It’s Senate Bill 539, by U.S. Senate candidate Kevin de León, a state senator from Los Angeles. The measure would limit the impact on affluent residents of the new $10,000 federal limit on deducting state and local taxes from federal tax returns by sharply increasing an existing tax credit for contributions to a college scholarship program already run by the state.

If SB539 is signed by Brown, families making more than $100,000 – especially homeowners – could potentially save billions of dollars with the new, much higher 75 percent credit. In 2015 – the most recent year for which statistics are available – 6.1 million California tax filers used the state and local tax deduction, with an average of $18,438, according to the Tax Policy Center.

This explains the bipartisan appeal of the measure, which passed the Assembly and Senate with a total of two negative votes – one Republican (state Sen. Jim Nielsen of Fresno) and one Democrat (Assemblyman Jim Frazier of Contra Costa County).

It’s not clear whether Brown will sign the measure. While he called the Republican tax overhaul approved last December “evil in the extreme” at the time it was being considered by Congress, he’s been reported to be skeptical that any state tax avoidance effort would be accepted by the Internal Revenue Service.

That’s the impression the IRS has sought to create since the state and local tax deduction was limited. And last month, the IRS proposed a 15 percent cap on deductibility of certain gifts, including to state programs like the one that would benefit from SB539.

IRS rule could reduce deductions for private tuition

The proposed IRS rule is so broad, however, that Gannett News Service reported on Aug. 24 that it could affect laws allowing for state and local tax credits for charitable contributions in 34 states. In several Republican-dominated states, these credits are available for private school tuition.

This generated a sharp reaction from EdChoice, an Indianapolis-based national nonprofit organization that’s devoted to encouraging alternatives to traditional public schools.

“The IRS chose to adopt a new rule after New York and a few other states who overtax their citizens at the state and local level had the audacity to create federal tax-dodging schemes,” EdChoice told Gannett. “These tax-dodging schemes do not compare in intent or purpose to the charitable programs created years ago to help children access K-12 education where they fit in and can learn.”

Treasury Secretary Steven Mnuchin, however, disputed the idea that the proposed IRS rule would have a heavy impact on donations to private schools and to school choice advocates.

In July, four states – New York, New Jersey, Connecticut and Maryland – sued the federal government over the deduction limit, saying it amounts to unconstitutional “double taxation.” The Tax Foundation says those states and California are the five where taxpayers will face the biggest hit.

But most tax experts think the lawsuit is unlikely to win, given the long-established primacy of Congress in setting tax laws and of the IRS in interpreting them.

California has already sued the Trump administration more than 50 times – but not, so far at least, over the tax deduction change.

While farmworkers do get overtime, there is a much higher threshold than other professions — this bill would bring the over-time thresholds more in-line.

Supporters argue it’s a matter of fairness — that farmworkers should have the same overtime and break protections as everyone else. Opponents say farmers can’t afford it and that an industry dependent on weather, perishable goods and external price-setting can’t be regulated the same as other professions.

“This vote boils down to a moral argument,” said Sen. Bill Monning, D-Carmel, who, like many of his colleagues, added that the doomsday economic arguments that workers will lose hours or jobs were either overblown or untrue.

Of course, opponents disagreed. Sen. Jim Nielsen, R-Gerber, said that increased labor costs would force farmers to reduce those costs, especially as the minimum wage hikes begin to kick in.

“What’s been accomplished? Maybe a noble goal where we can pat ourselves on our back,” Nielsen said, adding that “the victory would be hollow.”

Gut and amend

What made this bill particularly interesting is that the last iteration died a few months ago and so Assemblywoman Lorena Gonzalez, D-San Diego, inserted the language into another bill — a process called gut and amend.

By gutting and amending, the San Diego Democrat’s proposal will circumvent some of the normal steps in the legislative process. However, that alone won’t change members’ minds and it’s unclear if Gonzalez or other supporters have secured enough votes in the Assembly for final passage.

But there was also some eye-rolling. How could a governor who will be out of office in January 2019 possibly impose binding conditions on future chief executives and Legislatures beyond those established in AB32 and other emission-focused legislation formally adopted by the Assembly and Senate?

Now it turns out that the Legislature’s top attorney — Legislative Counsel Diane Boyer-Vine — shares this skepticism. Last week, state Senate Minority Leader Jean Fuller, R-Bakersfield, released a letter by Boyer-Vine responding to her questions about whether Brown could change state law by fiat.

“We think the determination of a standard for the statewide (greenhouse gas) emissions limit is a fundamental policy decision that only the Legislature can make,” Boyer-Vine wrote. She noted that under state law, the Legislature couldn’t assign sole policy-making authority on the issue to the governor even if it wanted to.

The California Air Resources Board defended the legality of the governor’s order with a statement that didn’t address the specific legal points made by Boyer-Vine.

“While the 2020 limit is an important first step in measuring progress, climate change will not end in 2020 and AB32 explicitly states the intent to ‘maintain and continue reductions in emissions of greenhouse gases beyond 2020,’” a spokesman told the Sacramento Bee.

Echoes of D.C. fights — with one big difference

The emerging battle has crucial similarities to the fights over executive authority in Washington, where Republican lawmakers have backed lawsuits challenging President Obama’s orders on immigration, pollution and other issues. But one big difference is that the Sacramento scrum is over a policy area in which California’s legislative and executive branches are generally in sync: greenhouse gas reduction.

But an Associated Press story about Boyer-Vine’s opinion hinted at why Brown prefers a unilateral approach to either deferring to or working with the Legislature on a measure expanding upon AB32 a decade after its passage:

Overturning the executive order would be a blow to Brown’s effort to establish a legacy and a global identity as a crusader against climate change. …

While Democrats maintain overwhelming control of the Legislature, Brown would face difficulty winning legislative approval for his emissions targets. A group of moderate Democrats in the Assembly has sided with business interests against efforts by Brown and conservation groups to create stronger environmental protections.

“The Legislature should not advance the cap-and-trade program under this dark legal cloud,” said Sen. Jim Nielsen, R-Gerber.

Relishing the opportunity to take a signature issue to a world stage, Gov. Jerry Brown had his political work cut out for him in taking California’s approach to environmental policy to the next level amid the United Nations’ so-called COP21 summit in Paris.

Long known for successfully navigating a path between the Golden State’s political extremes when his own agenda called for it, Brown has found himself facing a complex, shifting set of constituencies at home. In Paris, he has sought to present a policy vision capable of satisfying most, if not all. 

An international turn

To his left, Brown has confronted activists and advocates displeased with the limits of his approach. While Brown peeled away cap-and-trade funds for his beloved high-speed rail project, the environmental left cried foul. (At the end of a speech in Paris, Brown was even “heckled by a group of protesters opposed to carbon offset programs they said could hurt indigenous people,” as the Sacramento Bee observed.) But to his right, within his own party, Brown has had to contend with moderate and electorally vulnerable Democrats who refused to go along with this year’s ambitious legislation to slash emissions yet further, as CalWatchdog previously reported.

Although the bullet train has been hamstrung by environmental impact and other concerns, Brown has found in the Paris talks a way to dramatize both the significance and workability of his plans on climate. By pressing ahead with regulations that won the approval of enough Democrats and the acceptance of enough Republicans, Brown positioned himself as the global leader in actually implementing a large-scale emissions policy. Consequently, as the Los Angeles Times noted, “California officials have rolled out the welcome mat in the last two years for representatives from more than three dozen countries — including China, Kazakhstan, France and Abu Dhabi [United Arab Emirates]. And with a slew of agreements with foreign leaders, Brown and administration officials have turned California’s Air Resources Board and Environmental Protection Agency into de facto diplomatic organizations.” For Democrats, Brown’s initiative and prestige has struck a reassuring contrast with Washington, where Congress has not looked to California as a model.

Dodging conflict 

Even for Republicans, Brown’s approach has avoided some major political hangups. Although few in the party, even in California, have embraced an emissions agenda as aggressive as Brown’s, his state-and-local-first strategy has enabled him to largely bracket traditional Republican opposition to handing the federal government sweeping new powers around regulating carbon. “We don’t have to wait for the federal government to say jump. We’re already moving,” he told Time. 

“The Compact of States and Regions, a consortium of sub-national governments from six continents, announced commitments on Dec. 6 to cut greenhouse gas emissions by a cumulative 12.4 gigatons by 2030 when compared to business as usual projections,” the magazine noted, adding that the entire United States emits between 5 and 6 gigatons each year.

Of late, state Republicans have complained that terrorism should take political precedence over climate. “Climate change has ebbed and flowed for eons. Mankind can deal with it intelligently. But I have serious doubts about our resolve in dealing with terrorists,” said state Sen. Jim Nielsen, R-Roseville, according to the San Jose Mercury News. But the reaction to Brown’s doings in Paris has been muted. 

Brown’s transcendental spiritual sensibility has also shown the ability to shield him from more vociferous Republican criticism. “Modernity has two major elements: individualism and oil,” he also told Time. “And those two we have to transform.” Not typical GOP talking points — but of a piece with the wave of Silicon Valley innovation that has been defined in large part by the sharing economy on the one hand and vast leaps in alternate-energy transportation on the other. California Republicans have not been afraid to show their political support for sharing-economy and transportation stalwarts like Airbnb and Uber, who have repeatedly run afoul of the municipal officials and state regulators often accused by the state GOP of stifling job growth and economic productivity. 

California has moved one step closer to the return of redevelopment and the controversial power to seize private property through eminent domain.

The state Senate approved legislation Wednesday that would give local governments the power to create new entities, known as community revitalization authorities, to stimulate economically-depressed or crime-ridden areas. Assembly Bill 2 would grant these new government agencies broad powers to issue bonds for the purpose of investing tax funds in infrastructure, affordable housing and economic revitalization projects.

“Redevelopment was a multi-purpose tool that focused over $6 billion per year toward repairing and redeveloping urban cores, and building affordable housing, especially in those areas most economically and physically disadvantaged,” argues the bill’s author, Assemblyman Luis Alejo, D-Salinas, according to a legislative analysis. “Since the dissolution of redevelopment agencies, communities across California are seeking an economic development tool to use.”

However, property rights advocates warn that the bill’s language contains no restrictions on eminent domain and could resurrect the abuses made possible by the Supreme Court’s controversial Kelo decision.

“Today, the state Senate passed a land grab bill that will make it easier for government to seize homes, businesses and places of worship by eminent domain!” the California Alliance to Protect Private Property Rights, an opponent of the bill, posted on its Facebook page.

4 GOP Senators Join Democrats to Pass AB2

Republican Senator Anthony Cannella of Ceres, who introduced the bill on the Senate floor, argued that AB2 will provide economic stimulus to disadvantaged communities.

“This will grow jobs, reduce crime, repair deteriorating and inadequate infrastructure, clean up brownfields and promote affordable housing,” he said.

With Cannella’s support, the bill passed on a 29-10 vote — with the support of all but one Democrat and four Republicans, including Sen. Tom Berryhill of Twain Harte, Sen. Bob Huff of Diamond Bar and Sen. Sharon Runner of Antelope Valley.

Under the bill, a Community Revitalization Investment Authority could be created by a city, county or special district if certain conditions are met. The first requirement is that the area have an annual median household income that is less than 80 percent of the statewide median. Additionally, three of the following four conditions must be met:

• Unemployment that is at least 3 percent higher than the statewide median unemployment rate;
• A crime rate that is 5 percent higher than the statewide median crime rate;
• Deteriorated or inadequate infrastructure such as streets, sidewalks, water supply, sewer treatment or processing, and parks;
• Deteriorated commercial or residential structures.

Private Property Rights Threatened

Only one senator, Republican Jim Nielsen, R-Gerber, spoke in opposition to the bill.

“This is the resurrection of the redevelopment agencies – the failed redevelopment agencies,” he said. “They absolutely exploited and will continue to exploit – under the provisions of this bill – the seizure of private property under eminent domain.”

Eminent domain is mentioned in the bill 21 times. The Legislative Counsel’s bill digest explicitly states, “The bill would authorize an authority to acquire interests in real property and exercise the power of eminent domain.”

Although the bill subjects private property to eminent domain, government agencies would receive a special carve-out from the practice.

“Property already devoted to a public use may be acquired by the agency through eminent domain, but property of a public body shall not be acquired without its consent,” the bill states.

Sen. Bob Huff: “We led the charge to save redevelopment”

In 2005, the U.S. Supreme Court ruled in Kelo v. New London that government agencies have the power to seize property for economic development. The decision was widely criticized across the political spectrum and inspired states to pass tougher laws limiting governments’ eminent domain powers. Here in California, the momentum for property rights reached its zenith in 2011, when Gov. Jerry Brown pushed through a plan to end redevelopment as part of his plan to balance the state budget.

Huff, who until recently served as Senate GOP leader, downplayed the “scare stories” of eminent domain abuse by private property advocates and reminded his colleagues of his past work with Sen. Rod Wright to save redevelopment agencies.

“We led the charge to protect redevelopment because it was one of the few economic developments that cities had,” Huff said on the Senate floor in support of AB2. “It was also one of the few ways to generate revenue for our affordable housing.”

With the Senate’s approval, the bill returns to the State Assembly for concurrence, where it is expected to pass with widespread support.

In May, AB2 passed by a 63-13 vote – without a single member – Republican or Democrat – voicing opposition. A dozen Assembly Republican lawmakers, including Assembly GOP leader Kristin Olsen, joined the Democratic majority in backing the bill.

California’s oil industry is celebrating the defeat of a bill that would have placed a moratorium on hydraulic fracturing — but warned that the fracking war is far from over.

Senate Bill 1132 by Sen. Holly Mitchell, D-Los Angeles, failed 18-16 on the Senate floor May 28. Four Democrats joined Republicans in voting against it, while three Democrats sat out the vote. The bill was reconsidered the next day, resulting in a loss of two more Democratic votes.

Catherine Reheis-Boyd, president of the Western States Petroleum Association, sent out a congratulatory email to supporters last week:

“The legislation would have banned hydraulic fracturing and other well stimulation technologies, putting existing petroleum industry jobs at risk and preventing the creation of potentially tens of thousands of others – not to mention depriving Californians of much-needed state and local tax revenues and enhanced energy security.

“Not surprisingly, anti-oil special interests who fed the public, the state Legislature, and media egregious misinformation about hydraulic fracturing and other oil extraction techniques have vowed to continue their efforts in Sacramento and throughout California’s local communities. WSPA will continue to push for common sense legislation that balances environmental protection with domestic energy security, job creation, and economic development.”

Mitchell: Big Oil ‘polluting for profit’

Mitchell did indeed vow to keep up the fight against an oil-and-gas drilling process that she believes pollutes the environment.

“[She] is proud of the bill’s successful journey in raising awareness around public safety, fossil fuels and environmental justice,” Mitchell said in a press release.  “Although the bill fell short of passage, she is confident that the movement to re-assess fracking, acidization and other well stimulation methods will continue to grow until the public’s concerns are thoroughly addressed.

“We have the momentum, this issue’s gone viral nationally, and it’s just a matter of time before the dangers of fracking prompt people to put it on pause until its safety can be established. When the impacts on the public of a for-profit endeavor are unknown, we try it out first in minority neighborhoods – assuming low vigilance and the need to bring in jobs makes safety irrelevant.

“But we’ve put big industry on notice: That ploy won’t fly forever. People’s neighborhoods aren’t fodder for fracking, environmental justice must come, and one day soon the vote to refrain from polluting for profit will prevail!”

State, feds: Fracking not a danger

But the California agency charged with oversight of fracking assures that more than a half-century of hydraulic fracturing in the country have shown it to not be an environmental danger.

“Hydraulic fracturing was first used in 1947 in a well in Kansas,” states the California Department of Conservation’s Division of Oil, Gas and Geothermal Resources. “Since then, hydraulic fracturing has become a regular practice to tap into previously unrecoverable reserves, or to stimulate increased production from existing oil or gas wells in the United States.

“In California, hydraulic fracturing has been used as a production stimulation method for more than 30 years with no reported damage to the environment.”

The Obama administration also has long depicted fracking as safe. In May 2013, at a news conference on draft rules for fracking on 700 million acres of federal land, Interior Secretary Sally Jewell defended the drilling process: “I know there are those who say fracking is dangerous and should be curtailed, full stop. That ignores the reality that it has been done for decades and has the potential for developing significant domestic resources and strengthening our economy and will be done for decades to come.”

SB1132 came hard on the heels of another fracking crackdown bill, SB4, which was approved by the Legislature last year and signed by Gov. Jerry Brown. It increases regulations on fracking, including disclosure of the composition and disposition of fracking fluids to state regulators.

It also requires a study be completed by the end of this year on “the hazards and risks that fracking poses to natural resources and public, occupational, and environmental health and safety,” according to the bill’s legislative analysis. “No permits for fracking would be allowed to be issued after Jan. 1, 2015, unless the study is completed and peer reviewed.”

SB1132 would have extended that study an additional six months, and imposed additional governmental reviews before fracking could resume in the state.

Sharp disagreements in Senate floor debate

Democrats and Republicans debated the bill May 28 on the Senate floor.

“SB1132 puts a temporary moratorium on hydraulic fracturing and acidization until they are proven safe by an exhaustive study that looks at many of the concerns and complaints commonly made by the citizens who live and work near the oil fields,” said Mitchell.

She dismissed concerns about potential job loss, saying the oil industry claims that only a small minority of wells are fracked. And she cited media reports that the oil recovery potential of California’s Monterey Shale formation has been cut by 96 percent, according to the U.S. Energy Information Administration.

“SB1132 simply calls for a ‘time out,’ if you will, a temporary moratorium pending verification that fracking and acidization methods are safe,” said Mitchell. “Along with many of you, I have no desire to increase our over-reliance on foreign oil. However, the safety of oil drilling is fundamentally an environmental justice issue that I believe we must view with great scrutiny.”

Jackson: No need to ‘frack, frack, frack’

She was backed by Sen. Hannah-Beth Jackson, D-Santa Barbara, who said that fracking has caused earthquakes in Ohio and degraded water quality in Texas.

“There would be no harm in hitting the pause button and evaluating specifically and more independently what the impacts are of this process on our water quality, air quality, the public health of people in surrounding communities,” said Jackson. “There is no urgency to frack, frack, frack. Let us be cautious. Let us be circumspect. And let us have the information that we need in order to determine whether we should continue a procedure that has demonstrated negative results in other parts of the country.”

Sen. Mark Leno, D-San Francisco, said that 70 percent of Californians support a fracking moratorium. And he noted that other states have adopted moratoriums.

Two Republican senators representing inland valley areas pointed out that their districts are still suffering double-digit unemployment, which will worsen with this year’s drought.

GOP response cites economic potential, need for fuel

Sen. Tom Berryhill, R-Stanislaus, discussed a trip to North Dakota last year where the economic contrast could not have been more stark due to that state’s oil and gas drilling boom.

“It was mind-boggling,” he said. “There was ‘help wanted’ on every corner and every small business. It was a tremendous opportunity to get people back to work. This technology has the potential to create thousands of jobs and a second gold rush to the local economy in the state of California that we haven’t seen in years.”

Sen. Jean Fuller, R-Bakersfield, challenged Mitchell.

“Californians require 44 million gallons of gasoline a day,” said Fuller. “Our state refineries provide all of that gasoline, and they must be supplied with oil from somewhere. My question for the author is: What other methods or new technology does this bill propose to use to backfill the lost oil production in California? Tankers, rail, rationing or something that I don’t know?

Mitchell responded, “This bill does not propose to offer an alternative.” The time for that is if the study determines that fracking is unsafe, she added.

That did not satisfy Fuller, who said, “My area produces about 80 percent of the oil and gas. Most of those wells that are being fracked have been fracked for many, many years. Most of them are in an oil well footprint where there’s no groundwater underneath, there’s no residential houses nearby. And they haven’t had safety violations.

“I think that we’ll get [safe fracking] without having to suffer loss of jobs and tremendous economic upheaval in my area. Some of the small cities in my area have 30 percent unemployment now. We’re about to head into a drought in August, and that will probably double [unemployment], because the last time we had a drought there was 30 percent unemployment just from the drought. To have even a day’s loss of this work, which are very good wages and very good health benefits, is absolutely crushing for us.”

Sen. Jim Nielsen, R-Tehama, argued that Mitchell’s bill puts up so many obstacles to completion and certification of the study, that it would amount to a de facto ban on fracking.

“Would it affect the citizens of California?” he asked. “Absolutely. We cannot conserve our way to the future in either water or energy.”

Mitchell: You’re crying fire

Mitchell accused her bill’s opponents of being alarmists on the threat of lost jobs.

“I don’t think it’s appropriate for us to cry fire in a crowded theater when we are unable to quantify the actual statistical job loss based on the narrow parameters of this bill,” she said. “We as policy makers have to make a very, very difficult, delicate decision: employment versus public health and safety. I appreciate the challenges many of the districts are experiencing. I hope you appreciate the challenges my constituents are facing who live in very, very dangerous close proximity to wells that are being fracked and where acidization is being used.”

Reheis-Boyd discussed in her blog her organization’s next steps, now that there has been a temporary truce in California’s fracking war:

“[The] defeat of Senate Bill 1132, legislation that would have imposed a moratorium on hydraulic fracturing and other well stimulation technologies, clears a path for a concerted and collaborative effort to fully implement new statewide regulations embodied in Senate Bill 4.

“The SB 4 regulations put into place a robust set of monitoring, disclosure, testing, land use and research requirements that ensure hydraulic fracturing in California is conducted safely and without harm to the environment. But there is still much to be done to finalize these new regulations, and the petroleum industry is going to be a constructive partner in getting them accomplished.

“For example, we are working with the State Water Resources Control Board and regional water boards to develop groundwater monitoring criteria and planning required by SB 4. Once finalized, these new requirements will give us the data necessary to demonstrate hydraulic fracturing and other well stimulation technologies are not adversely impacting California’s precious water supplies.

“We are working with the California Air Resources Board and regional air boards to ensure air quality concerns are addressed as required by SB 4. We are working with the Division of Oil, Gas & Geothermal Resources to develop the in-depth CEQA analysis of well stimulation operations also required by SB 4. And we look forward to the findings of the science-based study of hydraulic fracturing – yet another requirement of SB 4. …

“As Governor Brown has noted, close to a third of the new wells drilled in California are hydraulically fractured as a way to improve their productivity. These wells are an important part of California’s ongoing, conventional oil production that supplies 37 per cent of our daily petroleum needs. 

“The more than 100,000 men and women directly employed in oil production and transportation in California appreciate the Legislature’s support for the work they do and welcome the opportunity to move forward under the guidance of SB 4 regulations.”

By KATY GRIMES

SACRAMENTO — As the Budget Conference Committee hearings began on Wednesday, Republicans challenged the frequent use of the word “balanced” for describing the tax increases and budget cuts within the governor’s budget proposal. With Republicans and Democrats coming at the budget from different ideological positions, several large state issues remain unresolved.

The conference committee is charged with the responsibility of bridging the differences. This report is based on my attendance at the hearings.

Gov. Jerry Brown needs a few Republicans to vote  in favor of placing the tax increase extensions on a June ballot. So far, with a $25 billion state budget deficit, there are bigger challenges facing the committee than just a difference of ideology, with Republicans standing firm in their opposition to the tax increases.

Before the hearing, Sen. Mark Leno, a San Francisco Democrat, said the state’s budget problems are not “simple addition or subtraction.” But at the hearing, Leno blamed California’s convoluted budget process on the crippled economy, resulting in the state whittling down the $125 billion budget to $84 billion.

Leno said that the Legislature must “take action” on the budget by the first week of March in order to get Brown’s five-year tax increase extensions on a June ballot.

The governor released his budget in January. He relied on budget cuts and shifts, tax increases and — most controversially — a constitutional amendment needing voter approval to extend for five years expiring tax increases passed by the Legislature in 2009.

“Sacramento politicians would prefer to put the blame on already overburdened taxpayers for not providing enough money to the state; if they won’t come up with more money they are being “unreasonable and selfish,” said Jon Coupal, President of the Howard Jarvis Taxpayers Association.

“Legislators have been stressing that taxpayers should share in the sacrifice, and they say this with a straight face,” said Coupal. “But taxpayers have been sacrificing for years. While already imposing some of the highest taxes in the nation, the Legislature, approved massive new taxes just two years ago. Two years later, the economy and resulting state revenues have continued to decline, and the house remains in chaos. The new governor’s response: Even more taxes.”

The budget conference committee is faced with making decisions about the proposed public safety realignment, the elimination of redevelopment agencies, child care programs, in-home support services and long-term health care programs, and must do so according to Democratic legislators’ fast-track timeline.

Legislative Analyst Mac Taylor and Department of Finance Deputy Director Michael Cohen both offered legislators overviews of the budget. “Both houses maintained the governor’s balanced approach” with the budgets, with “equal cuts and revenues,” Cohen said.

But Senator Bob Huff, R-Diamond Bar, disagreed with Cohen’s “balanced approach” description, and asked Cohen if there really were equal cuts and revenues in the budget. “No,” Cohen said.

After the hearing, Huff explained about the budget, “It’s not truly balanced. It is not one-half cuts and one-half taxes. They keep repeating the same lie.”

Huff said the only thing wrong with the state is chronic overspending. “Within the next five years, we will have grown government another 31 percent,” he said.

As the deadline for the budget gets closer, Huff said, “Some legislators can be peeled off to vote for putting the tax increases on the ballot,” primarily because “some Republicans are in difficult districts.” But he doesn’t want to see anyone negotiate something for a district over such an important statewide vote.

Both houses of the Legislature have reviewed the budget and made their own proposals. The differences are slated for work outs in the conference committee.

The Assembly budget includes $14 billion in proposed taxes, and $6.8 billion in proposed cuts. The Senate Budget Committee proposed cuts of $12.5 billion and $12.0 billion in taxes.

Both houses have proposed fund “shifts,” with the Senate shifting $1.4 billion from “loans and transfers from special funds to the General Fund, including deferrals of loan repayments.”

During the hearing, Butte County Republican Assemblyman Jim Nielsen was critical of the governor’s proposed tax increase extension and stated his opposition to voting for it. “The impact of taxes on the citizens is destructive. It was only a temporary tax. Now it will be seven years,” said Nielsen.

The governor’s proposal to realign services and funding down to local governments has been met with resistance by local government officials, many of whom have stated fears that the state funding will not continue. And, in recent hearings, legislators and local government officials have said that unless cities and counties are afforded flexibility by the state, existing mandates will mean that control remains in the hands of the state.

Beyond flexibility, Diane Harkey, R-Dana Point, pointed out another serious area of concern with realignment. “One of the problems with the big cities’ proposal is that cities can go bankrupt. How does that affect the securitization of our debt?” she asked.

Harkey did not get an answer.

There’s another hearing on Friday, Feb. 25, at 10:00 a.m., which can be watched on the California Channel.