California Legislature facing long budget deadlock

California lawmakers are keeping up with tradition by missing the constitutional deadline by which they're supposed to approve a new state budget.

It's nothing new. Lawmakers haven't passed a budget by June 15 since 1986, although they came close in 1999, missing the deadline by only one day. There's no penalty if they don't meet the deadline.

They also haven't been batting 1.000 as far as getting a budget in place by July 1, the start of a new fiscal year. They've reached that goal only a dozen times during the last 30 years.

In 2003, the year voters recalled Gov. Gray Davis in part because of skyrocketing budget deficits, lawmakers didn't approve a budget until Aug. 31.

There is no movement this year to recall Gov. Arnold Schwarzenegger, but the state is again facing a big budget deficit — $15.2 billion — and the likelihood of another long budget deadlock in the Legislature.

There's one main reason for the Legislature's sluggish budget record: California is one of only a handful of states that require a supermajority to approve a new budget. Democrats have majorities in both the state Assembly and Senate, but they need some Republican support to put together the two-thirds votes required to pass a budget bill.

And the parties are poles apart on how to deal with the state's red ink.

Democrats want spending cuts and revenue increases generated by raising tax rates, eliminating tax breaks or using a combination of the two. Republicans are insisting on no tax hikes of any kind.

Assembly Speaker Karen Bass, D-Los Angeles, has proposed a budget plan that calls for $6.4 billion in additional tax revenue. The Senate Democrats' plan calls for $11.5 billion in more revenue.

They haven't specified what taxes they would raise or which loopholes they would close, although they did attempt to eliminate what they call the "sloophole." That's a loophole that enables Californians to avoid sales taxes by buying boats, planes or motorhomes out of state. Assembly Republicans blocked that move.

Schwarzenegger has been on both sides of the issue. His budget proposal includes a 1 percent sales tax increase that would kick in if a plan to generate more lottery revenue and borrow against that income didn't work out.

But he also told a group of local government officials and business executives in Riverside last week that he opposed raising taxes, although he said tax hikes should be "on the table" for budget negotiations.

Instead of raising taxes, he said, the state should be handing out more tax breaks to business to try to stimulate the economy, in particular by providing incentives for movie and television productions to film in California.

The state's economy is slumping. California's unemployment rate in April was 6.2 percent, the third highest in the nation behind Michigan and Alaska. The national rate was 5 percent.

A conference committee of six lawmakers has begun meeting to try to put together a budget that can pass both houses. But one of the members of that panel, Assemblyman John Laird, D-Santa Cruz, said Friday that many of the item-by-item decisions the panel faces depend on an overall agreement among legislative leaders on whether to raise taxes.

"The bottom line is we will do big cuts to health care and education without some measure of new revenue," he said.

The outcome could depend on whether Republicans "have the stomach for the toughest cuts" they dislike, including reducing state payments to doctors and hospitals that treat the poor, Laird said.

A long budget deadlock could delay some state payments, particularly to businesses that supply state prisons, hospitals and other facilities. It also could force the state to engage in more costly borrowing to maintain cash flow.

A spokesman for the state Department of Finance, H.D. Palmer, said Friday that California will have enough money to cover its expenses through August. But then, if still without a budget, it would have to issue revenue-anticipation warrants, a more costly form of borrowing that can jeopardize the state's credit rating.

In 2003, the state sold $11 billion in such warrants to help deal with its budget problems that year, generating $140 million in borrowing costs, Palmer said.

Besides the budget conference committee, several other legislative committees have long agendas this week as lawmakers consider bills passed by the other house. Here are some of those measures:

PRISONER EDUCATION — Assemblywoman Anna Caballero, D-Salinas, has a bill that would require state prisons to enable inmates to take high school and college courses if they have a reasonable chance of being released and have the mental capacity to benefit from more education. It's on the Senate Public Safety Committee's agenda on Tuesday.

NUTRITION INFORMATION — Sen. Alex Padilla, D-Los Angeles, is trying again to require chain restaurants to tell their customers how many calories and how much fat, carbohydrates and sodium are in their standard menu items. Schwarzenegger vetoed a similar bill last year. The new version is on the Assembly Health Committee's agenda on Tuesday.

CAMPAIGN FINANCING — Assemblywoman Loni Hancock, D-Berkeley, hasn't given up her attempt to weaken the influence of wealthy campaign contributors by allowing use of public financing for state races. But she's lowering her sights a bit. Hancock's bill started off as a measure that would have authorized public financing for all state candidates who agreed to generally shun private contributions. The bill passed the Assembly last year as a measure that would have covered candidates for governor and, as a test, one Assembly and one state Senate seat.

It's now been reduced to a measure covering candidates for secretary of state. It's on the Senate Elections, Reapportionment and Constitutional Amendment Committee's agenda on Wednesday.

http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2008/06/15/state/

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California Legislature facing long budget deadlock