Budget taken up and defeated 

A state budget for 2005-06 went to both houses for a floor vote on June 15, the constitutional deadline for the Legislature to act. Although it needed just eight Republican votes to pass, however, the bill was defeated along party lines: 47 to 32 in the Assembly and 25 to 13 in the Senate.

Democratic leaders hoped to avoid a drawn-out battle over the budget this year, which might only antagonize the electorate and add fuel to the fire of the governor’s special election agenda – primarily the so-called “Live Within Our Means” act, which would allow the governor to cut the state budget anytime his advisers felt revenues were falling behind spending. The initiative would eliminate many Proposition 98 guarantees to schools, including removing the minimum funding level, allowing mid-year cuts and purging the state’s obligation to pay amounts owed from past years.

At the end of May, Democratic leaders came out strongly in favor of restoring $3.1 billion to K-12 education – if necessary, by raising taxes on the wealthy. Republicans, however, flatly rejected any tax increase and argued that the state cannot afford to increase education funding. Speculation in the Capitol is that Republicans will try to delay a successful vote to increase public sympathies for the governor’s budget initiative. Senate Republican Leader Dick Ackerman told reporters in May that Republicans are prepared to hold up the budget for a long time.

To avoid a prolonged fight, Democratic leadership then changed its approach and offered a budget that was very close to the funding levels the governor proposed in the May Revise. Nevertheless, the compromise budget advanced by the Budget Conference Committee failed to receive one Republican vote in either house. Republicans contend that even though the proposal is similar to the governor's, it does not address the structural deficit and uses one-time funds to expand programs. They specifically objected to rejecting the governor’s proposal to shift the state’s contribution to the State Teachers Retirement System onto schools, which would be a $469 million hit to districts. Assembly Bill 6, a separate proposal to increase taxes on the wealthiest Californians, was also defeated in the Assembly.

Democratic leadership appears to have a larger strategy regarding Proposition 98, as Senate Pro Tem Don Perata and Assembly Speaker Fabian Núñez told reporters following the Conference Committee’s final vote to “stay tuned” to what is to come for education. Both leaders have convened meetings with leaders in the Education Coalition to discuss the state’s education needs and budget strategies.

The budget approved by the Conference Committee does not include many of the governor’s proposals. Besides the STRS shift of $469 million, committee’s budget also rejects the governor’s proposals to create several new programs using one-time settle up funds. Instead, the funds (in the amount of $247.5 million) will be used to pay mandate claims for prior years. The committee also increased funding for deficit reduction to a total of $406 million.

The Conference Committee budget also retains the AB 3632 mandate on counties to provide mental health services to special education students, and adds $220 million ($120 million of that in one-time money) to the program.

The Legislature can take another vote on the budget bill – Senate Bill 77 – or send it back to the Conference Committee for amendments.