Money & Politics | Daily Report

Willem van Bergen/FlickrCalifornia State Capitol

UPDATE: Gov. Jerry Brown this morning vetoed the state budget, blaming Republican lawmakers for failing to compromise with Democrats on extending tax increases in order to balance a $9.6 billion shortfall without accounting maneuvers.

"Unfortunately, the budget I have received is not a balanced solution," Brown said in a statement this morning. "It continues big deficits for years to come and adds billions of dollars of new debt. It also contains legally questionable maneuvers, costly borrowing and unrealistic savings. Finally, it is not financeable and therefore will not allow us to meet our obligations as they occur."

In his statement, Brown called on GOP lawmakers "to allow the people of California to vote on tax extensions for a balanced budget and significant reforms." He warned that, "If they continue to obstruct a vote, we will be forced to pursue deeper and more destructive cuts to schools and public safety – a tragedy for which Republicans will bear full responsibility."

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California lawmakers raced up to the deadline yesterday to send a budget proposal to Gov. Jerry Brown that contains further cuts to education, additional fees and many of the “gimmicks” that he repeatedly pledged to avoid in order to close an estimated $9.6 billion deficit.

The move marked the first time since 1986 that legislators produced a budget by the June 15 deadline. The Senate voted 23-15 in favor of the main budget bill and the Assembly voted 51-23, both simple majority votes without the support of any Republican representatives. Had the constitutional deadline not been met, lawmakers would have forfeited their salary and per diem pay starting immediately – amounting to $48,603.50 in savings for the state per day, according to the state controller's office.

The docked pay and ability of lawmakers to pass a budget with a simple majority rather than a two-thirds vote are both part of Proposition 25, which voters passed last year.

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Democrats in both houses scoffed at the notion that the threat of losing pay was a concern in moving the budget through floor sessions faster than many had anticipated. Instead, said Senate President Pro Tem Darrell Steinberg, D-Sacramento, they felt compelled to comply with the deadline in order to ensure that a budget is in place by the start of the new fiscal year July 1.

“This budget is not our preference,” Steinberg said, adding that while he hopes lawmakers can achieve a bipartisan agreement, Democrats will put forth a proposal “with or without” the support of Republicans. “The governor has pushed for a better plan. Maybe, and hopefully, it can still get done.”

Brown now has 12 days to either sign or veto the package, giving him more time to continue negotiating a deal with Republican lawmakers to put his proposed tax extensions on the November ballot. While it remains unclear if Brown will approve a package that does not include the extensions, he said Monday that the alternative would decimate California's future.

“If these taxes will not be put on the ballot, and if we're going to retrench and retreat, then we are stirring up not a disaster this year, but we are furthering a decline that at some point becomes irreversible,” Brown said. “This battle this week is battle one, but there will be several more before we're finished.”

Cuts enacted by lawmakers Wednesday include $150 million each to the UC and CSU systems and an additional $150 million to state courts, among others. The plan also includes $1.7 billion in money that would come out of the state's redevelopment agencies, with nearly $3 billion in deferrals that would push repayments to K-12 education back another year.

The proposed budget comes on the heels of the latest monthly report [PDF] on the state's fiscal health by California Controller John Chiang, which found that revenues for May were more than $408 million above estimates in Brown's May 16 budget revise. Under the current budget plan, Democrats would factor $800 million into the budget from revenue increases they expect will continue.

The current budget package includes a $12 increase to the state's vehicle registration fee, which would add $300 million to the general fund. The plan also includes raising $200 million from online sales tax revenue and increased homeowner fees to cover rural firefighting efforts, among other things. It also calls for the sale of two dozen state buildings to generate an additional $1.2 billion and largely ignores California's “wall of debt,” estimated to be $35 billion.

Republicans, meanwhile, said the budget package was a “missed opportunity,” and one that destroys job creation and continues the trend of spending more money than we bring in. Some suggested that Democrats acted simply to protect their own interests and avoid losing pay.

“We've been kicking the can down the road for the better part of 50 years. That's why we've gotten into this mess where we are today,” said Sen. Tom Berryhill, R-Stanislaus.

Republican Party Chairman Tom Del Beccaro issued a statement following the Senate vote.

“Democrats have demonstrated that they are truly out of touch with the people of California," he said. "Instead of making the necessary and popular reforms to California's bureaucracy, the Democrats have chosen to pass a legally suspicious budget to save their own paychecks. It's now up to Jerry Brown to finally keep one of his promises, do the right thing, and say no to the Democrats' gimmicks-based budget solution."

Assemblyman Bob Blumenfield, D-San Fernando Valley, meanwhile, said Wednesday's budget passage would become a “new precedent” for meeting the deadline in the future, and he stressed the difference between this year and last, when lawmakers passed the budget a record 100 days late.

"The era of late budgets is over. Political paralysis will not delay the passage of this budget," Blumenfield said, adding that while the deadline was over, the work of lawmakers on both sides was not. "We have new budgetary authority from the voters, and we used it today. To the few legislators who support a plan, our doors are open to talk."

Source: California State Controller's Office