Dems Go Around GOP. Et Tu, Arnold?

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And just when you thought the budget saga couldn't get any more bizarre. If this were the Olympics and even if you hated it, you'd have to score some style points on the acrobatic budget maneuver unveiled this afternoon.

Democrats, frustrated with GOP refusals to vote for any tax increase to erase any part of the state's fiscal problems, have now decided to push forward a budget plan that includes $9.3 billion worth of new revenues... revenues they say don't require a single Republican vote.

Fasten your seatbelt. Here goes:

Democrats say the plan (which legislative attorneys have reportedly vetted) is "revenue neutral," meaning that the bill to be considered is a zero sum game to the state. And that, they say, means any new revenue... even a new tax... can be enacted with a simple majority vote.

But it's not revenue neutral to most Californians; on the contrary, the plan would add 13 cents to the price of a gallon of gas, a 2.5% surcharge onto everyone's income tax bill, a three-quarter-of-a-cent sales tax hike, and a new 3% withholding tax to independent contractors (who technically own their own business).

So how does a revenue neutral bill solve the problem? Pop a Dramamine pill before reading on...

Because, say Democratic budget staffers, it creates new revenues in the state's general fund, and takes away a relatively equal amount of revenues that now go to the state's special fund. And because the current shortfall is revenue that's evaporated from the general fund... well, there ya go: new revenue... and... revenue neutral. Presto!

The package also includes an oil severance tax that conforms with a plan proposed last month by Governor Schwarzenegger. And overall, it's estimated that it would bring in $1.5 billion in the current fiscal year, and $7.8 billion in the budget year to come.

The revenues are paired with $7.3 billion in cuts, which Democrats say are the same proposals they offered late last month.

All of this begs two questions: if it's such a great idea, why didn't Dems do it sooner? And what will Schwarzenegger do if this lands on his desk?

I asked the first question in today's news conference with Democratic leaders. Senate President pro Tem Darrell Steinberg's reply can be heard below.

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(By the way, the "pledge" he refers to is the pledge almost every GOP legislator signed to not raise taxes.)

The answer to the second question -- what will the governor do -- may be the only other real news.

After all, this does seem to be at least a first step away from financial collapse. On the other hand, it would probably cement the frosty relationship with Republicans. And you can probably put a stopwatch to attorneys for a few interest groups who will no doubt run to court and try to block its implementation.

No matter what you think of this, it has re-energized the story for reporters... who've labored to write the same story with the same dynamics day after day.

Stay tuned, this one's a long ways from over.

[4:13 pm update -- Reaction on the other side of the aisle so far has been as expected, with an extra dash of outrage. Assembly GOP Leader Mike Villines describes the Democratic proposal as "trickery." As for the governor... a spokesman says Schwarzenegger's reviewing the proposal, but also insists on a series of economic stimulus plans -- including more public-private partnerships, and less lengthy environmental review for some public works projects.]

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About John Myers

John Myers is senior editor of KQED's new California Politics & Government Desk. He has covered California politics for most of the past two decades, serving previously as Sacramento bureau chief for KQED News and most recently as political editor for KXTV News10 (ABC) in Sacramento. In 2014, he was named one of the nation's top statehouse reporters by The Washington Post. Follow him on Twitter @johnmyers.

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