GOP Unveils Deficit Fix, Sans Taxes

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Getty/Robyn Beck

Responding to Governor Jerry Brown's call to provide an alternative to his plan for solving the state's fiscal crisis, Assembly Republicans have released a budget blueprint which relies on cuts, revenues, and transfers... but no taxes.

Like balloonists tossing over ballast to gain altitude, the lower house's GOP caucus would further cut spending, bet that the economy's rebounding, and -- after four months of hammering away on the idea that voters have spoken on the budget fixes of 2009 -- would cede what's perhaps their most prominent debate point.

A document drafted by the GOP's top budget crunchers holds true to their party's 2011 rallying cry: no more taxes. It also rejects the governor's hotly debated realignment of government services from state to local control; earmarks $500 million for local public safety needs; and (almost) closes the door on Brown's controversial plan to abolish redevelopment agencies.

Given both the governor's projected problem and those changes, the GOP plan assumes a remaining state budget hole of $14.7 billion.

As first suggested a few days ago, Republicans want to fund K-12 schools at the same level as Governor Brown but would do so by using $2 billion of the better-than-expected state revenues, not by additional taxes. (The remaining $500 million of the 2010 rosy revenues would go to the aforementioned local public safety programs, according to a GOP presentation shared with reporters.)

Two large components of the GOP plan will get lots of attention, and with good reason. Republicans assume that this year's revenue windfall will keep going into 2011-12 and thus score what they claim is a "conservative" amount of additional revenues for the coming year of $2.5 billion. The GOP plan also relies on a one-time raid of funds earmarked for early childhood programs (1998's Proposition 10) and mental health (2004's Proposition 63), for a total of $2.3 billion. In case you've forgotten... that requires voter approval. But more on that later.

Republicans then rely on both the savings scored in the main budget bill (passed in March but not yet sent by Dems to the Guv for a signature) and about $1.4 billion in spending cuts proposed by Brown in January but rejected by legislative Democrats earlier this year.

Chart by John Myers

Assembly GOP members agree with the governor that the state can grab some of the dollars now used by local redevelopment agencies, but they (with at least one notable exception) prefer the plan pushed by the California Redevelopment Association -- a plan that would supposedly bring in $1 billion (as opposed to Brown's $1.7 billion budget infusion) while leaving RDAs across the state in operation.

The next largest solution: a $1.1 billion cut in state employee costs. Getting that level of savings could be both legally and politically complicated; Republican staffers say it's roughly the equivalent of a 10% pay cut for the average state worker -- pretty much what the long furlough program amounted to under the previous administration. Suggestion mentioned by GOP budget staffers range from Brown laying off some state workers to further higher employee contributions to their health care benefits. But might it also trigger a reopening of the newly minted MOUs?

From there, the Assembly GOP framework jumps and skips through state government to find the remaining dollars: $300 million from a plan proposed by state auditors to reduce Medi-Cal eligibility errors; $400 million from having UC medical facilities take over more of prison health care (a federal judge might have something to say about that); $700 million for things like electronic court reporting and contracting out food and transportation needs in developmental services and mental health facilities; and $600 million in an across-the-board cut to state agencies and departments.

The plan, again, rejects additional cuts to either K-12 or higher education -- cuts Democrats have said will be inevitable without additional taxing authority. In fact, Republicans hope to use their budget plan to try and frame the Dem position on taxes as an intent to "grow government," as one GOP staffer said.

Several elements of the GOP plan would seem to be vulnerable to either policy or political challenges. On the policy front, it's unclear how all of these one time fixes would position the state budget come July 1, 2012. It would seem, for example, that the K-12 funding plan (using all of this year's tax windfall) could set the stage for automatically higher spending that could force sharp debates about other services being crowded out of the cash.

Politically, Democrats will relish pointing out the GOP's resuscitation of the 2009 special election proposals that asked voters to borrow from childhood and mental health programs -- both resoundingly smacked down in that election as Proposition 1D and Proposition 1E. Republicans have almost made a social drinking game out of counting the number of times they've said "the voters have spoken" on why Brown's taxes aren't worth another special election. Now, they're asking voters to reconsider a different part of that doomed package. Expect an awful lot of Democratic jabs on that change of heart about what happened in 2009.

The Republican proposal isn't actual ready-to-go budget legislation; more likely, GOP legislators may hope that at a least a few of their ideas are used while also hoping the plan amounts to a preemptive strike on Governor Brown's revised budget being released on Monday. Some of the cuts will no doubt be excoriated by Democrats, social services advocates, and organized labor. There will also be ample debate on whether it's safe to start recalibrating future state revenues upward and assume a mild economic recovery is underway.

But it does at least put the minority party on record as having gone through the motions of trying to hit the magic number, even if the solutions are one-time in nature and rely on a lot of other things going also going just right.

One thing's for sure: it's going to be a tough slog for everyone in Sacramento over the next six weeks... as the clock starts to run out on the current fiscal year.

(I'll post more official reaction from both Dems and Reeps later today, once the news stars to trickle out.)

10:03 a.m. Here's the PDF from the Assembly GOP caucus.

10:42 a.m. Assembly GOP spokesman says budget staffer misspoke when briefing reporters about the effective pay cut for state workers -- it's 10%, not 15%. Posting has been changed from its original content.

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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.
  • william snow

    I am just a dummy I suppose but have you ever noticed how these politions make all sorts of promises, and play party politics and in the end still leave a mess? Oh and lest we forget we the people can only do as they wish. I am an old man no life, a little social security check and if these politions would use their head for someting else than to hold their ears in place they actualy might get some work done and figure it out without sticking it to the lowerpaid stae employees and tax payers.

  • william snow

    yep. 10.03 and 10.42 ear hangers.

  • Andy

    What is “Competition” and how does it get you $700 million annually?

    There are at least $3 billion in one-timers and suspect items here…how is this not kicking the can to next year?

  • http://www.kqed.org/weblog/capitalnotes/blog.jsp John Myers

    Andy:
    $700 million from more “competition” is the portion of the Assembly Republican plan I mention above that allows electronic court reporting (fewer human court reporters) and contracting out of food and transportation services to the Department of Developmental Services (which includes Regional Centers) and state mental health facilities. I think the term “competition” is the GOP effort to emphasize their long-standing argument that too many service jobs in state government are dictated by public employee unions. Now, having said all that, does it get you $700 million? Therein lies the hard part at actually putting such proposals under an impartial spotlight.

    I should mention that after Governor Brown releases his revised budget plan next Monday (5/16), we’ll start to get some independent analysis from the Legislative Analyst’s Office. Perhaps that will include some of the GOP ideas, too.