BUDGET DAY PLUS 29 -- The hallmark of a good horror movie is that just when everyone thinks they've stabbed, or strangled, or mutilated the monster to death... he rears up again, scaring the bejeebers out of everyone.

In budget terms, Senate President pro Tem Don Perata appears to be trying again to kill the ugly budget beast that is talk of raiding transportation funds.

In an emailed letter from his campaign this afternoon, the Oakland Democrat emphatically stated he is not on board with any plan to take money from the Proposition 42 and Proposition 1A transporation funding guarantees.

"Raiding these funds now would break faith with voters who joined us in supporting the plan to rebuild California," Perata writes. "I can't stop people from floating trial balloons in Sacramento, but I can sure shoot this one down before it gets very far."

This is not the first time Perata has rejected such Capitol budget chatter. And transportation groups are already growling at legislators, through a media campaign, to stay away from their money.

But still the talk persists, with more and more Capitol denizens seemingly braced for some kind of eventual deal that relies on borrowing -- a theory espoused today in a piece by Sacramento Bee columnist Dan Weintraub.

Of course, one could parse the words in Perata's letter and observe that his pledge to not borrow only specifies transportation funding, and not the myriad of other funds approved by voters in recent years. But on previous occasions, the pro tem has condemned talk of all such borrowing schemes... so perhaps he's still referring to the whole concept.

But as the budget impasse drags on, and Governor Schwarzenegger prepares to issue his minimum wage executive order tomorrow, today's promise from a leading Democrat only further confuses those of us watching the process as to how it'll all get resolved.

BUDGET DAY PLUS 17 -- A good example of just how heated the budget impasse is quickly getting can be found today in a dustup over whether legislators are mulling the option of internal borrowing to help erase the $15 billion shortfall.

The borrowing talk has been rampant for weeks in the Capitol, and has been pushed by some Republicans as a better plan than the Democratic call for raising taxes. The most talked-about scenarios involve borrowing money sitting in the accounts of transportation (through 2002's Proposition 42), early childhood development (1998's Proposition 10) and mental health programs (2004's Proposition 63). Some have also suggested exercising the borrowing option from the local government funding measure, 2004's Proposition 1A.

None of this would be easy. The various groups who support such programs will... and already are... howling; some of the money, while technically in the bank, may have already been committed for 2008; and the repayment of said loans only pushes a huge fiscal mess into another year.

The man with the biggest megaphone put the issue out there in today's edition of the Los Angeles Times. Governor Schwarzenegger was quoted as saying it's "not a good idea," though stopping short of refusing to go along with such a plan.

But Democrats, believing that the Times' story implicated them as pitching this plan, fired off angry press releases. "Today’s Los Angeles Times story about state budget negotiations is inaccurate and misleading," said Senate President pro Tem Don Perata in a written statement. Both he and Assembly Democrats emphasized that borrowing isn't a part of their plan -- fair enough, but like Schwarzenegger they, too, stopped short of refusing to vote for such a plan if Republicans hold the line on their no-tax pledge.

If Democrats are willing to consider such a GOP proposal, today's fracas may have set back such talk. But everyone also knows that $15 billion is not an easy gap to close... and in the end, something... spending cuts, taxes, or cuts... will have to give.

A nasty war of words is raging among Democrats over the state party's recent -- and hefty -- contribution to the legal defense fund of Senate President pro Tem Don Perata.

Less than two weeks ago, the California Democratic Party gave $250,000 to help defray the legal bills of the Oakland Democrat for an FBI investigation into his business dealings. It was the second big donation from the party in less than a year, bringing the total to $450,000.

Perata's legal defense fund reported 2008 expenses as of mid May of $290,000 and very few contributions; outstanding debts were reported at just about $250,000. Other than the Democratic Party contribution, the Senate leader's defense fund received a $25,000 check from the Pechanga Band of Luiseno Mission Indians in June.

But the donation of Dem party cash has ignited some furor among party activists. On the grassroots blog Calitics this morning, Democratic activist Bob Brigham took aim at party chairman Art Torres for approving of the donation, calling for the veteran leader's resignation:

"[Democrats] have every right to expect that contributors' money will be pumped into districts where Democrats are locked in tough election fights with Republicans, or into struggles with the GOP over the budget. Instead, it's paying the legal bills for Perata..."

Perata was asked about the donation yesterday after a news conference on the state budget. He disagreed with those who said he shouldn't be getting financial help from the party. "I believe Democrats respond to defend Democrats," he said.

And, though he was asked only about the controversial cash assistance from the party, Perata appeared to take a swipe at the FBI investigation itself, even as one Bay Area newspaper reported yesterday that something new may be brewing in the case.

"I believe this is a partisan attack," Perata said. "It's no mistake who's in the White House and when this started... I'm the leading Democrat in the state of California."

BUDGET DAY PLUS 8-- With year after year of California budget impasses scarred by sharp partisan debates over spending versus revenues, it seems almost silly to say that there hasn't been much of a debate about a tax increase. But there hasn't.

And so, in the immortal words of Monty Python, now for something completely different...

Every multi-billion dollar budget deficit over the last few years has been papered over with an elixir of spending deferrals, accounting changes, and borrowing. But this time, the Legislature's Democratic majority seems ready to wield the very budget balancing tool that all of those schemes were designed to avoid: higher taxes.

The budget plan adopted by the joint budget conference committee last night (and, to be fair, adopted without any Republican support) calls for $9.7 billion in additional tax revenues, with more than half that amount coming from higher income taxes for high-income earners. Also in the mix, as reported last night, are more tax revenues from businesses and middle-income earners, as well as a new push to collect taxes that aren't being paid.

Of course, the tax debate isn't new for some Democrats, most notably Senate President pro Tem Don Perata. The Oakland legislator has been calling for new tax revenues for several months, and told reporters today that the proposal on the table is about fairness, in light of several years of cutting back programs and services for the most needy.

"We're asking those who have benefitted the most to pay the most," said Perata.

And pay the most they would. Adding two new tax brackets for wealthy Californians -- a 10% rate for joint returns above $321,000 and an 11% rate for joint returns above $642,000 -- would reinstate taxes levied during the state budget crisis of the 1990s. But those tax increases were temporary; Democratic budget staffers confirmed today that this proposal would make those tax rates permanent.

If enacted, it would mean California would have the highest state income tax bracket for the wealthy in the nation, according to data compiled by the Federation of Tax Administrators. And the very wealthy -- those earning more than $1 million -- would be subject to a 12% rate, because of the surcharge imposed by voters through Proposition 63 in 2004 (money for mental health programs).

Needless to say, Republicans seem almost giddy in these early hours of the debate. "That's a dysfunctional approach to the crisis that we're in," said Assemblymember Roger Niello (R-Sacramento) in comments to reporters this morning. "Those proposals, especially in a weak economy, have been proven time and again not to produce the revenue that's expected."

Niello and his fellow Republicans want more cuts in spending to resolve the $15 billion shortfall; Democrats, who are proposing to close the gap with slightly more in cuts than in tax revenues, adamantly refused such suggestions today. "We can't cut anymore," said Assembly Speaker Karen Bass. And so far, GOP legislators have not submitted specific cuts that would, alone, balance the budget.

So perhaps, for once, there might be a real debate about appropriate taxes and appropriate expenditures. One that forces Californians to think about what services they want, and what they're willing to pay. That would, indeed, be something completely different in the annual summer slugfest over the state budget.