Monday, August 18, 2008


• from the AP: "California is the last state in the nation on a July fiscal calendar to enact a budget. " The LA Times editorializes: "The state budget is past due, so why are lawmakers spending time raising big bucks from donors?" At a party Sunday afternoon a friend opined that "all the lawmakers, Republican and Democrat alike, should be tossed out".  4LAKids would like to second the motion.


Assembly Democrats Budget Bill Fails

BY Matthew Yi & John Wildermuth, San Francisco Chronicle Staff Writers

California Governor Arnold Schwarzenegger file photo. Fre...

Monday, August 18, 2008 04:00 PDT - Sacramento -- A revised budget proposal by Assembly Democrats failed Sunday night in the lower house of the state Legislature during an unusual weekend session that quickly morphed into nearly five hours of finger-pointing that didn't end the 48-day budget stalemate.

The 45-30 vote fell well short of the 54 "yes" votes needed to satisfy the two-thirds majority required. And the lengthy session gave no indication the Democrats would get additional Republican votes needed to pass their spending plan.

"I'm definitely disappointed," said Assembly Speaker Karen Bass, D-Baldwin Vista (Los Angeles County). "But now that everyone has aired their feelings, (today) we can get back to work."

The speaker suggested it is time for Republican Gov. Arnold Schwarzenegger to "turn up the heat" in an effort to reach a compromise.

Aaron McLear, a spokesman for Schwarzenegger, said the governor will continue to push lawmakers to pass a bipartisan budget that he can sign.

Assembly Republican leader Mike Villines from Clovis (Fresno County) said he thought Sunday night's debate would help push the negotiations forward, but added: "What's important now is that they know we're not willing to (vote for) taxes."

Democrats presented what they billed as a compromise proposal that would close the state's $15.2 billion budget gap with a combination of tax increases and spending cuts.

"Nothing in this budget is easy," said Assemblyman John Laird, D-Santa Cruz. "I believe the cuts go too far in some instances, and I'm unhappy to see the reinstatement of the higher corporate tax rate and other taxes. But no one has put together a plan to balance the budget without significant new revenues."

But Republicans, holding tough to their "no new taxes" pledge, said the plan to raise $6.7 billion in new revenue by boosting taxes on Californians with taxable income of $321,000 or higher, increasing the corporate income tax and suspending some business tax breaks was never going to pass.

The proposed budget "runs the risk of putting California on the brink of bankruptcy, along with many of its citizens and businesses," said Assemblyman Roger Niello, R-Fair Oaks (Sacramento County). "We have a $15 billion deficit, thanks to the irresponsible budget choices by Democrats in this Legislature, spending on new programs and bigger government."

True compromise

Speaker Bass argued that the budget represented a true compromise. It dealt with many of the concerns of Schwarzenegger, keeping a number of the cuts the governor proposed, she said, as well as agreeing to make changes in the state lottery that would allow the state to take $10 billion for repaying state debts in fiscal years 2009-10 and 2010-11.

"We are ready with a compassionate, balanced budget that meets the governor's demands and will keep our economy strong, maintain our commitment to education and protect the state's most vulnerable citizens," she said in a statement before Sunday's session.

But Republican lawmakers argued that the Democrats' plan to double the size of the state's "rainy day fund" budget reserve wasn't anything like the spending cap the governor had demanded.

The Democratic proposal says that any revenue more than 5 percent above the state budget estimates would be moved into the reserve fund, until that fund reached 10 percent of the state budget. Any money beyond that could only be spent on one-time expenditures, such as debt repayment and one-time tax cuts.

GOP wants spending limit

Republicans called the plan meaningless, saying that the rules also allowed the Legislature to transfer the money out of the reserve fund on a simple majority vote.

"We need a spending limit to force the state to save money," said Assemblyman Chuck DeVore, R-Irvine.

The Republicans had proposed a state constitutional amendment to impose a "hard" budget spending cap that would have only allowed the budget to rise at the combined rate of the cost of living rate and the state's population growth, but it was killed in committee Friday in a party-line vote.

Republicans argued that the majority Democrats had virtually ignored them in putting together the budget plan, pushing aside their concerns and presenting them with the final budget proposal only a day before Sunday's session. But Democrats complained that the Republicans were far more willing to complain about the budget than offer suggestions of their own.

'It's time to get real'

"If the cuts we've proposed aren't deep enough, what cuts would you make?" asked Assemblyman Mike Feuer, D-Los Angeles.

But amid the name-calling and partisan rhetoric, there were signs that members on both sides of the aisle had had enough and wanted to see a serious effort to find a budget plan that both parties could live with.

"We need to be at the table right now," Feuer argued. "It's time to get real, it's time to get practical, it's time to get it done."

"We're sitting today giving a performance," agreed Assemblywoman Bonnie Garcia, R-Cathedral City (Riverside County). "I want to come up here and be a responsible adult. Let's just fix this."

With Sunday's failed vote, a new state budget could be a long time coming. The state Senate still hasn't weighed in with its own budget plan, but few are optimistic that any agreement is in sight.

Assemblywoman Loni Hancock, D-Berkeley, said she was "sick at heart at what we've had to cut," and suggested that Democrats might wait until after the November elections to reach a budget agreement, after Democrats had won some more Republican seats.

"That may be the only alternative," she said. Republicans "have not made any moves to be productive and resolve this crisis."

What's on the table

The new Assembly budget proposal has a number of changes from the spending plan approved July 17 by a joint Assembly-Senate conference committee. They include:

Budget reform: A constitutional amendment, which goes on the November ballot, would double the size of the state's "rainy day" reserve fund to 10 percent of general fund revenues.

Lottery: A November ballot measure would allow the state to change the way it operates the lottery, bringing the state at least $10 billion extra, beginning in fiscal 2009-10.

Revenue: Raises the tax rate for Californians with joint taxable income over $321,000 to 10 percent and to 11 percent for those making more than $642,000. Increases the corporate tax rate, but drops plans to roll back dependent credits for high-income taxpayers.

Cuts: Trims the prison reform plan by $270 million and moves public transit funds to pay for home-to-school bus transportation.


Calif. GOP lawmakers kill Dem's $6.6B tax package

By JUDY LIN – the associated press

August 18 - SACRAMENTO (AP) — California's Republican lawmakers on Sunday rejected a Democratic proposal for $6.6 billion in tax increases on the wealthy and corporations despite an offer to boost the state's rainy day fund. The failed vote now pushes California's budget impasse into its eighth week with no compromise in sight.

The 45-30 vote in the state Assembly was the first since the state began its new fiscal year July 1 without a budget. It came after four hours of debate during which 49 of the Assembly's 80 members spoke.

Democrats offered a revised tax plan that's smaller than the $8.2 billion package they initially proposed last month. Under the new proposal, Democrats called for imposing top income tax brackets of 10 percent on joint filers making more than $321,000 per year, and 11 percent on the portion above $642,000. The highest tax bracket is currently 9.3 percent.

The proposal also called for a temporary suspension on the net operating loss deduction allowed for businesses. And it reinstates a higher corporate tax rate.

Assembly Speaker Karen Bass, D-Los Angeles, characterized the package as a compromise because it contained both cuts and new revenues. She said her plan reinstates tax brackets that were last in place under former Gov. Pete Wilson, a Republican, in the 1990s.

The Democratic leader said the proposal included a constitutional amendment for increasing the state's existing rainy day fund from 5 to 10 percent of general fund revenues.

It also includes measures that would allow the state to borrow $10 billion from future lottery funds to generate more revenue. According to the Democrats' plan, lottery proceeds would go toward retiring debt and filling the rainy day fund beginning in the 2009-10 fiscal year.

GOP members, whose votes are needed for a two-thirds vote, said they refuse to burden people with taxes while the economy remains weak. California's unemployment rate is now 7.3 percent, the highest in 12 years.

It was unclear whether the state Senate planned to take up the Democratic plan.

Last week Republicans proposed a spending cap that would have restricted growth to population change and inflation. The plan was rejected by Democrats, who hold a majority in both houses.

Gov. Arnold Schwarzenegger has been unsuccessful in leading budget negotiations. Democrats recently backed off from a temporary 1 percent sales tax Schwarzenegger proposed.

Schwarzenegger has tried to add pressure to the talks by laying off more than 10,000 state workers and trying to roll back wages for about 175,000 other employees. Some would receive the federal minimum wage of $6.55 an hour under Schwarzenegger's order, which is being challenged by state Controller John Chiang.

California is the last state in the nation on a July fiscal calendar to enact a budget.


Sacramento's fundraising follies: The state budget is past due, so why are lawmakers spending time raising big bucks from donors?

LA Times Editorial

August 18, 2008 - It was bad enough that members of the Senate and Assembly gave themselves a vacation in July, when the state budget was already past due. What really rankles is how they have spent their evenings since rolling back into Sacramento.

After each fruitless day in the Capitol, they walk across L Street to one of the clubby watering holes or hotel ballrooms or quasi-swank restaurants -- or maybe a few blocks farther afield to a more exclusive spot -- to rub elbows with, and pick up checks from, influential donors.

To parents worried that schools may be defunded, or to the typical Californian wondering whether sales taxes are about to go up, this is budget season; but for lawmakers, this is fundraising season. It means little to elected officials that they don't get their paychecks while the state budget is past due, as long as they scoop up the important stuff -- political cash. That's the flow that needs to be cut off pending an adopted-and-signed spending plan. Political fundraising by state legislators and the governor should be banned when the budget is past due.

The Times has called for a fundraising blackout during the weeks just before and just after the end of the legislative session, when lawmakers are in their final bill-passing crunch and the governor is mulling whether to sign or veto. Gov. Arnold Schwarzenegger even vowed that he wouldn't collect money during that period, because doing so smacks of backroom deal-making. Legislation should stand or fall on its own merits; decisions to pass or not pass, to sign or veto should not be made while big bucks are being dangled by special interests trying to secure action on bills.

Those same corporate and labor interests gather when budgets are overdue. Like miniature devils with little pitchforks, they swarm cocktail parties to prick Republicans seeking reelection and urge them not to give an inch on taxes. They prod Democrats eyeing higher office, pressing them to give up nothing on programs. The lawmakers don't mind. The budget can wait, as long as the donations keep coming.

It is extremely unlikely that senators and Assembly members would vote to cut themselves off. Even Schwarzenegger reneged on his pledge. But Californians have every right to insist. This state has far too many initiatives, but a ballot measure that bans fundraising while the budget is past due may be just the thing to jab lawmakers back into negotiations.

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