California Legislature Approves $92.1-Billion Budget

Lawmakers barely make the deadline to pass a state budget before their pay was affected, but details on cuts to social services still need to be worked out.
by | June 18, 2012

By Chris Megerian and Anthony York, Los Angeles Times

California lawmakers narrowly met a constitutional deadline to pass a state budget Friday, but their work is not finished as they continue a tug-of-war with Gov. Jerry Brown over just how deeply to cut social services in the $92.1-billion plan.

The budget -- pushed through the Legislature by Democrats without a single Republican vote -- makes fewer cuts to welfare and child care than the governor had sought and funds those programs through accounting maneuvers he opposes.

Once Brown receives the budget, he has 12 days to sign it into law, trim some spending unilaterally, or veto the entire plan and send it back to the Legislature for revisions.

On Friday, the governor signaled only that he would continue negotiating with Democratic leaders. The spending plan can be modified with follow-up legislation.

"We're still not there yet," said Brown spokesman Gil Duran. Passage of the budget seemed to be almost a non-event in the Capitol compared to years past -- in part because it was only a prelude to the battle at the polls in November, when Brown and his allies will try to persuade voters to approve billions in new taxes.

The budget passed Friday leaves a hole of more than $8 billion, which Democrats hope will be filled by temporary increases in both the state sales tax and income tax on the wealthy. If Brown's tax proposals are rejected, California's public schools would bear the brunt of the pain, and the academic year in some districts could be shortened by three weeks.

So far, public support for the tax measure has been wobbly. Republicans and anti-tax advocates have accused the governor of holding schools hostage in order to scare voters. But Brown and his fellow Democrats have insisted that the taxes are necessary because spending cuts alone can't mend the state's estimated $15.7-billion deficit.

"Nobody wants to scare the voters," Senate President Pro Tem Darrell Steinberg (D-Sacramento) said. "We all want, and the public wants, the highest-quality education, the best university and college system. And in order to have that, there needs to be a way to pay for it."

Republican lawmakers, who were sidelined during the budget process, called the document a sham and complained that it had been negotiated behind closed doors.

"This budget is full of borrowing and gimmicks," said Sen. Bill Emmerson (R-Hemet).

Balancing the budget -- always a challenge in a Capitol driven by partisan differences and awash in special-interest cash -- became even more difficult when Brown announced in May that the estimated deficit had grown far beyond the $9.2 billion he had projected in January.

The gap -- the result of a tax revenue shortfall, higher-than-expected spending and an increase in school funding under a voter-approved formula -- was a reminder that California has struggled to turn the page on its years-long financial crisis.

The Legislature's budget largely mirrors the plan Brown unveiled in May, and Democratic leaders took pains to say they had accepted almost all of the governor's proposals.

Part of the projected budget deficit will be patched through a variety of one-time fixes -- including a tax windfall from Facebook's initial public offering and leftover cash from defunct redevelopment agencies. Lawmakers also propose raiding dedicated funds to help pay the bills.

Their budget would cut more than $1 billion from Medi-Cal, the state's healthcare program for the poor, and $540 million from California courts, halting 38 construction projects.

It also assumes a 5% cut to state workers' compensation but is unclear on how that goal would be reached. Administration officials are negotiating with unions to find savings, and Brown has suggested moving some workers to a four-day, 38-hour work week, which would mean closing some state offices an extra day each week.

Despite long negotiations, Brown and top Democratic lawmakers remain at an impasse over a few hundred million dollars in spending on social services.

Throughout the week leading up to Friday's vote, Steinberg and Assembly Speaker John A. Perez (D-Los Angeles) engaged in a public back-and-forth over the budget with Brown. At one point, the governor said the lawmakers' proposal was "not structurally balanced and puts us into a hole in succeeding years."

Legislative leaders said the plan they were sending to the governor had been revised since then and should receive his signature.

However, they insisted that deeper cuts to social services would hurt poor families at a time when jobs are scarce and the economy is still recovering. Democrats rejected Brown's call to tighten work requirements for welfare recipients and reduce some benefits by as much as 27%. They also refused a proposal to raise grade-point average requirements for college students who get state financial aid.

"We fought for more compassionate alternatives than the governor's proposals," said Assembly Budget Committee Chairman Bob Blumenfield (D-Woodland Hills).

To minimize cuts to social services, the budget plan would sock away less money in a reserve fund than Brown has asked for. More controversially, Democratic lawmakers altered Brown's budget plan by taking $250 million in property tax money, which once went to redevelopment agencies, and earmarking it for education rather than giving it to county governments, as Brown envisioned. That would free up more money in their budget for social services.

Last year, when lawmakers and Brown disagreed on $5 billion in spending, the governor immediately vetoed the Democrats' budget plan. This year their differences are much smaller, and Brown has been tight-lipped about the budget's fate.

Talks are expected to drag into next week.

Still, this year's process was a much-abbreviated version of negotiations that dragged through the summer in previous years, causing financial misery to thousands of contractors and healthcare service providers who were cut off from money owed them when the deadline was blown.

A constitutional amendment enacted by voters in 2010 has made California lawmakers more punctual. The amendment strips them of their pay if the budget is late, and it empowers the majority -- currently Democrats, by a wide margin -- to move a budget to the governor's desk on its own.

Said Steinberg, "The era of endless late budgets in California is over."

(c)2012 the Los Angeles Times

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