Supreme Court decision forcing the state to reduce its prison population by 30,000 inmates.

The Sacramento Bee provided early details of the budget deal:

It maintains parts of the package Brown vetoed nearly two weeks ago:
— $150 million cut each to University of California, California State University
— $150 million cut to state courts
— $200 million in Amazon online tax enforcement
— $2.8 billion in deferrals to K-12 schools and community colleges
— $300 million from $12 per vehicle increase in DMV registration fee
— $150 million from fire fee for rural homeowners
— $1.7 billion from redevelopment agencies
— $1.2 billion in higher May and June revenues

The new budget rejects some parts of that package:
— $1.2 billion from selling state buildings
— $900 million from raising a quarter-cent local sales tax
— $1 billion from First 5 commissions
— $500 million cut in local law enforcement grants
— $500 million deferral to University of California
— $700 million in federal funds for Medi-Cal errors

And it adds the following:
— $4 billion in higher revenues in 2011-12, with triggered cuts
— 1.06 percentage point sales tax swap that redirects money to local governments for Brown’s “realignment” plan rather than to the state. Sales tax rate will still fall 1 percent on July 1.

The $4 billion “trigger” plan bears some explaining.

First, the plan requires Brown’s Department of Finance director, Ana Matosantos, to certify in January whether the $4 billion projection is accurate. She will use revenue totals for July to December and economic indicators to project the remainder of the fiscal year.

The “trigger” cuts are essentially in three tiers, based on how much of the extra $4 billion comes in.

There was talk earlier today that Democrats believe that cutting a deal with Brown is the best way to address Controller John Chiang’s loss-of-pay requirement, which would have meant that each legislator would have permanently lost nearly $400 a day until they pass a balanced spending plan.

Continuing to fuel many of the criticisms about a paycheck motivated budget, there is talk that if both the Senate and Assembly pass the majority-vote budget deal, and Brown signs it, their pay will be reinstated.

Sounding more like San Francisco Democratic Rep. Nancy Pelosi, one reporter noted on Twitter that after the press conference, Brown said that after the budget is passed and signed, he and Democrats will offer more detail about it.

While the Democrats are celebrating and high-fiving over not losing paychecks, not everyone in the Capitol is happy with the announcement. Republican Senators Berryhill, Cannella, Emmerson, and Harman, the four Senators who were negotiating with Brown before he abruptly cut off talks, said in a statement, “The Democrats have proven once again that they are unwilling to stand up to the unions that fund their political campaigns and adamantly oppose meaningful pension reform. They didn’t want a bipartisan deal in March, and they don’t want a deal now. And, ultimately, it’s the hardworking people of California who pay the price.”

And Senate Republican Leader Bob Dutton said in a statement immediately following the budget announcement, “Californians deserve better than the ‘Hope without Change” budget the Democrats announced today. This latest budget is based on the hope that $4 billion in new revenues will miraculously materialize, but does absolutely nothing to change government as usual.”

JUNE 27, 2011

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  1. GSL
    GSL 27 June, 2011, 22:01

    While we’re sipping bubbly right now at the death of five more years of income and sales tax hikes, we’re not sure this budget is going to hold up. We won’t shed a tear over the death of the state’s RDAs, but the revenue backfill isn’t going to stand without a legal challenge. And we’re not sure the hikes to vehicle fees or fees on homeowners in fire zones would hold up either. It probably depends on how much someone in Sacramento is willing to stand up for the interests of the taxpayers. There’s a first time for everything, right?

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