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June 17, 2011 > Democrats set to act alone on California budget

Democrats set to act alone on California budget

By Don Thompson, Associated Press

SACRAMENTO, Calif. (AP), Jun 15 - The Legislature took up a budget proposal Wednesday offered by majority Democrats, but the plan was widely seen as merely a stopgap to meet the constitutional budget deadline.

Democrats hoped to pass their budget plan on majority votes in the Assembly and Senate, allowing lawmakers to continue receiving their salary and per diem payments. An initiative approved by voters last year punishes lawmakers by stopping their paychecks if they miss the June 15 deadline.

Even as they offered a detailed proposal to close California's remaining $9.6 billion deficit, Democratic leaders intended for the governor to continue negotiating with Republicans. The GOP must provide two votes in each legislative house to enact the budget Democrats and Gov. Jerry Brown really want.

That hoped-for budget includes a temporary extension of expiring tax increases to fund schools in the coming fiscal year and an authorization for a special election this fall so voters can decide whether to extend the tax hikes for an even longer period.

``The governor pushed for a better plan and we support his plan,'' Senate President Pro Tem Darrell Steinberg said as he opened floor debate on the Democratic proposal.

He said Democrats wanted to continue working with Republican lawmakers to see if they will provide enough support to go to the ballot with the tax questions later in the year. If not, however, Steinberg said Democrats would expect Brown to sign the budget they are expected to pass Wednesday.

``I would love nothing more than to come back sometime between June 15 and July 1 and pass Plan A,'' Steinberg, D-Sacramento, told reporters earlier in the day.

July 1 is the start of the next fiscal year. The next two weeks are crucial because the last of the tax hikes passed in 2009 - increases to the sales and vehicle taxes - expire June 30.

Republican lawmakers have not agreed on the tax matters and say they want reforms to public employee pensions, a spending cap and regulatory changes to help California businesses. They criticized the Democrats for trying to pass a budget that was released just hours before the floor sessions and without Republican support.

``What we have before us is a Democrat budget that reflects a Democrat vision,'' said Sen. Bob Huff, Senate Republicans' lead budget negotiator. ``Clearly, the Democrats didn't want to go down this path to reform.''

Democrats had tried to scare voters with the possibility of an all-cuts budget, only to lose their nerve and use gimmicks and accounting maneuvers to preserve programs, said Huff, of Diamond Bar.

Steinberg responded to Republican complaints by saying the Legislature would pass comprehensive pension reform and take ``real steps'' to overhaul the state's business regulations later in this year's legislative session.

Under the Democratic plan being considered Wednesday, education would see $3 billion less in state funding than Brown called for when he released his revised budget proposal in May.

Steinberg said the majority party's plan also includes more than $500 million in cuts to state programs to help close California's remaining $9.6 billion deficit.

It also relies on tax and fee increases Republicans say will be challenged in court if they are enacted without a two-thirds vote. Those include increasing car registration fees and extending a quarter-cent sales tax that otherwise would expire next month, aides said.

Democrats still hope Republicans will agree to ask voters later this year to extend temporary tax increases, Steinberg said. The main debate revolves around asking voters to extend the increases to the personal income, sales and vehicle taxes that were approved two years ago. The sales and vehicle tax hikes will expire June 30, while the income tax increase expired in January.

So far, Democrats have been unable to line up the four Republican votes needed to set a special election or keep the taxes in place until voters have their say.

A Field Poll released Wednesday shows 52 percent of registered voters support a renewal of those taxes, with 44 percent opposed. That's down from 61 percent support for the tax extensions indicated in a Field Poll taken in March.

Brown did not take a position on the Democratic proposal being debated Wednesday. His spokesman, Gil Duran, said the governor would not comment until the Legislature sends him a budget plan.

Brown and Democratic lawmakers already have reduced by more than half an original budget deficit of $26.6 billion, primarily through spending cuts. Democrats have little appetite for making even deeper cuts in social services, health care, parks and other programs.

Their plan being considered Wednesday avoids even deeper cuts by reducing the temporary 1 cent increase in the state sales tax to a quarter-cent, thereby retaining some additional tax revenue. It would boost the state's vehicle registration fee by $12, impose a surcharge on rural residents for the cost of fighting wildfires and require online retailers to collect state sales tax.

The $12 registration fee would be a charge for services provided directly by the Department of Motor Vehicles. It is separate from the increase in the vehicle license fee that is scheduled to expire June 30.

The rural surcharge would assess an annual fee of $150 per home for those whose fire protection is provided by the California Department of Forestry and Fire Protection.

Democrats say they can also impose those fees with a simple majority vote - rather than the two-thirds needed for tax increases - because they would be considered direct fees for a service.

The Democratic plan also revives a proposal pushed by former Gov. Arnold Schwarzenegger to sell 11 state properties and lease them back from the new landlords but makes important changes to the previous Schwarzenegger proposal, primarily by allowing the state to repurchase the buildings when the lease expires.

Democrats also assume higher tax revenue in the coming fiscal year from a recovering economy.

The budget asks Republicans to provide the two-thirds majority needed to extend the increase in the state vehicle tax to generate $500 million for local law enforcement programs. Without the extension, local governments would lose the money.

Democratic leaders wanted the Legislature to renew the vehicle and sales tax increases directly until the special election - and perhaps throughout the entire coming fiscal year - to provide funding stability for schools.

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