Audio from budget vote September 9, 2008
Few expect that today's debate and votes in the Legislature will produce a final resolution to California's historic fiscal crisis.
But by day's end, there will hopefully be a better sense of where we're headed... and when. Can lawmakers strike a deal before the state runs out of money in less than five weeks time?
The Assembly and Senate are scheduled to convene this morning to consider a package of bills, largely crafted by the Democratic majority, aimed at erasing $23.3 billion in budget red ink. Some points worth pondering as the action gets underway:
Why It All Comes Down to $3 Billion: This theory focuses on the fact that the Democratic plan, stripped of its controversial tax increases, is valued at about $21.5 billion... while Governor Schwarzenegger's deficit package is worth about $24.3 billion. Simple math whizzes, therefore, will conclude that the tax increases pitched by the Dems are essentially a replacement for Schwarzenegger's planned elimination of social services programs. "I'd rather have $21.5 billion of solutions than zero," said Senate President pro Tem Darrell Steinberg yesterday. To which the governor's press secretary, Aaron McLear, quickly replied: "We will not support a fix that does not add up to $24 billion."
Why It's Not Just About the $3 Billion: There are other elements of the budget debate that strain the "$21.5 billion vs. $24.3 billion" narrative. For starters, there's the Democratic plan to require anyone who hires an independent contractor to withhold 3% of the payment for tax purposes. Those contractors ultimately pay the money to the state as it is, but this would "accelerate" that payment, to the tune of an extra $2 billion in the budget year. The Guv and GOP legislators have suggested it's a no-go. Ditto for the Dem idea of a "one day/$1.2 billion paycheck shift." Add the value of those two plans to the dispute over taxes-versus-cuts mentioned above and you end up with a dollar gap that's much bigger than $3 billion. And that doesn't even include disagreements over deeper cuts to state worker pay, funding for state parks, etc.
Should We Just Forget About The Taxes Already? It's one thing when pundits write off Democratic plans for atax increase; it's another when the leader of the upper house does so. "We're probably not going to get them," Senate pro Tem Steinberg said about the taxes in his Q&A with reporters Tuesday. And making the point even more clear, Steinberg said that Dems will not link the tax hike to the spending cuts... thus avoiding an all-or-nothing squeeze play. "They (taxes) are not joined to the rest of the package," he said.
Taxes May Not Be Linked, But... The single biggest chunk of spending reductions are apparently now linked to a proposal that costs the state money. Call this one the Proposition 1B redux; you'll remember that the defeated May 19 proposal would have guaranteed an extra $9 billion for public schools and resolved a legal dispute about how California's education guarantee works. Now it appears that the propsoal is back; at least one of the budget "trailer bills" debated today (which contain lots of statutory details for enacting budget solutions) will contain language related to both the K-14 spending reductions and the disputed supplemental funding. Yesterday, The Sacramento Bee opined that the proposal would "tie the Legislature's hands" in the years to come. As you can see, procedural issues matter... because the only way a legislator can vote to reduce school spending is to also vote in favor of additional school spending.
What Will Republicans Do? GOP legislators have generally panned the Democratic deficit package while aligning themselces with the governor's call for a $24 billion solution. But when Democrats put a bill up to reduce state spending by billions of dollars... even if it's not as much as the GOP wants... will they vote no? "(The) budget vote is a political drill and nothing more," says Assembly GOP caucus spokesperson Jennifer Gibbons. (Capitolspeak: a "political drill" is when you know the outcome, and you do it just to make a point. It appears Republicans aren't willing to engage in any scenarios other than the obvious.)
What Will Democrats Do? And it's not that much clearer what happens if the majority party finds itself without the deal it wants today. Senate pro Tem Steinberg seemed to indicate Tuesday that, if need be, the deficit package (minus the tax hike) could be sent to Schwarzenegger without Republican votes. Even the revenue accelerations and fees could apparently be approved on a majority vote by convening a special session. Aside from the political ramifications, the problem with that path is that many of the deficit solutions can only take effect immediately through an urgency vote -- which requires a supermajority. Budget staffers were apparently still crunching numbers as of Monday on how much savings would be lost were the spending cuts to take effect in 90 days -- the legal lag time for proposals passed by a simple (read: Democrats-only) majority.