Budget update: No action, but lots of posturing
Published: August 8, 2008
Analysis from CSBA’s Governmental Relations Department
More than five weeks into the fiscal year, Democrats and Republicans remain at odds over fundamental aspects of the state budget: revenue increases proposed by Democrats, and another rainy day fund and an additional state spending cap favored by Republicans and the governor. Also still on the table is a proposal for additional borrowing, to be secured by proceeds from the state lottery.
A spending cap and any changes to the lottery would have to be approved by voters in November; the cutoff date for getting those items on that ballot keeps shifting, but Aug. 16 appears to be the absolute deadline because of the time needed to print the ballots and other practical considerations. That makes Aug. 16 a key date in the negotiations to get enough Republican votes to muster the two-thirds vote needed in each house for a budget.
The only substantive action so far remains the Senate-Assembly Conference Committee’s approval in July of a spending plan that would provide $59.1 billion for education, including restoration of the categorical cuts proposed by the governor and a 2 percent cost-of-living adjustment. This increase over the $ 56.8 billion for education proposed in the governor’s May Revision relies on $8.2 billion in increased revenues.
This week’s blow-by-blow
There was a flurry of activity related to the budget this week, but it’s unlikely that any of it brought us closer to a deal. In fact, Senate President pro Tem Don Perata, D-Oakland, declared in a press conference that the Legislature is at an impasse.
The week began with more fallout over the governor’s signing of an executive order to reduce state workers’ pay to the federal minimum wage of $6.55 an hour. At a Senate Governmental Organizational Committee hearing on the order, state Controller John Chiang reiterated his position that he would not reduce the wages and said such an action may not be possible, given the difficulty of reprogramming the state’s massive payroll system. (In a tongue-in-cheek reply, the governor’s finance director, Mike Genest, offered up computer programmers from his department to help the controller.) Chiang further stated that the state’s cash flow was improving slightly, with sufficient funds to make payments into October, making the pay cut unnecessary.
Next came a proposal from the governor to increase the state sales tax by 1 percent for three years, with the rate then to be reset a quarter-cent below the current 6.25 percent. (Cities and counties often tack on an additional local sales tax.) Support for this proposal was hard to find. The temporary nature of the tax, and the prospect for putting off a resolution of the state’s structural revenue problem for three years, was of particular concern to some. The different legislative thresholds for raising and lowering taxes also complicate the proposal: Tax increases require a two-thirds approval, but repeal takes only a simple majority.
In an additional bid to turn up the pressure, the governor also told legislators he would veto all bills that are sent to him until a budget is in place.
‘No end in sight’
On Tuesday, Senate leader Perata expressed his pessimism about the status of the budget, declaring that there is “no end in sight.” Perata blamed the Republicans for failing to provide a comprehensive spending plan. Senate Republican Leader Dave Cogdill, R-Modesto, took exception to this and in turn blamed Democrats for ignoring GOP proposals to stimulate the economy or make meaningful reforms. Perata also warned Democrats in his house not to plan on attending the Aug. 25-28 Democratic National Convention in Denver, signaling that he now expects the stalemate to continue through then.
On Thursday, there was a debate on the Assembly floor about a lack of debate on the budget on the Assembly floor. Republicans expressed their frustration at not having a discussion on their spending cap proposal, and Democrats responded that they can’t have a debate on the budget until the Republicans put forth a complete spending plan. After a ruckus over parliamentary procedures, Assembly Speaker Karen Bass, D-Los Angeles, unsuccessfully urged six or seven Republicans (the number needed to join Democrats for a two-thirds vote in the chamber) to come to her office and work out an agreement. Republican leader Mike Villines, R-Clovis, instead urged a hearing on Assembly Constitutional Amendment 19, the spending cap proposal he’d put forth on Wednesday.
A motion for the Assembly to recess passed without Republican support. This week’s words and deeds seem to bring to an end the goodwill that was declared at the beginning of the legislative leaders’ budget negotiations.
Constituent pressure needed
Activities continue in many legislative districts, with CSBA and its partners in the Education Coalition encouraging their members to contact their legislators to urge them to support the Conference Committee budget. CSBA regional directors, for example, have participated in recent local media events in Monterey, Stockton, San Diego, Bakersfield, Palm Springs and Modesto. It’s crucial that legislators hear often from their constituents; express your support for a budget deal that protects public education.
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