Calif. Dems Try to Pass Budget Without GOP Votes

Calif. Dems Try to Pass Budget Without GOP Votes

Thursday, December 18, 2008 4:00 AM

SACRAMENTO, Calif. -- Democrats were trying to break a weekslong impasse over California's multibillion-dollar deficit by making an end run around Republicans, offering a complicated mix of revenue cuts and increases that they said would raise billions without requiring two-thirds majority typically needed to raise taxes.

Meanwhile, a state panel that oversees loans for public works raised another alarm in the state's budget crisis by voting to stop financing nearly all infrastructure projects in California, halting nearly $4 billion in loans for everything from freeway interchanges and carpool lanes to classrooms.

Treasurer Bill Lockyer, the board chairman, had warned the Legislature last week that the unprecedented halt in funding would be necessary if lawmakers did not immediately address a $14 billion deficit in the fiscal year that ends in June. The hole is forecast to grow to $42 billion over the next 18 months.

Lockyer estimated previously that the frozen projects could cost California 200,000 jobs in every part of the state. Officials were still calculating the effect of Wednesday's decision.

The Democratic proposal would address $18 billion of the state's shortfall over the next 18 months through a scheme that would cut some taxes and raise others, as well as slash more than $7 billion in spending on health, education and prisons.

Democratic legislative leaders had planned to vote Wednesday night on the plan, but said they were forced to delay their sessions because of difficulties involved in drafting the legislation.

Assembly Speaker Karen Bass, D-Los Angeles, said she believes the plan could pass without the two-thirds majority typically needed to raise taxes because it would not change the amount of tax coming into the state's overall budget.

The proposal they made Wednesday would eliminate an 18-cent-a-gallon excise tax on gas and a fluctuating sales tax on gas, replacing them with a 39-cent-per-gallon fee. Democrats also were seeking to raise the state sales tax by 3/4 of a cent, tax oil produced in California, add a 2.5 percent surcharge on state income taxes and force independent contractors to pay taxes upfront.

Jon Coupal, president of the anti-tax Howard Jarvis Taxpayers Association, said his group stands ready to challenge the Democrats' plan should it pass, and Assembly Minority Leader Mike Villines, R-Clovis, said his party would consider joining in a lawsuit.

Coupal said taxpayers would recognize it as "a ploy" to raise taxes.

Republican and Democratic lawmakers have been locked in a stalemate over how to deal with the deficit since Republican Gov. Arnold Schwarzenegger first called them back into a special session on Nov. 5. Republican opposition to any tax increase has been the main sticking point; three GOP votes are needed in each house to get a two-thirds majority.

Talks broke down with Schwarzenegger last week after he blamed Republicans for coming to meetings unprepared. Republicans responded with their own plan Tuesday, calling for deeper cuts to education and social service programs than Democrats propose.

Senate Minority Leader Dave Cogdill, R-Modesto, said Wednesday that the decision to freeze public works financing "doesn't make the case for raising taxes."

The three-member Pooled Money Investment Board voted 3-0 Wednesday not to lend money for an estimated 2,000 infrastructure projects statewide through June, saying the state's finances are so grim that California can no longer afford to fund them.

The value of those projects overall totals $16.2 billion. They include work on highways, parks, schools, levees, hospitals and more.

"We don't have the money to loan, so we're stopping the projects," Lockyer said.

California is expected to run out of operating cash in February, creating another drain on the pooled fund that makes loans available for construction projects.

Schwarzenegger said he was sad that California would lose thousands of jobs and halt projects when he and other leaders have been championing infrastructure investment as a way to boost the state's economy.

"It's terrible the kind of pain that the Legislature is causing to the people of California," Schwarzenegger said. "They were sent to Sacramento to solve problems, not create them."

The projects affected include $727 million in repairs and new classrooms for California schools, including some emergency repairs; levee safety improvements in four counties; and interchanges and carpool lanes on several California highways. Many of those projects have other revenue sources and it was unclear whether some may be able to go on without state aid at least temporarily.

The board agreed to meet again in early January to possibly provide about $500 million to keep the neediest projects going.

State finance officials said California hasn't been able to borrow money for months, partly because of the tight credit market but mostly because elected leaders have not been able to address the fiscal mess.

California has the lowest credit rating of any state in the nation and already faces another potential downgrade by Standard & Poor's.

http://www.newsmax.com/us/california_bu ... 63143.html

Thanks Airbornne putting this on my site to help Chuck DeVore defeat Barbara Boxer in 2010.

Go Get'em Gogo

Arnold was talking today more like the 'old' Arnold we voted into office. We'll see if he can hang tough. As always the unions threaten and imo they are the major problem in this state since many of the legislators are beholding to them. The party is over here....they've spent us into the ground and the state took in more revenue this past year than ever with less people??? This state is driving many of us bonkers!
~~~

Schwarzenegger Orders Unpaid Leave for State Workers (Update2)


By Michael B. Marois

Dec. 19 (Bloomberg) -- California Governor Arnold Schwarzenegger today ordered all state workers to take two days of unpaid leave each month to conserve money amid a record budget deficit and a legislative impasse over how to fix it.

The furloughs will begin in February and will last through June 2010, Schwarzenegger said in an executive order. He also ordered all departments to cut 10 percent of their workforce costs, through firings if necessary.

“Every California family and business has been forced to cut back during these difficult economic times, and state government cannot be exempt from similar belt tightening,â€

Sunday, December 21, 2008
Calif. tax hike passes through loophole
David M. Dickson

California Republicans and taxpayer groups are vowing to go to court and initiate a referendum to halt nearly $10 billion in tax increases Democrats passed in a special session Thursday night.

In an extraordinary parliamentary maneuver, California Democrats circumvented a constitutional provision requiring a two-thirds vote in the state legislature to raise taxes by using their simple majority.

In 1978, California voters passed Proposition 13, which requires a two-thirds vote in the Assembly and the Senate to raise taxes. Until Thursday, the state legislature never raised taxes without reaching that threshold.

Even though Democrats enjoy large majorities in both bodies, a united Democratic front would still need the votes of three Republicans in each chamber to reach a two-thirds majority. Republicans in the legislature, who offered a budget plan that would have reduced state spending by $22 billion, were united in their opposition to any tax increases.

The Democratic plan attempts to exploit an arcane loophole that permits the legislature to pass a tax bill with a simple majority vote if the measure does not raise more tax revenue.

The gambit involved several steps.

First, the Democratic bill would eliminate some current fees, such as those applying to gasoline. Then it would impose several tax increases, including a 0.75-percentage-point increase in the state sales tax, a 9.9 percent tax on oil production and a 2.5 percent surcharge that taxpayers would owe on next year's state income taxes. Republicans have called the surtax "a tax on taxes."

The proposal would then re-impose gas fees at a much higher level and earmark the gas revenue for transportation projects.

State law permits the legislature to raise fees by a simple majority vote. However, the net effect would be an increase of $9.3 billion in state revenues.

Gov. Arnold Schwarzenegger, a Republican who advocated raising the state sales tax by 1.5 percent, has promised to veto the $18 billion budget package, which also included $7 billion in spending cuts that would affect schools, health care, grants to local governments and other programs.

Mr. Schwarzenegger did not complain about the tax increase or the tactics used to pass them. Rather, the governor, who has said the state's projected $42 billion deficit over the next 18 months threatens California with "financial Armageddon," objected to the fact that the package was not "exactly what I recommended [for my] recovery package." He also was upset because the Democratic bill did not reduce the state work force and welfare programs by the $1.2 billion he recommended.

The Democratic package would reduce the projected 18-month deficit by less than half, while the Republican plan would cut the $42 billion shortfall by a bit more than half.

"In a fiscal crisis, with Republicans repeatedly proving unwilling to participate with us responsibly. Democrats are simply left with no choice but to address the problem as much as possible through majority-vote bills that do not require Republican support," said Assembly Speaker Karen Bass of Los Angeles, where the sales tax would rise to 9.5 percent.

On the floor of the state Senate, Republican leader Dave Cogdill delivered what he said was the Democrats' holiday greeting to California taxpayers: "We certainly hope you got most of your Christmas shopping out of the way, because you've got another big bill coming."

California, which is now tied with Louisiana with the nation's lowest rating for its state bonds, is expected to run out of money by February if the deficit is not addressed. Credit-rating agencies have said California bonds will likely drop another notch. A 30-year California bond was already trading below 80 cents on the dollar Friday.

The continuing credit crisis has made it difficult for California to raise funds in the bond market. As a result, a state panel last week suspended financing of nearly $4 billion worth of state infrastructure projects.

Republican legislators and taxpayer groups immediately promised to block the Democratic-passed legislation by going to court and by collecting signatures for a statewide referendum. Once enough signatures (434,000) are collected to qualify the referendum for a vote, the bill's big increase in gas taxes would be suspended.

Members of the Howard Jarvis Taxpayers Association, the anti-tax group named for the man who spearheaded Proposition 13 three decades ago, have said they will quickly gain enough signatures by petitioning motorists at gas stations.

www.washingtontimes.com