California Lawmakers Close Budget Deficit on Rosy Projections
{{#rendered}} {{/rendered}}June 28: State Senate President Pro Tem Darrell Steinberg, D-Sacramento, second right, confers with Senate Minority Leader Bob Dutton, R-Rancho Cucamonga, second left, Repulican Senate Caucus Chief of Staff Kevin Bassett, left, and Sen. Ellen Corbett, D-San Leandro, at the Capitol in Sacramento, Calif. (AP)
SACRAMENTO, Calif. -- Exercising their new majority-vote authority, California Democrats on Tuesday closed the remainder of what had been a gaping budget deficit by relying on a combination of deep spending cuts, optimistic revenue projections and new fees that are sure to be challenged in court.
The Legislature sent a nearly $86 billion spending plan for the fiscal year that begins Friday to Gov. Jerry Brown. He was certain to sign it because he struck a compromise with fellow Democrats days earlier, after failing to get Republican support for tax increases.
The package closed the remaining $9.6 billion deficit of what had been a $26.6 billion shortfall at the beginning of the year.
{{#rendered}} {{/rendered}}Both parties were displeased at the final package, which was passed entirely with Democratic votes.
Republicans criticized the projections of greater-than-expected tax revenue and questioned the legality of new fees. Democrats were angry about having to make deep cuts to higher education, welfare, social service programs, state parks and other core state services.
"This plan is best described as making the best out of a bad situation," said Assemblyman Bob Blumenfield, D-Sherman Oaks, chairman of the Assembly Budget Committee.
{{#rendered}} {{/rendered}}The budget passed the Assembly first on a 51-25 vote and then got the bare majority needed in the Senate: 21 votes.
The Legislature acted with unusual haste to pass a budget before the start of the fiscal year on July 1. An initiative passed by voters last fall allows Democrats to pass a budget with a simple majority vote but also halts lawmakers' pay if they miss their June 15 constitutional deadline to pass a balanced budget.
Democrats had passed a budget by the deadline, but the state controller determined it was not balanced and unrealistic.
{{#rendered}} {{/rendered}}Increasing taxes still requires a two-thirds majority vote in the Legislature, and, therefore, at least some support from Republican lawmakers. Unable to get that support, Democrats and Brown relied on a grab bag of options to craft a general-fund spending plan that represents a dramatic drop from pre-recession levels.
Total general funding spending was $103 billion in 2007.
The budget package included bills that will raise fees, fund a prison realignment and restructure the state's 400 redevelopment agencies so that more tax money flows to schools. If the projected higher tax revenue fails to materialize, the budget plan called for immediate cuts to schools, higher education and social services.
{{#rendered}} {{/rendered}}Democratic lawmakers and Gov. Jerry Brown had hoped to extend temporary increases passed two years ago to the state sales, personal income and vehicle taxes to help close the state's budget deficit. Brown wanted the Legislature to call a special election so voters could decide the question, but he could not persuade any Republicans to support it.
The increases to the sales and vehicle taxes will expire Thursday, while the increase to the personal income tax rate expired in January. In all, the state Department of Finance estimated the end of the temporary tax increases will save the average Californian about $260 a year.
Republicans had wanted reforms to the public pension system, a state spending cap and an overhaul of state business regulations, but in the end could not close a deal with the governor. On Tuesday, they criticized the Democratic budget plan, especially its reliance on the assumption that general tax revenue will rise $4 billion more than expected in the coming fiscal year.
{{#rendered}} {{/rendered}}"It is woefully short on reforms," said Assemblyman Jim Nielsen, R-Gerber. "There's some creative work in here -- creative in terms of determining how much new money might be available."
Several Republicans said the assumptions of greater-than-expected tax revenue in the coming fiscal year undermined the Democrats' pleas for a continuation of the higher taxes. In addition to the $4 billion projected in the latest budget plan, Brown assumed $6.6 billion in higher revenue in the proposal he submitted last month.
"If we now have the revenues that we needed at the beginning of the year, why is it we keep going back to the voters asking for more?" said Sen. Bob Huff, R-Diamond Bar, vice chairman of the Senate Budget Committee.