Budget +89: Still Framing the Framework

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Photo: John Myers

Governor Schwarzenegger and the legislative leaders are scheduled to meet this afternoon to talk about the still uncompleted work on their budget "framework" announced last week.

Which means we still can't say for sure if this is the real deal. And no one's expecting it to all be ironed out today.

Budget staffers spent the weekend working on turning the general handshake agreement of last Thursday into an actual spending plan for the state, now the tardiest in history and approaching the 100th day of the 2010-2011 fiscal year.

There's no real sign of white smoke, which means we're still chewing on the few morsels provided by various Capitol sources as last week came to a close. Most of those are very big picture, but what seems to help put this into at least a little focus is to compare the last budget document hashed out by the joint legislative conference committee to the deal points mentioned by those familiar with the agreement (all of whom, both with me and apparently other Capitol reporters, would only speak on background due to the sensitive nature of the talks).

Below you'll see dollar amounts from the conference committee (PDF original) marked as CONFERENCE and corresponding dollar amounts from last week marked as FRAMEWORK. And again, keep in mind the latter are amounts that have been only broadly sketched out, hence some of the questions posed below.

Spending Reductions
CONFERENCE: $8.3 billion
FRAMEWORK: $7.5 billion
Democrats are privately touting the framework's limitation on spending cuts -- not only less than they agreed to last month in conference, but much less than the $12 billion proposed by Schwarzenegger earlier this year.

Federal Funds
CONFERENCE: $4.1 billion
FRAMEWORK: approximately $5 billion
This will require some close scrutiny when the actual proposals are made public. Remember that the governor's initial plea to D.C. was trimmed down substantially, and there have been some not-so-great signals from the feds about the financial assistance California wanted. Remember, too, that budgets must only be balanced on paper... and that a lot of assumptions in recent years never came to pass.

Revenues
CONFERENCE: $4.5 billion
FRAMEWORK: $1.5 billion
This represents one of the biggest hurdles for negotiations all year long. Schwarzenegger and legislative Republicans remained adamant that there would be no "tax increase" in a budget deal. The revenues reportedly agreed to represent a temporary delay in implementing a new business tax break -- one that allows a tax reduction due to net operating losses (NOLs). If this revenue proposal truly makes it into the final budget, then the guessing game will begin as to which Republicans vote for it; because while you will no doubt hear it spun as not a tax increase, under state law the repeal of a tax credit is treated as a tax increase and subject to a supermajority vote in each house of the Legislature.

Other "Stuff"
This one is hard to measure at this point in a direct 'conference committee vs. framework' way, so let's just run through some of the biggies. Sources say that school funding under Proposition 98 will likely end up a little more than $1 billion lower than the $52 billion in the conference committee report... sources also say that the framework assumes about $1 billion from selling state buildings, many of which would then be leased back for state government use... and then there are the various adjustments/creative solutions/gimmicks that seem to be a part of every recent budget deal which, when combined with better-than-projected revenues, bites off somewhere around $5 billion of the problem (and these were pretty much already in the August conference report).

You'll notice the above list is decidedly not comprehensive, and it does not address some outlier issues that apparently are still being nailed down -- most notably, the governor's demand for reform of public employee pensions. The general consensus now seems to be that no formal budget floor votes would come until early next week, but that's also a moving target. In an unrelated event this afternoon, Schwarzenegger made a prediction.

As you can see, it was probably pretty accurate last week to call the agreement a "framework." For all involved, the real news will come when we see how that frame is going to be filled in.

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About John Myers

John Myers is senior editor of KQED's new multimedia 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. He moderated the only gubernatorial debate of 2014, and was named one of the nation's top statehouse reporters by The Washington Post. Follow him on Twitter @johnmyers.

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