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Democratic lawmakers unveil California budget plan

The spending plan calls for new taxes on online purchases, higher car registration fees and higher local sales tax rates, along with some cuts and accounting gimmicks.

June 15, 2011|By Shane Goldmacher, Los Angeles Times
  • California car registration fees in the Democrats' budget plan would rise by $12 annually.
California car registration fees in the Democrats' budget plan would… (Justin Sullivan / Getty…)

Reporting from Sacramento -- Democratic lawmakers are rushing to meet a Wednesday deadline with a spending plan that would tax purchases from online outlets such as Amazon.com, bump up car registration fees and local sales tax rates and impose a new fee on residents in fire zones.

The plan also would cut from higher education, public safety and courts; defer billions of dollars in payments; and revive a plan to sell state buildings that was abandoned months ago after being deemed too costly.

Crafted without Republican input or support — and earning GOP ire — the proposal would rely on policymaking maneuvers to raise the levies, according to Assembly staff members involved in the process. That way, it could pass without the GOP votes typically needed to increase taxes. Under a new law, legislators' pay is cut off if they miss the June 15 budget deadline.

Having slashed billions in spending earlier this year, mostly from programs for the poor, the Democrats would close much of the remaining deficit with the sort of accounting sleight-of-hand that for years has merely papered over California's fiscal shortfalls. It is not clear whether Gov. Jerry Brown will sign such a budget; he vowed not to do so during his campaign.

The lawmakers openly admitted that their plan, which many rank-and-file Democrats learned of Tuesday afternoon, was their distant second choice. They said stiff Republican opposition to Brown's proposal to renew higher income, vehicle and sales taxes forced their hand. Brown wants lawmakers to extend those taxes to close the deficit until a public referendum on them can be held in the fall.

"If there was a glimmer of hope that if we waited until Friday, or Monday, or Tuesday, or Wednesday of next week, that we could get the better solution with Republicans votes, obviously we wouldn't be taking this up," said Assembly Speaker John A. Pérez (D-Los Angeles). "But that glimmer isn't out there right now."

This is the first budget deadline since voters empowered the Legislature to pass a spending plan with a simple majority vote and threatened to take away their pay for being late. If approved by both houses Wednesday, the Democrats' plan would mark only the second time lawmakers have met the constitutional deadline in a quarter-century.

"It's essential that we deliver on the promise of an on-time budget," Pérez said. The majority party, he said, must "continue to be responsible actors in the absence of anybody else."

Staffers in his office said the car registration fees in the Democrats' plan would rise by $12 annually, and local sales tax rates would climb by a quarter-cent. The online sales tax would extend to retailers with no physical presence in California, such as Amazon.com and Overstock.com, and would bring in an estimated $200 million. Property owners in fire-prone areas would pay $160 million in firefighting fees.

More than $2.8 billion in school and community college payments would be bounced to the next fiscal year — reversing the governor's proposal last month that they be made sooner — and about $540 million in UC payments also would be delayed.

About $150 million would be cut from state courts. And $500 million would be taken from local law enforcement support, unless Republicans approve a separate vehicle tax extension to maintain the program.

Republicans scrambled to respond Tuesday as word of the Democrats' last-minute plan spread through the Capitol.

Assemblyman Kevin Jeffries (R-Lake Elsinore) fired off a letter to the rules committee demanding a hearing on his legislation to require that all bills be in print at least 24 hours before a vote. Sen. Sam Blakeslee (R-San Luis Obispo) said he would offer a proposal to tighten the provision of the law that requires legislators to forfeit pay when budgets are late to ensure that gimmick-laden plans don't qualify.

Republicans also seized on news from state Controller John Chiang on Tuesday that California had collected $408.3 million more in taxes in May than anticipated. Chiang's announcement "makes it even more clear that tax increases are not needed to close the budget gap," said Sabrina Lockhart, a spokeswoman for Assembly minority leader Connie Conway (R-Tulare).

Already, Brown's spending proposal projects $6.6 billion in unexpected revenue, which helped shrink the deficit to about $10 billion. Democrats said they would factor $800 million more into their budget, given the controller's latest figures.

They also are including $1.7 billion that would come out of the state's redevelopment agencies. They cannot eliminate the redevelopment program, as Brown wants, without GOP support; they plan to pressure the agencies to part with the money voluntarily.

John Shirey, executive director of the California Redevelopment Assn., called that proposal "unconstitutional, plain and simple."

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