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Brown, Democrats reach budget deal without taxes

Republicans decry the plan, which relies on a revenue windfall that, if it fails to pan out, will trigger big cuts.

June 28, 2011|By Shane Goldmacher and Anthony York, Los Angeles Times
  • The Democratic budget plan is based on an expectation of $4 billion in extra revenue in addition to $6.6 billion in unexpected revenue that was forecast last month. "That's nearly $11 billion in new revenue that the Democrats assume will magically appear," said Senate Budget Committee Vice Chairman Bob Huff (R-Diamond Bar).
The Democratic budget plan is based on an expectation of $4 billion in extra… (Associated Press )

Reporting from Sacramento — Abandoning negotiations with Republican lawmakers, Gov. Jerry Brown struck a deal with Democrats for a budget that assumes billions of dollars in fresh revenue — but could lead to major service cuts if the money doesn't materialize.

The proposal, which Democrats said they would pass as soon as Tuesday, does not include the renewed tax hikes that the governor had been pushing to put before voters. But it does contain some charges that Democrats believe they can legally raise without GOP support.

Car owners, for example, would pay $12 more per year to register their vehicles. Residents of wildfire-prone zones would pay a new fee for state firefighting efforts. Other revenue would come from forcing online retailers such as Amazon.com to collect sales tax on purchases by California residents.

The budget is partly based on an expectation of an extra $4 billion in income. Without that cash, steep cuts to education and other state services would kick in, including a reduction in schools spending that could shorten the instructional year by seven days in some districts.

"In case we are overoptimistic, we have severe trigger cuts," said Brown, who has pledged not to sign a budget that pushes California's debt further into the future. "Those are real."

But Republicans immediately zeroed in on the projected windfall, which would be in addition to $6.6 billion in unexpected revenue that was forecast last month.

"That's nearly $11 billion in new revenue that the Democrats assume will magically appear," said Senate Budget Committee Vice-Chairman Bob Huff (R-Diamond Bar). "That's a wand that Harry Potter would be proud to wield."

Democrats said they would pass the latest budget with a simple majority vote, and the governor's signature would set the stage for lawmakers to be paid again. Their salaries and daily allowances have been docked since they passed an initial spending plan June 15. State Controller John Chiang decided that plan — which Brown quickly vetoed — was unbalanced and violated a new law that punishes legislators for late budgets.

Payment will resume if Brown signs the new one and the Department of Finance finds it balanced, Chiang spokesman Garin Casaleggio said Monday.

The new package retains elements of the earlier one, relying on some accounting maneuvers, such as bumping billions of dollars in school payments into the next budget year.

It also includes substantial program cuts that would take effect regardless of whether the projected revenue leap occurred. Courts and universities would have their funding curtailed, and Brown would still seek to dismantle the state's redevelopment agencies, which use tax money to spruce up blighted areas. Redevelopment boosters immediately vowed to sue.

The governor acknowledged that after months of often-halting talks with GOP lawmakers, he couldn't "get any Republican support" for his plan for a fall tax referendum and a bridge of tax extensions to balance the budget until then.

The governor said that "at end of the day, there just was not a willingness to sign onto [tax] extensions no matter what we did."

Republicans had demanded changes in pension, regulatory and spending policies in exchange for supporting an election. No such moves are included in the latest package, and GOP lawmakers accused the majority party of bending to special interests.

"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," said a joint statement by four Republicans state senators who had been negotiating with Brown: Tom Berryhill of Modesto, Anthony Cannella of Ceres, Bill Emmerson of Hemet and Tom Harman of Huntington Beach.

Senate President Pro Tem Darrell Steinberg (D-Sacramento) dismissed Republicans as "the gang that chooses not to govern."

Democrats said $1.2 billion in unexpected revenue collected so far in May and June was the basis for their $4-billion assumption. But if sufficient new money doesn't appear to be on the way by January, prisons and the University of California and Cal State University systems would each lose $100 million. Programs for the sick, disabled and poor would be cut by twice that amount.

If those reductions fail to balance the books, K-12 schools would face a $1.5-billion cut and be allowed to shorten the school year by up to seven days to achieve it.

Many cutbacks in the plan were signed into law months ago. In March, lawmakers slashed billions from welfare, the courts, universities and programs for the elderly, blind and disabled. Many state park closures have been announced, and some cash grants for the poor will be slashed this week.

A total of $350 million would be cut from state courts, which California Supreme Court Chief Justice Tani Cantil-Sakauye said marked Monday as "a sad day for justice in California."

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