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Government: California GOP senators go public with their budget demands [Updated]

Budget Talk This is a corrected version of the updated post; see the note below.

Gov. Jerry Brown broke off budget talks with five Republicans in the state Senate in March after complaining that the GOP's demands kept expanding. In particular, he pointed to a seven-page list of items Republicans told him they wanted in any budget deal, many of which had nothing to do with the budget.

Monday, four of those senators -- Tom Berryhill of Modesto, Anthony Cannella of Ceres, Bill Emmerson of Hemet and Tom Harman of Huntington Beach -- released details of four proposed reforms that they said are "necessary components" of any budget deal. It's not clear from their statement, though, whether they'll support the Democrats' budget proposal if they prevail on these four issues.

The four reforms are:

  • A cap that would limit total spending on recurring items (e.g., prison guards or the Department of Motor Vehicles) to the previous year's total, adjusted for inflation and population growth. If two-thirds of the Legislature approved, surplus revenue over the cap could be spent on one-time projects, such as roads or gubernatorially declared emergencies. The cap would remain in place until the state had repaid more than $40 billion that had been borrowed or deferred to help balance previous budgets.
  • A set of limits on public employee pensions, including a requirement that new employees be given a 401(k) plan and, if they choose, a small pension -- half the costs of which they'd have to cover. Pensions would be based on just the first $119,000 of an employee's salary, and an assortment of techniques used to inflate pensions would be banned. Most controversially, the state would be empowered to reduce the pension benefits that current employees were slated to receive but had not yet earned.
  • Require state agencies to estimate the economic impact of proposed regulations and consider alternatives that would be equally effective but less costly.
  • Amend the California Environmental Quality Act to discourage frivolous lawsuits and bar projects from being subject to the act solely on the basis of greenhouse gas emissions.

These are meaty, contentious proposals ... 

... and it's sad to think that they would be addressed through backroom budget talks instead of public hearings and the regular legislative process. But the budget gives the Republican minority a rare bit of leverage, so it's not surprising that they would use it to seek to advance their priorities -- and not just on budget-related items.

In a statement released Monday afternoon, the senators asserted that "there is significant agreement between Republicans and the governor on the vast majority of those reforms." Judging by Brown's previous comments, that's probably true. That doesn't mean it will be easy for the two sides to agree on the handful of details that still separate them, however -- the Republicans swing for the fences on a couple of issues, such as permitting changes to as-yet unearned pension benefits of current state employees.

The four Republicans also try to pin the blame for the lack of a deal on Democrats. For example, they say:

It is clear now, as it has always been, that the only impediment to resolving this budget crisis and putting the tax question before the voters as the governor has committed to are the Democrats and their special interest allies.

Republicans have been consistent in their words and their actions. The only thing that's changed since negotiations were halted in March is the nearly $7 billion in unanticipated revenue that the Democrats have already spent. And now the Democrat leaders have moved the goal post with their recent introduction of a legislatively mandated tax increase -– without voter approval -– the so-called "bridge tax" that violates the governor’s own pledge.

Actually, it wasn't at all clear in February and March that Republicans would be willing to support a ballot measure to extend the four temporary tax increases sought by Brown, even if the Democrats agreed to their requests for a spending cap, pension limits and regulatory reforms. And it's not entirely clear now that the four demands outlined by the GOP senators are the only requests on the table.

Nor is it true that Democrats "have already spent" the $6.6 billion in extra revenue projected to be collected by May 2012. About $3 billion of that sum will go to public schools, as per Proposition 98. An additional $1 billion was used to cancel a shift of money from early childhood education into Medi-Cal that had drawn a lawsuit from county agencies. Much of the rest was used for something one would expect the GOP to embrace: reducing the proposed tax increase.

Still, the senators' statement suggests that there's reason to hope that a budget deal may be close. They don't rule out supporting a "bridge tax," which Brown said Monday was the only workable solution to the budget problem. And although some of their demands go too far, much of what they're seeking would be a reasonable response to the state's budget problems and regulatory excesses.

[Updated, 7:01 p.m., June 13: Although the four senators' statement makes only one criticism of the "bridge tax" -- that it "violates the governor's own pledge" -- the chairman of the Senate Republican Caucus, Bob Huff of Diamond Bar, has publicly stated that there are no GOP votes for the proposal. That makes the stop-gap tax less likely than the sort of budgetary legerdemain -- e.g., one-time revenues and dubious revenue projections -- that Brown has opposed in the past.]

The question is whether both sides can make concessions in order to seal the deal. The "bridge tax," which would leave state sales and vehicle-license taxes at their current, elevated levels until voters could decide whether to extend them for a longer term, is a very difficult pill for Republicans to swallow. And the proposals for a spending cap, pension limits and changes to the California Environmental Quality Act all include provisions that Democrats have long opposed.

[For the Record, added 9:36 a.m. Tuesday: The update I added last night incorrectly referred to Sen. Bob Huff as "the Republican leader in the Senate." Sen. Bob Dutton of Rancho Cucamonga is the Senate Republican leader; I changed the post to indicate Huff's correct title, GOP caucus chairman. Equally relevant to this post, he's also vice chairman of the Budget Committee.]


Another, wonkier argument in favor of a bridge tax

Once again, taxes are a stumbling block

To fix California's budget, we need taxes too

-- Jon Healey

Photo: From left, Republican state Sens. Anthony Cannella, Bill Emmerson, Tom Harman and Sam Blakeslee talk about the budget at the Capitol in Sacramento. Credit: Associated Press


Comments () | Archives (7)

The comments to this entry are closed.

Joe Justin

Jon, nice to speak to you earlier. I hope you're able to update your piece upon your review of the following links. The Los Angeles Times is an influential newspaper and I hope that you agree, that the information below makes your piece accurate and relevant.

You'll see in Senator Huff's comments, his justification for the statement about the cuts that were rolled back that the Senators referenced in their statement today.


John E McCue

Having once been a Republican and a devoted follower of Ayn Rand, I can tell you about the kind of a fair economy I would have thought to be good. If you look and the early parts of the movie "Charlie Chapman" or the early days in Chicago and other parts of the country, you will see it.
During the 1930s we lived in labor camps and in cars parked along rivers and if the Republicans had their way it would have been even worse. They will try to measure their remarks in order to keep voters in line.


I see no issues with the rep demands. LA times is always putting down the reps. This is a one sided news agency. I hope this paper goes out of business soon.

P J Evans

It sounds like the usual Republican negotiating tactic: 'Give us everything we want, or we'll take your toys and go home.'
In adult terms, that's extortion.


Absolutely not to the last two "reforms". But I think that the first two are quite reasonable and negotiable.


Who benefits?

Whenever I see demands like this, I like to ask myself, who would benefit if this passes?

With regard to the pensions, the answer is clear that Investment firms in New York would be the greatest beneficiaries. If state workers no longer put the retirement monies into their CalPERS pensions, then they are going to need to pay someone else to invest their monies. Investment firms take about 1% of all money they manage (as opposed to CalPERS who takes less than 0.2%). That would put billions of dollars into the hands of investment firms.

At the same time, CalPERS would be weakened thus halting their recent inquiries into executive compensation at large corporations.

As everyone has acknowledged, the state would see no appreciable benefit in the near term.


It sounds like the usual Republican negotiating tactic: 'Give us everything we want, or we'll take your toys and go home.'
In adult terms, that's extortion.

No, that's what adults do to children when the children misbehave. The Democrats need to do some serious budget cutting instead of relying on budgeting smoke and mirrors, which is what they proposing as an alternative solution.

Their job is to create a balanced budget. The Democrats can pass a balanced budget without a single Republican vote.



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